What are the Different Types of Accounting Services?

Accounting is a vital part of any functioning business, regardless of whether it’s conducted in-house, or outsourced to an accounting service. If you choose to outsource to a firm, it’s especially important to understand the different types of accounting services, as this can help you choose a provider that best matches your needs.

In this article, we explain what the five main types of accounting services are for businesses, and also go over some slightly less common services. Lastly, we help you decide if outsourced accounting is right for your business.

If you’ve already decided that you need to outsource your accounting, and need help finding the right firm for your accounting needs, you can use our free quote-finding tool. Just give us a few brief details about your business, and we’ll match you up with trusted companies, who’ll be in touch with tailored, no-obligation quotes and information.

What Are The Five Main Types of Accounting Services?

The different types of accounting services fall into five main categories. These are:

1. Bookkeeping
2. Internal account auditing
3. Tax accounting
4. Payroll accounting
5. Management accounting

1. Bookkeeping

Bookkeeping is the service most people think of when they picture accounting services, and they’re not wrong, since it’s one of the most common services accountants provide.

With a bookkeeping service, your business’s financial transactions are recorded and tracked. Bookkeepers turn these into financial reports, so you can accurately and easily monitor your business’s finances.

Every business needs bookkeeping services. Small to medium-sized businesses tend to outsource this service, whereas larger enterprises usually keep this in-house, as they have the budget and resources to hire an internal accountant for this role.

2. Internal account auditing

This service allows auditors to ensure your accounts are valid and accurate. It’s essentially a check to make sure the bookkeeper hasn’t made any mistakes, and that fraud on the part of the business isn’t taking place. Auditors will also be able to gather detailed financial information about your business.

You’ll need this service if you want to provide credibility to your business’s financial position. This is usually relevant when communicating with future or current shareholders, as it means you can give them confidence that your actual numbers match what’s been reported.

3. Tax accounting

Tax accounting deals with all matters related to the taxes your business needs to pay. Tax accountants will work out how much tax you need to pay, as well as any deductions, and ensure compliance with regulations.

Paying the right amount of tax is crucial to staying compliant, and getting this wrong can mean having to pay a penalty. Outsourcing your tax accounting doesn’t just mean you can be certain your taxes are above board, but you also have access to expert advice.

4. Payroll accounting

Payroll accounting handles employee salaries. The service helps ensure you pay your employees on time and accurately and calculates deductions and taxes.

The service also maintains each employee’s data, ensuring they’re on the correct tax code, and calculating payroll each month. This is important since payroll calculations can change each month, especially if you have contractors.

Businesses of any size can outsource payroll services. You can outsource all, or only certain parts, of the payroll process if you want to maintain some control. How much you outsource depends on your existing team’s expertise, time, and budget.

5. Management accounting

Management accounting is used for managing a business’s finances.

It uses accounting information to make critical and informed decisions around budgeting and provides analysis to help with future financial decisions, such as investments. Accounting data can also be used to provide clarity on a business’s performance and help set realistic targets.

Other Types of Accounting Services

There are other types of accounting services besides the ones we’ve listed, although they aren’t as common as the top five. These are:

Accounts payable service

Most businesses owe money to suppliers and other businesses. This is known as a ‘short-term debt’, and is treated as a liability. A payable accounts service manages these financial transactions and ensures the accounts you owe are paid correctly and on time.

This service is relevant if your business deals with lots of different suppliers, and you want to maintain good relations and keep your accounts in good standing.

Accounts receivable service

If your business is owed money, an accounts receivable service can record financial transactions, follow up with collecting the money owed, and process invoices faster.

For businesses that sell services or goods, this service is key to ensuring accurate financial records.

Chartered accounting

Chartered accountants are specialist accountants who deal with responsibilities such as auditing, business strategy, and taxation. Compared to regular accountants, chartered accountants have completed in-depth training and passed tough examinations.

Chartered accountants offer expert advice, and can help you navigate the more complex financial decisions your business needs to make. If you don’t have a strong grasp of a business’s various accountancy needs, a chartered accountant can carry out the more confusing tasks for you.

Forensic accounting

Forensic accounting is a mix of accounting and investigative skills used to find financial crimes. If there are missing funds on a financial report, for example, a forensic accountant would be called on to investigate.

You can hire a forensic accountant if you believe there has been suspicious financial activity or a forensic accountant may be hired to investigate your books if it is believed a financial crime may have occurred.

Using a forensic accountant is one of the best ways to deal with a possible financial crime, as they’re well-trained in investigating these types of crimes, and have the necessary knowledge and expertise.

Benefits of Outsourcing Your Accounting

Here are the main benefits of outsourcing your accounting:

• It saves you time: outsourcing gives you more time and resources to focus on the exciting parts of your business. What you spend on outsourcing, you’ll likely get back in time spent growing your business.
• It can save you money: outsourcing your accounting is often cheaper than hiring in-house accounting professionals since you have to contend with salaries, sickness, and training.
• It reduces errors: if you’re currently doing your accounting yourself, and aren’t a professional accountant, outsourcing the work to professionals will reduce the risk of errors, which can lead to costly fines.
• It gives you access to expert advice: another benefit is that you can rely on your accounting service provider’s expertise to help you make more financially savvy decisions.
• It’s a scalable option: most accounting firms offer more than one type of accounting service, which means that as your business grows, you can make use of additional services without having to switch providers.

Who is outsourced accounting for?

Outsourced accounting is a good option for small the medium-sized businesses in any industry. This includes startups, owner-managed businesses, and non-profits, as well as medium-sized enterprises.

The reason accounting services can benefit many different types of businesses is that hiring an accounting firm is usually a temporary commitment, instead of a year-round one. Most firms are hired for a time-sensitive project, such as conducting an audit or an end-of-year report.

Large enterprises, on the other hand, usually have in-house accounting teams, since they have complex finances that require year-round attention, and conduct regular financial analyses.