Do you manage or own a business that either needs to grow its accounting department or has no accounting staff? If so, you’ve probably wondered which one’s better for your company: in-house vs. outsourcing accounting.
Many start-ups and SMEs usually outsource accounting services. Accounting is complex and highly technical, even for a small business, and a minor slip-up could mean catastrophic complications for the company.
The key differences to consider when comparing in-house accounting vs. outsourcing accountants are in experience/quality, control, reporting, and cost. It is crucial for any business to understand the pros and cons of hiring an accountant vs. outsourcing one to find the best solution for their business needs and goals.
Let’s go over each of the factors.
When it comes to the actual work, it’s vital that the people who perform the accounting tasks are experienced and fully capable. You may think the level of experience you need in an accountant varies with the size and type of your company. However, every business, be it a start-up or a multinational enterprise, needs accounting professionals who understand the nuances of the field, whether you’re making your first pitch for a venture capital or your hundredth acquisition.
The following are the differences in hiring in-house accountants vs. outsourcing accounting services.
Based off of the complexity of your accounting needs, you will need someone with several years of hands-on relevant experience. Ideally, it’s best to go for candidates who require miminal training and can perform their duties well from the get go. Even the most experienced accountants will need a sufficient time period to be onboarded to your company’s current systems and processes. Prioritize hiring someone who catches on quickly and requires minimal supervision.
One of the major advantages of outsourcing accounting services is that you eliminate the challenge of going through tens or even hundreds of applicants — all while ensuring that the accountant/s in charge of your business is a knowledgeable and experienced.
Firms who offer outsourced accounting services already have qualified experts in their staff, including ones who specialize in high-level accounting. This eliminates the need for you to set up an onboarding and training process. The most reputable outsourced accounting firms also ensure their employees are highly qualified professionals who undergo continual training to provide the best level of service.
Trust and Quality Control
Accounting and finance involve repetitive yet complex tasks. The professionals responsible for them must be complete with industry experience, mathematical skills, and keen attention to detail. To increase accountability and keep multiple layers of checks and balances in order, you need a certain amount of internal control and trust.
Here’s where in-house accounting vs. outsourcing differ:
Many small businesses employ only one or two accountants to handle all their accounting needs. This gives a greater chance for either intentional fraud or honest mistakes to happen. According to an embezzlement survey, 80% of cases regarding misappropriation or theft occur at small businesses.
The reason is simple: most small business owners operate based on trust and when there’s only one person managing your entire financial flow, they are in direct control of your financing and reporting. On the contrary, the risk is reduced significantly when more people are involved. The division of labor and multiple layers of checks plus quality control hold more people accountable.
There is complete accountability with the agency you hire to manage your accounts and books. As the firm’s professional reputation relies on their ability to efficiently and honestly serve their clients, committing fraud or engaging in illegal activities is completely counterproductive for them.
Additionally, trusted accounting firms divide specified responsibilities, streamline tasks, and set up stringent quality assessments before finalizing the financial statements. This ensures the math adds up and your books are well-accounted for. Outsourced accountants typically have supervisors who evaluate their work, leaving less room for errors. Many of them also rely on automation and technology to further reduce the chances of human errors and consistently deliver accurate reports.
Expenses and Cost
Now, we get to the meat of the differences of in-house accounting vs. outsourcing: cost and expenses. In actuality, everything discussed above is related to expense, or at least indirectly.
Let’s look at the numbers to fully understand what we mean by that.
When you hire an internal accountanting team, you will need to at least hire two full-time employees: an accountant and a bookkeeper. Aside from paying for their salary, you also need to pay for benefits and other miscellaneous costs such as:
- Health insurance
- Paid vacation and sick leaves
- Payroll taxes
- Costs of interviewing, hiring, onboarding, and continuous training
No matter the types of accounting services offered by an outsourcing firm, you will only pay for the actual services. All of the overhead costs are typically left out of the entire equation. While the cost will increase based on the complexity of your accounting needs, the overall expenses of outsourcing are still far more affordable for start-ups and small businesses compared to internally hiring a full-time accountant.
In-House vs. Outsourcing Accounting: The Final Verdict
For start-ups and small companies, it’s usually more sensible to opt for outsourcing instead of hiring a full-time accounting. In general, small businesses with a tight budget gain greater financial flexibility from outsourcing accounting services. Finding the right employee also takes time and costs money.
NarraSoft has a trusted track record in providing outsourced accounting to start-ups, SMEs, and even enterprise-level companies. We value our clients’ work and growth and your success is our objective. Let us help accelerate your business’ financial growth and profitability with accurate, on-time BPO accounting services at the most competitive prices.
Outsource accounting to NarraSoft today! Fill out the contact form, drop a message on our chat box, or send an email to email@example.com!