• The CAS Cache
  • Posts
  • How to Hire Outside the USA in your Accounting Firm: Top 5 Questions

How to Hire Outside the USA in your Accounting Firm: Top 5 Questions

Author

Luke Templin
August 16, 2023

Read Time: 5:23 minutes

✋Welcome to The CAS Cache, a newsletter designed to help accounting firms grow their CAS offerings. Each issue will feature my insights on a topic.

In addition, perspectives from gurus on the topic that I am listening to 👂, reading 📚, or watching 👀 and one thing I am talking 🗣 to my clients about in my firm newsletter. Please feel free to R&D (rip off and duplicate) the Client Cache.

Disclaimer: Some links below support me in writing this newsletter, and some give you a deal too.

Issue Sponsor 😎

SWK helps you Fulfill Your Vision of a smarter and easier way to run your business by integrating your Accounting and Enterprise Resource Planning (ERP) software, reducing manual tasks and streamlining your operations with Process Automation Solutions, and building a scalable infrastructure and extending your IT capabilities with our Managed Cloud & IT Services.

In the last issue, I discussed my experience hiring outside the USA. In this issue, I will cover the top five commonly asked questions I get about hiring outside the USA. The top five, in no particular order, are:

  1. Security

  2. Contractor vs. employee

  3. Compliance

  4. Trial Day

  5. Work performed by my contractor

Security Outsourcing Outside the USA

Security is by far the biggest one I see people get hung up on, and rightfully so. Using an agency is the easy button with security. My approach was the following:

  • I used onlinejobs.ph verification system to validate the candidate. They have multiple levels of verification.

  • My selection process included steps to make sure the candidate was legit.

  • My managed service provider (similar to SWK, this issue's sponsor) installs threat detection and protection software on their computer. You could take this one step further and use OnlineJobs tracking software.

Hiring a Contractor vs. Employee

Contractor vs. employee was an easy decision for me. The person who works for me is an independent contractor who uses their equipment and works on their schedule. The rules around having a person outside the USA were too complex for me, so I gave up some control for a more straightforward arrangement.

One thing to note is that people in the Philippines commonly work US hours. However, they call these hours the "graveyard shift," so I allow my contractor to work on their time.

My approach is the following:

  • Initial questions included sending pictures of equipment and screenshot of an internet speed test to ensure adequate equipment.

  • I had them sign an independent contractor agreement. However, these agreements are worthless if an issue arises.

  • I also had them complete a W-8BEN.

  • We agreed on a fixed fee for working around 35 hours per week. Although in most cases, they work less.

  • And, yes, my person works for other people, and I am good with it because they stay on top of the work I need.

Compliance around Outsourcing Accounting

Compliance is not a big deal for me since I do not do taxes. The IRS requires consent from clients when sending tax information to outside parties under Section 7216.

My engagement letter includes a paragraph about third parties. I also inform my clients about using an overseas contractor.

I did have one client uncomfortable with using an overseas contractor, but the more the client worked with my contractor, the more comfortable they became with working with the contractor.

Trial Day for an Accountant

I will always do a trial day when hiring in the future, whether it be a contractor or employee. It allows both parties to see how they work together and whether or not they are fit for the job.

For example, we were looking to bring on a lead developer at FinDaily, so we did a paid trial project. The person did great, and we wanted them on our team. However, the developer didn't feel they were a good fit, so we moved on.

I gave the contractor I hired for financial analysis a handful of tasks. These tasks used client data to complete real-world tasks in my firm, including the abovementioned work. Click here to get the list of the tasks. I paid three people $100 to perform these tasks, which took less than a day.

Not only did I get to see how they performed tasks. I got insights on things I didn't expect, such as organization. My number one candidate going into the trial became my least favorite, and I hired the number two candidate.

Work my Outsourced Accountant does for my Firm

Tasks assigned to my contractor are centered mainly around financial analysis. Most of my clients have a bookkeeper of some form in place, so my contractor's tasks are typically the following once the client's bookkeeper confirms that month-end is complete:

  • Reviews the bank reconciliations and ask questions to the bookkeeper about old and/or large items outstanding

  • Runs comparative financials to check for any significant discrepancies

  • Closes month in the accounting file

  • Updates chart of accounts in Fathom for new accounts

  • Runs our report in Fathom

  • Adds explanations to report of significant changes

My contractor also updates bank feeds for one client and performs ad hoc projects as they come up.

I hope this issue helps you hire your accounting firm's first nearshore or offshore contractor.

I am also creating a course with step-by-step instructions on my process and templates to R&D. Click here to check it out.

Guru Cache 👂📚👀

Client Cache 🗣

📈📚 Create an employee idea generation machine in your business to protect it from the competition. Kim Scott (author of Radical Candor) used this at Google. Click here to read.

Thanks for reading, Luke Templin!

P.S. There are 3 ways I can help you grow your CAS offerings when you are ready: