As a new business owner, it is normal to feel very excited to start your own venture. However, it is also apparent (and should not be neglected) that starting a new business entail being crucial and demanding. From managing operations, attracting potential clients, taking care of clients’ needs, and scaling the business, there is one area that often gets overlooked: accounting.
While bookkeeping, tax compliance, payroll and accounting management, and financial reporting might not seem glamorous in its face; they are still the backbone of the business and are necessary for having sustainable business growth.
Many small-medium enterprises (SMEs) or startups struggle to get these tasks efficiently since they have limited resources and lack of expertise — here is where outsourcing in the Philippines comes into play. But is this really the right move for your business? Let’s explore what outsourcing in the Philippines would mean for your business, how it works in the Philippine setting, and whether it can help your business save time, money, and resources for better allocation.
What is Outsourced Accounting?
Outsourced accounting means hiring an external firm or professional to take over your business’ financial functions. This could be from bookkeeping, payroll, tax compliance, and financial analysis. Instead of building your in-house accounting department to handle the financial things, you collaborate with a third-party service provider which specializes in accounting, taxation, financial or business compliance.
Outsourcing can be done locally, wherein you can partner with an accounting firm within your country; or offshore — wherein you can hire the same professionals from another country. For Philippine SMEs or startups, outsourcing within the Philippines is particularly rampant and attractive due to ensuring alignment with the government regulated bodies such as the BIR, SEC, and other local government regulations.
Why Accounting is a Tipping Point for SMEs and Startups
Many SMEs and startups underestimate how complex accounting is once the operations scale up. Here are the common issues being encountered:
- Manual Bookkeeping – companies who still relies on usage of spreadsheets, manual Excel, or paper receipts;
- Missed Deadlines – in terms of tax filings and other government-mandated contributions;
- Limited Financial Insight – this impairs business decision-making
- Cash Flow Issues – happens when expenses are tracked poorly; and
- Difficulty in Hiring Experienced Accountants – because of this, it would lead to possible hefty penalties with the Bureau of Internal Revenue (BIR), produces inaccurate financial reporting, and develops poor business decisions due to incorrect and incomplete data.
Through outsourcing, it would give businesses access to professional accountants and adequate systems, without paying for the overhead costs of having a full-time, onshore team.
The Challenges of Outsourcing and How to Overcome Them
While there are many benefits, we have to agree that outsourcing isn’t the one without risks. SMEs and startups shall be knowledgeable of the following challenges, for you to be ahead, and to plan accordingly:
- Data Security Concerns – Choose a firm that is compliant with the Data Privacy Act and with secure cloud systems. Make sure that their practices are in lieu of what your ideal security ecosystem should be
- Loss of Control or Visibility – Provide clear and consistent reporting schedules, and access rights within the accounting platform
- Miscommunication – Collaborate on a communication protocol for weekly updates, shared dashboards, and other regular reports
- Accountability and Quality of Work – Do your due diligence; review the outsourcing firm’s credentials, client testimonials, and CPA license validity
How Does Outsourced Accounting Work in the Philippines?
In outsourcing in the Philippines, you typically pay a fee depending on the agreement to a firm which handles accounting tasks such as the following:
| Accounting Function | Outsourced Tasks |
| Bookkeeping | Daily transaction recording, bank statements reconciliation, managing receipts, among others |
| Tax Compliance | VAT filing, withholding tax, and income tax returns with the BIR |
| Payroll Management | Salary calculation, deductions, and government-mandated remittances (SSS, PhilHealth, Pag-IBIG) |
| Financial Reporting | Financial statement preparation for management and regulatory use |
| Advisory and Analysis | Budgeting, forecasting, and performance monitoring |
Additionally, modern accounting firms adapt to the usage of cloud-based accounting tools such as Xero or QuickBooks to streamline these processes. It allows business owners to access their financial data anytime, anywhere, in just one click.
Related article: The SME Guide: Managing Offshore Teams & Smart Outsourcing
Benefits of Outsourcing in the Philippines
If you’re planning to hire in-house, hiring full-time can be costly. Apart from paying the salary, you need to comply with their benefits, training, and any other continuous improvement practices. With outsourcing in the Philippines, it allows you to pay only for the services you need, freeing up your capital for growth initiatives.
Professional accounting outsourcing firms typically employ Certified Public Accountants (CPAs) and specialists which have experience in tax compliance, financial reporting, bookkeeping, among others. SMEs could benefit from their knowledge and expertise, without needing to build that capability in-house.
