Why Consider Outsourcing Accounting Services for Your Software Development Company?

Software development companies often find managing finances and accounting a daunting task. You not only have to ensure accurate bookkeeping but also comply with complex tax laws and regulations. 

This is where outsourced accounting and bookkeeping services can help. By partnering with specialized accounting firms or hiring a remote accountant, you can free up valuable time to focus on your core competencies while ensuring proper financial management. 

This article will explore the benefits of outsourced accounting for your software development company, the specific accounting needs of the industry, and some situations where outsourcing may be necessary.

We’ve also curated a list of six accounting outsourcing companies that can help you solve your financial needs and provide specialized outsourced accounting services for software development companies.

Why Is Accounting Outsourcing Important for Software Development Companies?

Before we explore the benefits and key services of outsourced accounting, let’s first understand why accounting outsourcing is crucial for software development companies. 

As a software development company, you are responsible for managing finances related to your business operations and client projects. Some compelling reasons why outsourcing can be a strategic approach to accounting in this industry include:

Specialized support tailored to the industry 

Software development companies have unique financial and operational needs that may not be fully understood by general accounting firms. 

Outsourced accounting services for software development companies provide specialized support tailored to your industry, ensuring proper handling of expenses, revenue recognition, and tax planning.

Comprehensive accounting solutions 

Outsourcing finance services gives you access to a dedicated team of experts who can provide comprehensive accounting solutions for all your financial needs. From bookkeeping tasks and tax preparation to financial reporting and analysis, outsourced accounting firms can handle it all.

The ability to capitalize on global operations 

Software development companies often have global operations, which can make managing finances and complying with international tax laws challenging. Outsourcing accounting services can help you navigate these complexities and ensure compliance with local regulations.

Customized solutions 

Every software development company is unique, and so are its financial needs. 

Outsourced accounting services offer customized solutions tailored to your specific requirements, helping you save time and money while ensuring accurate financial management.

Advanced technology and tools 

Outsourced accounting firms use advanced technology and tools to streamline the financial processes of software development companies. These tools can help outsourced accountants deliver more efficient and accurate accounting practices, leading to better decision-making for your business.

Data security and confidentiality 

The number of data breaches increased by 72% between 2021 and 2023, demonstrating the recent surge in cybercrime.

Fortunately, outsourced accounting firms have strict data security measures to protect your sensitive financial information. This can give you peace of mind, knowing that your company’s finances are in safe hands.

Strategic insights and financial advice 

By partnering with outsourced accounting services, you can gain valuable strategic insights and financial advice from experts in the field. This can help you make informed decisions and drive business growth for your software development company.

What Are the Specific Accounting Needs of Software Development Companies?

Software development companies have unique financial and operational needs and business goals that may not be fully met by traditional accounting firms. These include:

Capitalization of development costs

Software development companies often have significant costs associated with developing new products or improving existing ones. These costs need to be capitalized and amortized over time, which requires specific accounting knowledge.

Revenue recognition

Revenue recognition for software development companies can be complex, as it often involves contracts with multiple performance obligations and variable considerations. 

This requires specialized financial expertise to ensure proper revenue recognition and compliance with accounting standards.

Cost management 

Efficient cost management is crucial for software development companies to maintain profitability. Outsourced accounting services can provide valuable insights and analysis on cost management strategies.

IP valuation

Intellectual property (IP) is a valuable asset for software development companies, and proper valuation is necessary for financial reporting and tax purposes. Specialized outsourced accounting firms can accurately value IP and guide you on maximizing its value.

R&D credits

Software development companies may be eligible for research and development (R&D) tax credits, but claiming them requires extensive knowledge of tax laws and regulations. Outsourced accounting services can help identify and maximize R&D credits.

Stock-based compensation 

Many software development companies offer stock-based compensation to employees, which requires complex accounting and tax treatment. Outsourced accounting services can ensure proper reporting and compliance with regulations.

Subscription and SaaS metrics 

For companies offering subscription-based or Software as a Service (SaaS) products, specialized accounting knowledge is required to accurately track and report on key metrics, such as: 

• Monthly recurring revenue (MRR)
• Customer lifetime value (CLV)
• Churn rate

Outsourced accounting services can provide these real-time financial insights and help you make informed business decisions.

Multi-currency accounting

Software development companies often have international clients and may conduct business in multiple currencies. This requires specialized accounting expertise to accurately record and report financial transactions in different currencies.

