JF1369: 5 Reasons To Outsource Accounting #SituationSaturday with Brent McClure
Brent sees a lot of small to medium businesses who almost ignore their books and taxes until the end of the year. If you’re not paying attention to the numbers, you can’t be maximizing your profits. By outsourcing this work to a part time accountant, you’ll pay for their services, but save money on taxes and know what you need to do to spend less and make more money in your business. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!
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Brent McClure Background:
- A visionary, a change maker, and a paradigm breaker for the accounting profession.
- Vast knowledge across a multitude of industries and is a CPA
- Brent leverages his extensive experience to help businesses improve profitability
- Based in Mobile, AL
- Say hi to him at https://www.brentmcclure.com/
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Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff.
Because today is Saturday, we’ve got a special segment for you called Situation Saturday. The purpose of our conversation is if you are in a situation like this, then we have a solution for you and we’re gonna be talking about that. The situation is if you are still doing your accounting, shame on you! That is not the right approach, and our guest today, Brent McClure, will talk to us about five reasons why we should outsource our accounting that we have.
First off, how are you doing, Brent?
Brent McClure: I’m doing fantastic, thanks for having me.
Joe Fairless: My pleasure, nice to have you on the show. A little bit about Brent – he is a change-maker and a paradigm-breaker for the accounting profession. He is based in Mobile, Alabama. You can learn more about his company and Brent at BrentMcClure.com. With that being said, Brent, do you wanna give the Best Ever listeners a little bit more about your background first, and what you’re focused on?
Brent McClure: Sure, thanks. I grew up in a family business, so I like to say for the first 20-25 years of my life I helped run the family business. For the next 20 years of my life I’ve been a CPA, primarily involved in accounting, audit, a little bit of tax work as well. What I’ve realized is small to mid-sized businesses – maybe they don’t have a reason for a full staff of accountants, or even a CFO, so there are opportunities to outsource accounting, to outsource a CFO service, so that’s where I come in. I have a company that is involved in doing just that.
My goal is to help businesses make more profit, which should be a lot of people’s goal.
Joe Fairless: Yes, yes, please. That is my goal as well. So what type of situation would someone be in if they need to outsource their accounting? Can you describe first that type of situation, so that if a listener is listening, like “Wait, that’s me! I’m in that situation”, then it’ll resonate more?
Brent McClure: Yeah, no problem. So a situation that I actually run into quite often in small businesses is their accounting records or their bookkeeping is sort of a mess; they don’t understand how the company is doing from month to month, or quarter to quarter, and they almost ignore it and wait until the end of the year and turn it over to hopefully a CPA to get their taxes worked on. But without having that information resource handy, then how are they running their business?
I’m sure that they’re doing it through knowledge, and touch, and feel, and they’re doing a great job, but I’ll argue they could do a much better job if they had this information.
Joe Fairless: Agreed. I know entrepreneurs who try to do this on their own, and it results in loss of money, and perhaps hospital bills, because they have heart attacks or strokes as a result of it.
Brent McClure: Right.
Joe Fairless: Yeah, so five reasons why we should outsource accounting in our business – please start it off.
Brent McClure: So my number one reason is it saves money. If you already have an accountant or if you’re looking at hiring a full-time accountant, outsourcing your accounting department eliminates that expense… Because if you think about a full-time employee, you have healthcare, paid time off, other benefits, along with their salary… And outsourcing is gonna be a good bit cheaper – even if it’s on a monthly basis – than actually hiring a full-time accountant or an accounting team, depending on your size.
Joe Fairless: I’m gonna guess that most listeners who this would resonate with do not have a full-time person, so does it still save you money to outsource your accounting, versus doing your accounting? How does that work?
Brent McClure: So if you had a part-time person, I think we’re still saving money for everything I just said. And if you don’t have anyone, then it’s gonna save you money through knowing accounting laws, being able to highlight deductions that maybe you’re missing when it comes tax time, so it will save you money on your tax bill.
