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Blog » Accounting for Insurance Businesses– Can DIY Approach Work?

Accounting for Insurance Businesses– Can DIY Approach Work?

Last updated: 18 Aug, 2023 By | 6 Minutes Read

accounting approach

If you run an insurance business and are following a DIY approach for your accounting, then you may not be realizing the costs incurred for the same. A lot of insurance business owners believe that they are reducing costs by keeping their accounting in-house; however, the truth is that the costs incurred are actually a lot more when compared with an outsourcing company handling accounting for insurance businesses .

Essential Aspects for Insurance Accounting Business Success

Professional Attitude and Proper Processes: 

If accounting was nothing more than mere adding and subtracting of numbers, then accounting professionals would be carrying basic elementary school degrees. Accounting profession is a lot more than this. It is related to an extensive theory of efficient business processes. This theory make sure your finance-related records are updated and complete.

The insurance business owners who manage their own books to keep wasting their time on previous months’ accounting. They come across a receipt in their cabinet from four months ago or come to know about an incorrect debit entered into their books, and then they spend a lot of time rectifying such mistakes. The issue with this technique for accounting implies that the financial picture of your insurance business will keep changing all the time. Reports generated will be inaccurate and would not be useful to anyone. Incorrect reporting can lead to bad financial decisions and result in probable losses.

Even a lot of trained bookkeepers tend to lag behind maintaining the books since they are not aware of certain accounting processes. This is the reason we recommend choosing an insurance business accounting firm as opposed to an in-house bookkeeper. Such companies are aware of all the international accounting standards and can streamline your accounting processes efficiently.

Tax Laws and Guidelines for Accounting Insurance Businesses: 

No one likes to pay taxes, however, things can get a lot worse if someone does not pay their taxes or files taxes incorrectly. Not many insurance business owners are informed about the relevant tax rules and guidelines which they need to apply to their business. There are a lot of taxes that an insurance company needs to pay, such as the sales tax, payroll tax, social security tax etc. All these taxes must be paid in a timely and accurately manner. Even if you get things sorted out, the rules tend to change every year.

Insurance business owners already have a lot on their plates, so they should not be spending their time understanding about all the rules and regulations by IRS. Outsourcing companies managing accounting for insurance businesses offer access to skilled professionals well-versed in tax guidelines. They provide precise tax preparation services for accuracy. They make sure that you don’t miss out any tax deadline and your financial reports are updated and accurate so the correct amount of tax can be paid to the government.

Accounting professionals usually have a proper understanding of the tax breaks that insurance business owners may not know about. A few of such tax breaks can help in improving a company’s bottom line significantly. And, you would also be saving costs by choosing to outsource accounting and tax preparation.

Accounting Analysis and Recommendations: 

Expert accountants can present you with an in-depth analysis of your insurance business financial situation, well beyond what a novice can. The reports generated by them can reveal trends in the revenue generated as well as your expenses. With such a detailed insight, insurance company owners can concentrate on strategically planning for the future of their business. Herein, the insurance businesses can take help of outsourcing companies for advice and consultation. This can vary from fundamental business processes that can help reduce costs and boost profits to an analysis of major expenses. Planning to expand your business operations? It would be beneficial for you to take help of professional accountants to determine the viability of your venture. Calculating the exact value of an outsourced accounting division is challenging. However, it consistently offers greater benefits compared to hiring in-house staff.

Recommended Post: Top 10 financial & accounting tips for insurance agencies

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We are an ISO 9001:2008 certified company offering world-class bookkeeping and accounting services to CPAs, accounting firms and businesses. We can also help your insurance business cut down costs and boost profits.