Businesses typically have two options for meeting their accounting needs: in-house or outsourced. Once your company reaches a point that you need a professional accountant, knowing which option to choose can be difficult. How do you determine which option is best for your business? Here are a few factors to compare when making this decision.
When choosing between in-house and outsourced accounting options, cost is generally one of the biggest factors that business owners will consider. However, when making this comparison, most people fail to look at all cost considerations for hiring an in-house accountant. Full-time, in-house accountants earn an average salary of nearly $80,000. In addition to this, you have to consider the taxes you pay on that employee’s wages, the cost of holidays and sick days, benefits and insurance you provide, retirement plans you offer, and the cost of simply searching for the right employee.
In addition to this, it’s impossible to expect any employee to be 100% productive every hour that they’re in the office. So, you’ll have several hours a week that you’re paying your employee for other things, such as taking bathroom breaks, grabbing a snack from the break room, or even dealing with computer issues.
With an outsourced accounting service, these additional costs are not something you have to worry about. You pay a flat fee for your annual service, which is based on your exact needs, so you only pay for the accounting work that you actually need done. In the end, outsourcing will typically cost less than a full-time accountant; and, if you need both accounting and bookkeeping services, it’s even more cost effective to outsource.
It’s also important to consider just how consistent your accounting workload is. Do you have a busy season when you’ll need two in-house accountants? Do things slow down at certain times of year, and your in-house accountant will be left with several empty hours in the office every day? For companies who have a fluctuating workload, finding the right number of employees can be difficult: Too few accountants, and your work piles up and your stressed-out accounting workers are more likely to make mistakes due to the high workload. Too many accountants, and you’re paying them to sit at a desk without any work to do.
If your business’s workload tends to fluctuate, outsourced accounting is almost certainly the better choice. You’ll pay only for work completed, and the company you use will have the professionals on staff to adapt to your shifting needs.
Conflicts of Interests
In-house accounting opens up many opportunities for conflicts of interest. Oftentimes, the person handling the books is the same as the person reconciling them. This provides them with opportunities to make adjustments that are difficult for you, the business owner, to detect. While we would certainly hope that this wouldn’t occur in your company, it would be unwise to completely ignore this possibility.
External accounting services eliminate this conflict of interest, as the accounts are typically handled by teams of experts, rather than one individual. There is a system of checks and balances in place to ensure that everyone stays honest, and your books are maintained accurately and truthfully.
Complex Compliance Issues
Finally, if your business is subject to compliance standards set forth by organizations like DCAA, HIPAA, or FINRA, you will likely want to utilize a third-party accounting service—more specifically, a service that specializes in that type of compliance. Your average accountant or bookkeeper likely won’t be familiar with all of the requirements to maintain compliance with these regulatory bodies. However, a third-party accountant that specializes in compliant bookkeeping will be intimately familiar with those standards.
At Peter Witts CPA, we specialize in helping government contractors maintain compliance with the complex standards of the DCAA, as well as other regulatory bodies. If you’re a contractor for the federal government, or your business is subject to other such complex regulations, we invite you to reach out to our accounting professionals. We offer full-service bookkeeping and accounting to business owners like you, so that you can focus on the work you do, rather than worrying about keeping your books up to compliance standards.
Give us a call today to set up an initial consultation. We’ll discuss your unique accounting and bookkeeping needs, and let you know how we can help your business grow and thrive!