In the long-run, hopefully it saves you money for sure, because you’re making more money, which I’ll get into in a second. But I would argue that we’re saving money on our tax bill at a minimum.
Number two is saving time and improving efficiency. You mentioned this a little bit before – any business owner already wishes there was more time in the day to get things done… So if they could take the focus off of accounting and stop worrying about it and put that focus on a professional, essentially, and not focus on the books, the bills, the payroll, things like that, they can run their business or do what they’re good at. So we’re saving a lot of time, so we can refocus it specifically on the business, as well as becoming more efficient, because small business owners normally are not good at accounting. If they try to do it themselves, there’s a lot of wasted time in there that could, again, be focused on the business itself.
Joe Fairless: Okay, it makes sense.
Brent McClure: Alright. Professional advice, I like to add in there. So even if you have an accountant, generally they’re not gonna be a CPA, so I bet the Best Ever listeners probably don’t have a CPA on staff… And being able to outsource accounting services means you’re gonna have a team of skilled accountants on the other end working on your stuff. Not only are they working on your items or your books, they’re working on lots of other companies also. They have cross-training maybe in other industries, in other clients, and they can pull together any best cases, or best uses of practices to push back into your company.
Joe Fairless: Yeah… This is just ignorance, I guess – I thought an accountant was a CPA; I thought it was the same thing.
Brent McClure: No, you don’t have to be a CPA to be an accountant. CPA stands for Certified Public Accountant, so you have to take this really hard exam to be a CPA. Anybody can say they’re an accountant
Joe Fairless: Okay, so accountants could also be called a bookkeeper?
Brent McClure: Bookkeeper, accountant – yeah, exactly.
Joe Fairless: Okay, alright. I knew there was a difference between CPA and bookkeeper, but fair enough.
Brent McClure: Accountant and bookkeeper – I’m using those interchangeably.
Joe Fairless: Yeah, I picked up on that. Okay. Number four?
Brent McClure: Streamline the accounting process, so using the most up to date accounting procedures and technology when you’re outsourcing. The outsourcing company is gonna have the latest software, they’re gonna have best practices, they can help you reduce costs enhance your cashflow, at least point to items that aren’t working or should be working a little bit better.
Joe Fairless: For example…?
Brent McClure: Let’s take insurance calls, for example. If they’re working on multiple companies that are all about the same size and they realize that your company’s insurance cost is 50% higher than another company, then they can point that out to you that “Hey, it looks like insurance should be trending about 50% less, so let’s have a conversation about your coverages, what’s going on, why is it high…?” Maybe they’re just over-paying, maybe they have too much insurance. That’s an example and hopefully it will resonate.
Joe Fairless: Okay.
Brent McClure: And the last one – it’s gonna be much easier to scale. If you have your in-house accountant or no accountant, then if you buy new real estate or get into a new real estate development, you’re gonna need some accounting support. So you can either go out and hire a large team, or if you outsource, you can easily throw more people onto your task or your books, so that it can ebb and flow with your business. If your business ebbs and flows, then so too can the outsourced accounting piece of it. And there are lots of resources over here on my side that will help the business owner if they just have a massive influx of business, like a development or like a project, if they kick that off… Does that make sense?
Joe Fairless: Yeah, it does. So with number four, you mentioned “Streamline the accounting process” and you might come up with some reduced costs or ways to enhance cashflow through other methods, and you use the example of there might be lessons learned that the CPA has with other clients of his or hers. That made me think “If we’re sold on outsourcing, should we be asking if that group or that CPA works with our competition?” Is that a question that you’d recommend being asked?
Brent McClure: I do. CPA’s are held to a pretty high ethical standard, so I shouldn’t be worried about CPA’s saying things they shouldn’t say, but I would ask the question, if you have direct competition, “Do you handle their work?”
I think it’s certainly okay to handle work in the same industry, but I would be a little nervous if I knew I was going to the same provider that my competition across the street was using… Just from a common sense standpoint.