While BIR regulations change frequently, outsourced accountants are required and are abreast of these laws, which ensures that your filings are always accurate and never late.
Outsourced accounting firms can also adapt with cloud-based systems such as Xero and Quickbooks, which improves transparency and accuracy in managing your financial data.
As the business grows, so does your accounting work. Outsourcing in the Philippines can easily scale up these services, when you want to, or need to.
By deciding to delegate these tasks, business owners can focus on improving their products, while winning clients and expanding their operations.
Why Does Outsourcing in the Philippines Continues to Boom?
The outsourcing sector continues to grow — accounting outsourcing services included. With the rise of digital transformation, it became more rampant since the COVID-19 pandemic, which brought immense positivity to the outsourcing space. This makes outsourced accountants accessible and transparent to the clients anytime, anywhere, and can provide the same efficient and competitive output to hiring in-house.
In light of this, the government, particularly the BIR is latching toward e-invoicing and digital record keeping through the Electronic Invoicing System (EIS), which also supports the Philippine Digital Workforce Competitiveness Act. This act recognizes “transformation in the world of work due to rapid acceleration of digitalization and advances in technologies such as artificial intelligence (AI) and automation across range of industries and sectors, which shall enhance the skills and competitiveness of the Philippine workforce in human, and digital technology and innovations.” Furthermore, the government aims to give Filipino workers an access with digital skills and competencies that are at par with global standards, which contributes to digital innovations and entrepreneurship.
Back-office solutions or outsourcing continues to prosper. According to the Board of Investments (BOI), the country’s outsourcing industry remains robust, which includes specialized finance and accounting services for both local and foreign clientele.
Check Your Pulse: Is It Time to Shift?
Still unsure whether outsourcing is meant for your business? If you meet some of these criteria, you can take it as a sign to do the shift:
- Spending more time in doing admin and accounting (might be a one-man-team of your own) than focusing on running your business for growth
- Tax filings and government deadlines are often overlooked, or worse, missed
- Lacking reliable financial reports for decision-making or investor relations
- Hiring a full-time in-house accountant is expensive, and is currently out of budget
- Preparing to focus on scaling or attract investors and need accurate books in place
Anything sounds familiar? Outsourcing in the Philippines for SMES and startups can help stabilize these finances and prepare you for the growth you’re looking for.
How Do You Choose the Right Outsourcing Partner
If you come to this part of the blog, maybe you’re starting to consider outsourcing in the Philippines. To help you further prepare, ensure that the right accounting firm should act as your financial partner, not just a service provider. And here are some of the things that you should spot on:
- Licensing and Credentials – make sure that the firm has BIR accrecitation and employes CPA, registered with the Philippine Institute of CPAs (PICPA)
- Industry Experience – check whether the outsourced accountant that would be assigned to you has the relevant experience to handle your delegated tasks
- Transparent Pricing – avoid hidden charges, and know the upfront costs
- Technology Capability – lean towards firms which use secure, cloud-based tools and have competitive and state-of-the-art cybersecurity measures. This includes data protection compliance
- Communication and Reporting – the outsourced accountant ought to comply with clear reports and timely updates
Finally, a good accounting firm should know how to customize its services to your business goals, not just handle the numbers.
Related article: How to Hire a Reliable Bookkeeper or Accountant in the Philippines
Final Thoughts: Is Outsourcing Accounting Right for My Business?
If you are an SME or startup owner and wondering whether outsourcing accounting services is worth it, the answer heavily depends on the following capabilities: business stage, complexity, and growth goals. For Philippine SMEs, outsourcing offers the ideal mix of cost savings, professional support, and business scalability. It helps them ensure that their financials stay accurate, taxes are accordingly complied with, and compliance risks are mitigated. ultimately, accounting outsourcing in the Philippines is about gaining the time, and clarity to make smarter business decisions.
With Manila Bookkeepers, we have accountants who specializes in empowering SMEs and startups from foreign businesses who decides to do their business in the Philippines. We help them stay compliant with the government laws, while ensuring that they stay compliant all the way: from bookkeeping, tax compliance, accounting management, and treasury services. Manila Bookkeepers’ experts ensure that our business is adapting to the way you do business.
Want to know why we are the best bet? Connect with Manila Bookkeepers through [email protected] for a free assessment.
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