If you want to be a successful business owner, then you need to take care of more than just your market share. You must have details of all the accounting transactions in your business depending on the industry you belong to, ensure you comply with statutory regulations, create budgets and make future projections, and file your financial statements on time. Not only will your business be profitable, but you won’t be on the wrong side of the law or be out of business!
This can be achieved through a well-maintained set of accounting books. Accounting is about accountability to all the stakeholders of the business like the government, investors, employees, and management with the information they need. Now you can either have your own accounts department or hire an accounting firm. When deciding to have in-house accountant vs outsourced accounting, you have to know the pros and cons of both.
Whether you want an in-house accounting department or hire a professional firm, this would depend on the following factors:
The in-house accountant or the outsourcing firm should understand their domain well. Regardless of how complex your accounting requirements are, there is a minimum experience level that your accountant should have when considering in-house accountant vs outsourced accounting. A major challenge will be assessing the skills of the candidate if you don’t have a background in accounting. The qualifications and experience of the candidate should fit your organization’s requirements. You need to factor in training required and the time taken for the accountant to work independently.
When you outsource your accounting needs, you don’t need to spend time on training. The firms have experienced accountants for different accounting needs, and they can start working almost immediately. There are both cost and time benefits to consider in the in-house accountant vs outsourced accounting decision.
With a limited number of internal accountants controlling your finances, you are at greater risk of honest mistakes and intentional fraud. These accountants have complete access to your financial reporting and banking. When the number of people involved is more, and there are greater checks, the possibility of fraud is minimized.
When it comes to outsourcing your accounting, the reputation of the accounting firm is at stake. This means higher accountability and streamlining of the process to ensure that your accounts are accurate, an important factor when considering in-house accountant vs outsourced accounting.
One of the important functions of accounting is financial reporting. If your employees have other responsibilities in addition to financial reporting like clearing bills or data entry, there are high chances of errors in your financial statements. You might have to pay a heavy price for it.
When you outsource your accounting function, the firm takes care of the important financial reporting issues, and your employees can concentrate on their other responsibilities. The productivity of your internal staff increases and this factor also affects your decision regarding in-house accountant vs outsourced accounting.
The in-house accountant vs outsourced accounting decision is also affected by the costs involved in the two choices.
When you hire an in-house accountant and bookkeeper, you have two employees on your payroll and need to factor in all the costs involved. Apart from their remuneration, they will have to be paid full employment benefits. Don’t forget overheads like payroll taxes, health insurance, paid time off, onboarding costs, and contribution to retirement plans.
When you outsource your accounting functions, you pay a flat fee for the period of the contract but don’t have to pay any employee benefits or bear the overhead costs. If you have a small firm, your fee won’t be more than a few hundred dollars. If you compare the costs, the outsourcing cost is much lower.
If you have complex accounting requirements, the fee would be considerably higher, but the benefits in terms of compliance and minimization of errors would far outweigh the costs.
You should understand the loss of productivity and impact on revenues when considering in-house accountant vs outsourced accounting. When your employees have too many responsibilities, there is a possibility that you are not able to pay attention to your core activities that drive your business.
When you are not being able to provide the quality of service expected by clients and spend time expanding your business, the result is that your revenues are hit. If accounting is not your core area, then you should hire a professional firm and concentrate on your business.
The accounting firm will ensure that you get all the important financial statements on time for taking MIS decisions in line with the long-term strategic goals of your company. The higher profits you get should help you decide while opting for in-house accountant vs outsourced accounting.
Understanding your strengths is the first step to business success. If you are a business owner who wants higher profits, you need to understand the accounting aspect apart from the business aspect. Both these aspects of the business need equal attention. If you can’t spare the resources to ensure accurate and timely financial reports, you should hire an accounting firm for it.
A professional accounting firm has an experienced team that keeps itself regularly updated about the latest developments in the field of accounting. Your accounts will be maintained as per the latest regulations, and you will get professional financial reports as and when you need them. When you can keep an eye on your expenses and are able to allocate capital optimally, your revenues will soar.
Keep all this in mind when choosing between in-house accountant vs outsourced accounting.
OHI is a specialized finance and accounting outsourcing service provider with over fifteen years of finance and accounting outsourcing experience. We have strong functional outsourcing expertise in end to end accounting processes covering daily accounting activities, reconciliations, month end and year-end account finalization processes, employee reimbursements, payroll processing, management reporting and financial analysis.
OHI serves close to 300+ clients across USA, UK and Canada. We invite you to experience finance and accounting outsourcing through us.