So you’re growing your business, it’s becoming more complex, and you’ve heard that you should look into back office services to help. This can be perplexing if you are unfamiliar with what back office services are. In this article, we’ll define “back office services,” discuss why you might consider outsourcing them, and provide some instances.
what exactly is a back office?
Let’s start with a question: which portions of your company are considered “the back office?”
Most businesses are formed to provide a product or a service, but there is obviously much more to running a business than simply producing and selling that service or product. From ensuring your brand is seen by potential customers to ensuring your taxes are paid, a plethora of support labor is required to keep your business going.
Customer-facing positions, such as sales and marketing, are called “front office.” Finance, HR, payroll, shipping, operations, and other roles that do not deal with clients are commonly referred to as “back office.”
Your back office does not generate income, and dismissing it as a back office cost center is easy. However, a well-managed back office may significantly impact your company, which is why it’s a brilliant idea to spend money on getting the job done correctly.
For many businesses, this means hiring outside experts to run their back office.
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outsourcing back-office functions
There are several reasons why businesses prefer to hire outsourced back office services rather than handle things in-house:
- Back Office Tasks are Frequently Tricky.
While operations like bookkeeping and payroll administration may not be attractive, they do demand a high level of competence to perform appropriately.
Without applicable experience, it’s possible to misclassify transactions, record revenue inaccurately, or withhold the improper amount of payroll tax. It is undoubtedly possible for business owners to develop this skill independently; however,
- Managing the Back Office Takes Time.
It requires a lot of time and care to guarantee that functions like bookkeeping are done correctly, partly because the work is complex.
This is time that business owners cannot spend building their businesses if they try to manage the back office themselves. The back office isn’t always the best use of a business owner’s time, especially considering
- Back-Office Errors can be Costly.
Back-office activities may appear simple, but the consequences of getting them wrong can be severe. These are often evident, such as miscalculating your payroll withholding or tax responsibilities, incurring an IRS fine, losing track of your cash flow, and experiencing a liquidity problem.
Other dangers are more subtle. If your books aren’t correct and up-to-date, you won’t have dependable data to help you make the best business decisions.
Building the necessary back-office knowledge in-house can be an expensive distraction from the primary mission and growth of a growing company.
This is why many people prefer to hire professional back office services rather than try to manage everything themselves.
outsourced back office services examples
The following are some of the most popular back-office operations that businesses opt to outsource:
payroll
There’s more to Payroll management than ensuring employees are paid on time (though that’s undoubtedly vital, too!). Handling this function correctly also necessitates sophisticated calculations regarding tax withholding and other charges.
It ensures that the relevant tax amounts are remitted to the appropriate government agencies at the appropriate time. Outsource payroll services, and handle this professionally so that your firm does not have to.
bookkeeping and tax preparation
Your books serve as the foundation for the financial stability of your organization. Tracking your cash flow, paying your taxes, and measuring your spending/ROI necessitate precise, up-to-date books. One of the things we do at Countick is provide high-quality bookkeeping services to growing businesses.
related: how historic bookkeeping can help your business thrive
the sales tax
Each state in the United States has its own unique sales tax policies, from the amount collected to when and where it is passed on to the government.
Keeping up with e-commerce enterprises and others who sell online to customers from many states (and countries) can rapidly become daunting. TaxJar and Avalara, for example, will track and handle this for you.
helpful resource: the consequences of missing tax deadlines
controller and CFO roles
Although this may appear to be an unusual area to outsource, many growing companies discover that hiring a full-time senior financial leader is overkill (or just unaffordable) at this point in their organization.
When the company needs counsel and analysis, an outsourced CFO or controller can supply it at a fraction of the expense of full-time employment. This is another service that Countick provides. We are experts at back office support for small businesses. Along with that we provide complete tax and accounting services for businesses.
The back office may not be the most exciting area of your business, but it is an essential component of a well-run operation. Outsourced back office services can assist organizations in ensuring that these operations are well managed, allowing owners and founders to reclaim their most valuable resource: time.