Compliance and tax preparation

Software development companies are subject to a wide range of tax laws and regulations, which can be complex and take time to understand. 

Outsourced accounting services can ensure compliance with tax laws and assist with tax preparation.

When Should You Outsource Accounting Services for Your Software Development Company?

There are certain situations where outsourcing accounting services could be particularly beneficial. These include:

• Rapid growth: As your business expands, so does the complexity of your financial management. Outsourcing can provide the expertise and resources needed to handle increased bookkeeping and tax compliance requirements.
• Limited in-house resources: Small or emerging software companies may not have the budget or capacity to hire a full-time professional accountant or build an entire in-house finance team. Outsourcing allows you to access professional accounting services at a fraction of the cost.
• Time constraints: Running a software development company requires dedicated time and effort, leaving little room for managing finances. Outsourcing allows you to focus on core activities while leaving the financial management to experts.
• Tax season: Preparing and filing taxes can be stressful and time-consuming for any company. Outsourced accounting firms have the knowledge and experience to ensure accurate and timely tax compliance, helping you avoid penalties and audits. 

Top 6 Companies for Software Development Outsourced Accounting Services

So, where can you find outsourced accounting for a software development company?

In no particular order, here’s our list of companies that either specialize in recruiting expert accountants or are professional accounting firms with software development experience. 

1. Near

We couldn’t talk about outsourced accounting for software development companies without mentioning ourselves. And yes, we’re up first!

Near is a nearshore recruitment firm. As opposed to offshoring, this means we specialize in recruiting professionals based specifically in Latin American (LatAm) countries close to the US.

Through our experience, we have developed a deep understanding of the unique financial and operational needs of software development companies. 

Just ask CyberFortress, who filled 12 finance and accounting roles with us, including a Director of Accounting and Financial Reporting, an Accounting Team Lead, and a Manager of Global Tax. They’re saving $500,000 in annual salaries thanks to the competitive rates of LatAm talent.

2. Signature Analytics

Signature Analytics is a virtual advisory and accounting provider with headquarters in San Diego, California, though it offers its services throughout the US. It was included in the San Diego Business Journal’s list of the 2022 Best Places to Work.

Its outsourced accounting services for technology businesses include revenue recognition, software development costs, R&D tax credits, and other financial aspects relevant to software development companies.

3. Haynie & Company

Haynie & Company is a firm of certified public accountants (CPA) and management consultants with locations throughout the southwest US. It has been named an Accounting Today Top 100 Firm and a Top Workplace USA for the past three years.

The company’s qualified CPAs for technology businesses have deep expertise in taxes, strategic planning, accounting, bookkeeping, audits, and more, with industry knowledge of software, consumer electronics, telecom, and information technology.

4. Compass East

Compass East is a Nashville, Tennessee-based finance and accounting service with a strong profile of technology partners. One of the top industries it provides for is SaaS through its finance and accounting services.

Some of the services the company offers include advanced bookkeeping services, accounts receivable/accounts payable management, payroll, revenue recognition, cash forecasting, and KPI dashboard management.

5. CBIZ

CBIZ is a professional service provider with over 120 offices throughout the US. It received 100 workplace awards in 2023, including a spot in Business Insurance magazine’s top 30 largest brokers of US business.

The firm offers a broad range of services to the technology and life sciences industries, including audit and assurance services, international tax planning, federal tax incentives and credits, and state and local tax reviews.

6. G-Squared Partners

G-Squared Partners is an outsourcing company specializing in financial services for startups and entrepreneurs. It has won multiple awards from the Philadelphia Business Journal for its work in Pennsylvania and throughout the US.

Its experienced accountants are available to support SaaS, biotech, fintech, and hardware startups. They help with financial modeling and forecasting, strategic business planning, and fundraising and investment strategy.

‍Final Thoughts

Outsourcing accounting services for your software development company can bring numerous benefits, such as cost savings, improved financial management, and access to specialized expertise. However, partnering with the right provider is essential to success in outsourcing.

Near is here to provide you with a tailored outsourced accounting solution for your unique financial needs. As a recruitment firm specializing in sourcing top talent based in LatAm, we have a talent pool of some of the best outsourced accountants in the region.

If you’re interested in receiving a list of excellent candidates you can hire for your accounting role within 21 days, simply fill out this form to access their pre-vetted profiles.