Brent McClure: Yeah. What are some other questions that we should ask? My hope is that the Best Ever listeners are on board with having someone else doing their bookkeeping and accounting; I hope that’s the case… Unless they just really like it; then if you do, you’re a sicko. No, I’m kidding… [laughs] I understand that everyone gets fulfillment in different things. But I imagine most listeners are on board, “Yeah, Brent, I’m on board. I should outsource.” So now what are some questions we should ask?
Brent McClure: What does the turnaround time look like? I’m talking like I’m a Best Ever listener. “If I give you my books and records, how long is it gonna take for you to close out the month and report back to me?” Because you don’t want it to take longer than, say, 20-25 days, because business changes are faster than that. So if you give me your books and records for April and I don’t get anything back to you until July, then we’ve sort of missed the boat in that timeframe. So I wanna know specifically what the turnaround time looks like.
I would ask what industries they serve, which we sort of talked about a moment ago… How many staff members will be working on my books and records? Because you don’t want to have a revolving door on your books and records, because you would end up answering the same questions over and over and over if you have a new person doing your stuff every single month, or quarter. Does that make sense?
Joe Fairless: Yup.
Brent McClure: What are some others? You can also outsource payroll, which sort of falls into this. You can actually outsource just about anything nowadays. But if you wanna outsource payroll or look at your outsource bookkeeper handling your payroll or payroll tax returns, I would ask if they were able to and willing to handle all the payroll tax returns, and monthly, quarterly other tax returns that the business might have… Because that takes a lot off the business owner as well if they’re doing it themselves.
Joe Fairless: How much does it cost?
Brent McClure: “It depends” is a good answer there. But if you’re a small business, maybe you have five employees, not much. $700-$800/month maybe; maybe $1,000. If you are 20 employees to maybe 40-50 employees, then maybe it gets a little closer to a couple thousand… But much beyond that, maybe you should have your own accounting team. Does that make sense?
Joe Fairless: Why does the amount of people in your company determine the price that you pay for accounting?
Brent McClure: It doesn’t. That’s just one of the benchmarks I like to look at. I was just giving it as an example. You could look at it from a revenue standpoint, too. If you have, say, a million dollars or less, then you’re probably in the less than a thousand dollar category. If you’re up to, say, five million, then you’re in the less than two thousand dollar category.
Joe Fairless: And the same question – why does it matter how much your company makes?
Brent McClure: Assuming your company makes a million dollars, we can sort of get an estimate on the volume of transactions that you would have… It would then in turn allow us to understand how involved we need a person to be.
Joe Fairless: So the volume of the transactions is the main variable when determining the pricing.
Brent McClure: Yes. But if you go to a small business owner and say “Tell me how many checks and debit card swipes and deposits you had last month”, they’re like “What…?”
Joe Fairless: Right, yeah. They should know how much revenue they brought in.
Brent McClure: Hopefully they do, and if not, they’re talking to the right people.
Joe Fairless: Yeah, exactly. Great. Well, anything else that we haven’t discussed as it relates to outsourcing accounting that you think we should?
Brent McClure: I think we’ve hit the hot points, and I’d definitely urge everybody to at least look into it if they haven’t already.
Joe Fairless: How can the Best Ever listeners get in touch with you?
Brent McClure: I’m on the web at BrentMcClure.com. I’m on most of the social media sites @lbmcpa.
Joe Fairless: Excellent. Brent, thank you so much for being on the show. The five reasons to outsource accounting are 1) it saves money, 2) it saves time and improves efficiency, 3) you get professional advice, so you have an experienced team member by your side, 4) streamlining the accounting process, and 5) it’s much easier to scale the business and make more money… And now you’ll know how much you’re actually making, because you have a team in place.
Thanks for being on the show. I hope you have a best ever day, and we’ll talk to you soon.
Brent McClure: Yeah, thank you so much.