At the end of 2008, I wrote a post about post about outsourcing that generated quite a bit of interest, so I thought it was worth raising this topic again. After years of battling with my business payroll taxes (I have an S-Corp and thus have to file quarterly payroll taxes and a separate year-end tax return for the business), I decided to hand that task over to my accountant and so far I’m really pleased with how it’s going. For $40 per month, my accountant will run payroll (I’m the business’ only employee, so this isn’t a monumental task), automatically withhold the appropriate tax amounts from my gross pay, file my quarterly payroll taxes and issue my own W-2 at the end of the year, along with 1099-MISCs for anyone to whom I subcontract more than $600 worth of work.
I decided to throw in the proverbial towel on this task for a variety of reasons: most of all, I just hate accounting. In addition, the paperwork burden associated with corporate taxes increases as you make more money. If you have an S-Corp and you owe more than $2,500 per quarter in federal income tax, you have to electronically deposit your payments every month, rather than sending a check in once per quarter. Then if you have subcontractors earning more than $600 per year, you have to collect W-9s from all of those people, calculate who you paid more than $600 and issue 1099s to them. Although I write all of the appropriate deadlines on my calendar, on a couple of occasions I’ve forgotten to initiate the electronic tax deposit soon enough; the deposit takes a couple of business days to process, so if the due date is on a Monday, you have to initiate the deposit by the morning of the Thursday before. The IRS no longer offers printable 1099-MISC forms on its website, so you have to order the forms by phone and they take 3-5 weeks to arrive…do you have a headache yet?
I decided to outsource this task because it passes the two main outsourcing-qualification tests: I don’t enjoy the task and the outsourcing will pay for itself immediately. It’s gotten me thinking about other tasks to outsource, but for now I feel that at least I made the right decision by admitting defeat on this one! Readers, any tasks you’re thinking of outsourcing in 2010?
Absolutely! I just attended a presentation on time management by a guy who interviewed some 50 CEOs to assess their habits and identify any common traits. Outsourcing (delegating) and learning to walk away early from projects that are doomed to fail stood out as two hallmarks.
I outsource all accounting (France and US), property management of a rental unit we own, cleaning, ironing, grocery shopping (thank god for online delivery), and sewing (I’m hopeless). All of these are well worth the money spent with big dividends in terms of time saved and stress avoided.
I do the things I know how to do AND enjoy myself, like maintaining my customer database, developing and updating my own website, walking my dog, and doing DIY projects at home (big money saver, that one).
I would love to outsource maintenance of TMs and glossaries and accounts receivable (some day…we can dream, can’t we?).
For me, it’s also accounting. I wish I could also outsource the marketing and clients searching. It would make life so much easier…
I outsourced my accounting long ago because 1) I would have done it badly and I don’t want to get into trouble and 2) It bored the hell out of me. Last year, I bought an online tool which allowed me to cut my costs by half and keep better control of my finances. The result is that I get the best of both worlds: I am in charge of my finances, but the really specialised work (annual return and audit of company accounts) is undertaken by a professional.
I also outsource everything to do with the technical side of my website for similar reasons: it has to be done properly, as it is my main marketing tool, and it would take too much time and effort to do it myself.
I outsourced cleaning of our house to a company. Twice a month a nice and competent team of 3 people cleans the house in 2 hours, 6 hours of my time saved. I hate cleaning, everybody wins.
I also use a tax accountant, it is necessary because my business and my wife’s stock options make taxes complicated. He certainly earns his keep.
Tapani
I also have an S-corp and have for 11 years. I also have an accountant for the parts that are too difficult or time consuming. I do my own monthly federal payroll deposits online (I rely on the accountant to tell me each year the figure I should be depositing), as well as my quarterly paperwork (federal payroll-941, state- which I pay quarterly with the figure also provided by the accountant, and the unemployment). They are less intimidating than they used to be, and as long as the figures haven’t changed, with me as the only employee and no subcontractors, it doesn’t take me much time, since I can pretty much just copy from one quarter to the next (if anything changes, I ask the accountant to figure it out). At the end of the year, I have an extra form for federal unemployment. The accountant takes care of the W2-W3s and makes sure everything adds up. I keep the records on my expenses, but the accountant is there if I have questions about what’s allowable, and I send everything to him at the end of the year to actually do my taxes (I haven’t done that since I went into business for myself, too much room for error).
I used to outsource my lawnmowing, on the calculation that it took me longer than them I was better off, as a pure financial calculation, spending the time working, but since getting a manual lawnmower, have found benefits to doing it myself (exercise and being outside). Besides, half the time they ran over my plants ; /
As far as housecleaning, I don’t mind so much doing it myself and I’m a little paranoid about the idea of having a stranger in my house messing with my stuff.
Thanks to everyone for your comments! I agree that in order for a task to be worth outsourcing, you have to dislike the task and you have to save time, money or hopefully both by outsourcing it. As Sara and Joan pointed out, it’s important to keep in mind that it’s OK to hold onto a task simply because you enjoy it and/or it’s good for you, even if you could outsource it for less that what you make. I could definitely make more money by outsourcing after-school child care and yard work/gardening, but those activities go a long way toward keeping me sane after a day at the computer! Thanks for your great tips and feedback!
I outsource cleaning, accounting (essential in Italy), and I’ve experimented outsourcing some article writing and content writing, with disastrous results. Won’t be doing that again.
In the past I’ve also used a virtual secretary on a pay per hour basis. She was great. She answered the phone (I got a virtual number that rerouted to her), did various menial tasks but also chased up overdue invoices. I think if you spent the time to train a virtual secretary or virtual assistant, he or she could be very useful for things like glossary and TM maintenance etc.
I’ve also contemplated hiring a sales professional on a commission only basis…. I’d be interested if anyone else has done this.
I am completely at the end of my rope with both the tax accounting and basic recordkeeping. I am an expat American freelancer. What programs or systems do any of you use to save yourself money beyond simply outsourcing? My accountant charges me the equivalent of a thousand U.S. dollars to fill out and file one return, because my tax situation as an expat freelancer is so complex (they say). They claim I do not present the information the way they want. But they give me no guidelines, either. Back home in the States, my tax accounting charges were $300 a year. This is three times more. There must be a way to do some of the work myself, but the sheer number of records to be kept, and the currencies, different fiscal years, let alone knowing the tax legislation changes….all of it is truly beyond my capabilities. Tips?
Payroll processing is a real huge disruption to your company, sometimes decision makers consider outsourcing this work to a pro.