A concise guide to offshore accounting: Types, pros, cons, and top providers

I’m an entrepreneurial CPA that founded Xen Accounting, a100% cloud-based accounting firm, in 2013. Following its acquisition in 2018,I started Future Firm to help accountants fast-track the growth of a modern, scalable accounting firm of their own. Take a look at my recommendation finding dory and parenting a child with sensory processing disorder for the 5 best books for accounting firms looking to modernize and stay ahead of the curve. Data security is one of the main concerns of those in the accounting industry who are skeptical about offshoring. Clients may also not be very welcoming about the idea of your firm employing accountants from different parts of the world.

1. And as computerized accounting can save time and help complete tasks without errors, you must ensure your service provider uses accounting tools like Quickbooks, Xero, Sage, etc.
2. Effective risk management involves understanding the regulatory changes, cultural nuances, and economic stability of the chosen jurisdiction to mitigate potential challenges.
3. It involves setting up accounts, conducting transactions, and holding assets in foreign locations.
4. Another case is when your company is growing and expanding, your accounting may be unable to handle more workload.
5. While offshore accounting services can be beneficial for your company, there are several things you need to consider before hiring a service provider.

You can flexibly hire some help when you need it the most and scale down your employees when your crucial work is done. Either it is because you have done your quarterly financial report, have already made sure your inventory is updated, or have automated your payroll. There is no denying that the country is a great choice for your offshoring needs.

Different time zones

Additionally, you should ensure that they have employee performance monitoring software like Time Doctor in place. This helps you get accurate data about the total hours your offshore team works. For example, let’s say you’re based in the USA and have outsourced accounting work to a CPA in the Philippines. Your accounting partner should be aware of your country’s federal and state laws to ensure proper compliance.

Understanding the fundamentals of off shore accounting is crucial for making informed decisions about global financial management. Offshore accounting services are among the most offshored roles today, next to IT services. More and more companies are choosing to offshore their accounting roles as it is more viable, cost-effective, and efficient.

For one thing, you can get round-the-clock services from offshoring companies. However, it can be difficult to bring the whole team together during an urgent team meeting or business emergency as their working hours will differ. However, many offshore companies have a dedicated cybersecurity channel and a complete in-house data security team. They are capable of fully safeguarding your financial information and maintaining confidentiality.

What is an offshore accounting service?

If not, your in-house accountant may have to cross-check all the calculations — making outsourcing accounting unbeneficial. Using outdated technology and accounting methods in the small business bookkeeping services modern world can slow down your business. Additionally, you may lag behind your competitors who have access to new software and other technology.

Less skilled employees

Payroll processing is another function often performed by offshore payroll service providers. Businesses are increasingly recognizing the value of delegating accounting tasks to qualified service providers in other countries. Having an offshore accounting staff from the Philippines can save you about 70% to 80% compared to your local in-house or accounting services. Offshore payroll service providers also handle the distribution of your employees’ payroll.

Offshore accounting cost

Offshore accounting involves delegating accounting and finance services to an external organization from another country. Before you decide to offshore, ensure that you meet your country’s double declining balance method: a depreciation guide legal requirements and also those of the offshore jurisdiction. Hire a tax law expert in the offshore country to navigate tricky compliance formalities.