All businesses in Thailand, including local and foreign companies have to prepare accounts that comply with the Thai Accounting Standards issued by Thailand’s Institute of Certified Accountants and Auditors. The reports need to reflect an actual status of their companies’ assets and expenses.
Most large businesses decide to do accounting outsourcing to reputable business services providers in Thailand for smoother processing and cost-efficiency. Many small-to-medium-size business owners however, are unsure whether they should manage the accounting on their own or hire experts to do the job for them.
While personally taking up the accounting duties seem tempting at first, especially for small businesses, they need to be aware that this approach may have a few disadvantages. Here are four significant obstacles encountered by SMEs in Thailand when doing their accounting.
1. Lose a significant amount of time
When a SME business owner chooses to do its accounting, the biggest challenge it will face is to find sufficient time within their limited time each day to manage both accounting and core tasks. The time spent by business owners when managing their accounts depends on the following things:
- The accounting team’s or manager’s degree of specialization in accounting management. A newly hired staff without much experience in accounting, for instance, may take longer to complete the accounting work
- The volume of documents and paperwork needs to be processed, which includes the number of sales and purchases invoices and bank statements’ lines.
- The company’s size
Generally, some accounting tasks, such as accounting entry, are time-consuming with no added value. Taxes compliance and reconciliations are likewise too complicated and time-consuming, particularly for business owners who have no accounting background whatsoever.
2. Higher risk of committing errors
Unless the business owners or accounting team have a good background in accounting, it would be difficult for them to master every ins and outs of this discipline. Accounting has its unique code that the business owners need to comply with; otherwise, the company would be exposed to some mistakes:
- Account posting, wherein a transaction is connected to a wrong account
- Extra-accounting restatements, wherein distinct laws govern taxation and accounting, and some regulations which are accepted in one area are not allowed in the other
- Interpretations, wherein a text is misinterpreted leading to an inaccurate treatment
Moreover, these errors does not only poise risks at the accounting level alone since the company also needs to deal with the tax and social aspects of accounting, including the tax statements, withholding tax, VAT, drafting of contracts for employment, payslips generation, and social charges declaration.
3. Stack up hidden expenses
SMEs in Thailand typically choose to do their accounting due to financial motivation. Although do-it-yourself accounting seems cost-efficient at first, there are, in fact, several hidden expenses that can undermine the favorability of DIY accounting. These hidden costs primarily include:
- The amount paid for the accounting software’s rental or acquisition, as well as the expenses incurred for its updates and maintenance
- Fess incurred to train employees in accounting methods and how to use the accounting software
- Charges for advice in a variety of fields
4. Deprive of professional guidance
SMEs that choose to assume the accounting tasks on their own are deprived of helpful expert advice in the accounting field, as well as in several other areas, such as:
- Taxation aspect: Professional accountants know how to optimize every aspect of the company’s tax and maximize tax benefits. They are also authorized to fulfill every tax declarations.
- Financial field: Professional accountants are efficient in assisting the company in analysis of balance sheet, confirmation of funding opportunities and selection, and drafting of an effective business plan.
- Legal aspect: Accounting experts stay up to date with the country’s current tax and accounting regulations and ensure the company complies with the country’s tax laws, such as the annual legal follow-up concerning the accounts approval and the result’s allocation.
- Social aspect: Accounting experts have the authority to craft employment contracts, generate payslips, and declare social charges.
Seeking advice from a competent accounting outsourcing service provider in Thailand
A competent accounting service provider in Thailand can help manage the company’s accounting and bookkeeping while making sure the company stays compliant with the country’s tax and accounting rules. Also, accounting outsourcing help saves employment and operational expenses, boost productivity, saves time, and allow the company to gain access to accounting experts and the latest accounting software and technology.