“Virtual bookkeeping service for only $5/hour!” You might see it in your email inbox from time to time, but there’s a reason why you haven’t jumped on the offer. Is it because you’re worried it’s a scam or a poor-quality service?
Many small business owners only go to U.S.-based accounting services with transparent websites and lots of reviews. Why??? Even though they pay more, they’re more confident in the service.
However, we’ve noticed a trend over the past 20 years; more and more U.S.-based accounting services are secretly outsourcing some of their work overseas. We need to talk about why this matters.
At CSI Accounting & Payroll, we’ve provided monthly accounting services to small businesses for almost 60 years – and we’ve never outsourced our work overseas. We’ve answered a lot of questions like:
- Are accounting firms allowed to outsource my work and not inform me?
- Why do some accounting firms outsource overseas?
- Why doesn’t CSI Accounting & Payroll outsource my accounting?
Secret Outsourcing: Is It Allowed?
When you sign up for a service, you typically expect it to be performed by the company you hired – but that’s not always the case.
Let’s look at an example. You hire a construction company to complete a project for you. However, the company uses independent contractors instead of their own employees. You may or may not be aware of this when you hire the company. Those contractors are the people who will be completing your work, and they can make their own decisions and use their own equipment for the project.
This practice is completely legal.
When it comes to accounting, it’s no different. An accounting service can legally outsource your work without informing you, even to overseas workers. This is often referred to as “white labeling,” which is when your work is outsourced but presented to you as if the company you hired did the work themselves.
In the next section, we’ll talk about why this happens.
Why Some Accountants Outsource Overseas
Why do some services outsource your accounting overseas? It all goes back to the pitch from those “Virtual bookkeeping service for only $5/hour!” emails; the work is cheap. These savings aren’t passed to the end consumer, though.
Many accounting firms try to follow this model:
Cheaper Labor + White Labeling to charge full price = Larger Profit Margins
Outsourcing has the potential to be helpful during busy times or when accounting services are trying to hire another bookkeeper. However, it doesn’t always present the expected benefits. Let’s talk about why in the following section.
Why CSI Does Not Offshore
Long story short: we don’t offshore our work because the practice is flawed. We can’t knock it for others completely, but there are ways that it doesn’t benefit our clients, and there are ways that it doesn’t benefit us.
Offshoring Problems for Clients
When your accounting service offshores your work, it can be easier for them to fall behind. Conversations take place over days instead of minutes due to time zone differences (opposite work hours) and frequent miscommunications (language barriers).
We also mentioned that even if there are any savings in the form of cheap labor, those savings are rarely passed to you, the end consumer. However, let’s talk about how offshoring often doesn’t produce any savings at all!
Offshoring Problems for Accounting Services
On our end, outsourcing bookkeeping overseas doesn’t mean we can reduce our U.S.-based staff. Overseas services are limited, often not even producing financial statements. They are simply data entry services and cannot even fully replace a bookkeeper.
Plus, services overseas notoriously don’t have familiarity with U.S. accounting laws, so there can be a lot of mistakes in data entry. This is another reason why we need to maintain a full staff: to check the work for accuracy. After all, we want our clients to stay in compliance and happy!
Get Reliable, U.S.-Based Accounting Services!
Ultimately, we understand why some accounting services may need to offshore if they desperately need assistance – and some offshore services are definitely better than others! However, we also know that the downsides can outweigh any benefits in many cases. That’s why we prefer to focus on retaining educated, hard-working, U.S.-based staff.
Now that you know about white labeling, why some accountants outsource, and why CSI does not, are you ready to check out monthly accounting services with us?
To see if we can be a good fit for your business, click the button below for a free consultation:
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