An entrepreneur, who has registered his own business in our country, immediately faces the need to present a vast number of various reporting to government authorities: Inspectorate of Federal Tax Service, Pension Fund of Russian Federation, Social Insurance Fund and etc.
Over a period of time he understands that one person is unable to draw up such a number of documents and arrives at a decision to hire an accountant.
An entrepreneur has several ways to handle this challenge. In this article we will analyze their benefits and drawbacks.
First of all, the entrepreneur addresses his friends and acquaintances having their own business, asking to assist him to draw up reporting document. He makes a bargain with their accountant to prepare the reporting for modest extra pay. Then the entrepreneur delivers all the documents himself. The benefit of this way is relatively low cost paid every three months. The drawbacks are as follows: the accountant has to fulfill his main job, has no possibility to provide immediate consultations and is often inadequately qualified. While business is not growing, cost efficiency of this way outbalance its drawbacks. And the entrepreneur can choose this way, if he is not focused on business development.
It is a different matter, if the business is expanding. Here the entrepreneur faces the perennial question “What is to be done” ? The further use of accountant’s services is inappropriate due to the above stated reasons. Hiring of a full-time accountant will be too costly since there is no so much work for him, while the salary should be paid as for a full-time job. It is certainly possible to use him as a secretary and take along for negotiations. But a self-respecting professional will hardly agree to perform duties beyond his competence.
Thus, the entrepreneur decides to hire an outsourced accountant. In our country an outsourced accountant is usually a senior woman earning extra money by preparing and delivering financial statements for several companies. In this case the benefits are relatively low cost and lack of necessity to visit government authorities. The drawbacks are low quality of an accountant, an established pattern of settlement of issues, lack of interest for novelties in the changing legislation, inability to integrate accounting and juridical aspects while settling complicated problems and to use current legal precedents.
Else the entrepreneur can address a large, widely advertised accounting firm. Apart from obvious benefits (top quality accounting, a legal contract, salary taxes saving) there are significant drawbacks, such as lack of immediate communication with an employee supporting the entity, lack of interest in minor clients and price for services which is almost equal to the salary of a full-time specialist.
As a result the entrepreneur decides to hire his own accountant paying him the full salary while using as much as1/3 of his working time, as well as paying for accounting and tax consulting.
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