The Costs Of In-House vs Outsourced Accounting

Businesses are involved in various daily activities, among which is accounting. Simply put, organizations cannot operate successfully without an accounting staff.  The question is whether to hire the team in-house or outsource the work.  

A business needs help from a qualified and experienced auditor or accountant so that all financial undertakings of the company are monitored and checked. That way, the company can accurately track sales and operating expenses to obtain benefits that contribute to its success. The accountant records all income and expenses and can even offer insights to help increase the company’s sales and reduce costs.

However, having an accounting team can be costly, so many companies turn to financial accounting or auditing services. Outsourced accountants are not hard to locate; with the internet, you can quickly find them and enlist their services.

Will outsourcing help your business save on costs? Let’s take a look at the expense of maintaining an in-house accounting team and the price of outsourcing one.

Monetary costs

When maintaining an in-house accounting team, salary is not the only thing you will have to worry about. In addition to paying salary, hiring in-house accountants also come with the cost of giving paid leaves, retirement, health insurance, and other benefits. Outsourcing cuts these costs entirely, and you only pay for what you need.  This does not even take into account office space, computer equipment, office supplies, and other overhead costs. 

Outsourcing your accounting to a competent and well-run company makes more economic sense for many small and medium-sized businesses.

Training

If you decide to hire in-house accountants, the responsibility of onboarding, training, and retraining them falls on your shoulders. And when the new hire does not stay long, you will be forced to repeat the process all over again. That can be costly and something preventable.

You will also need a system in place to supervise their work and double-check books. You brought them aboard to help, but you nevertheless have to keep an eye on things.

On the other hand, when you outsource, you get a whole team of professional accountants at your disposal. Accounting firms hire only qualified accountants who are highly trained. A short, simplified onboarding process is all the firm needs from you. Once you hand over the books to them, you can sit back and let the specialists take over, which will give you more time to concentrate on running your business.

Higher risk of fraud

In-house accounting increases the possibility that you will be a victim of fraud. There were many cases of accountants creating falsified expenses and pocketing the money for themselves in the past. With no check and balance, embezzling becomes too easy because only a few people can access the books.

Costly errors are also common when only a couple of people control books. When you hire a third-party accounting firm, you will reduce the probability of fraud or careless mistakes since several pairs of eyes examine the books. Multiple accountants handle your account; helping to ensure nothing falls through the cracks.

In-house accountants may be less knowledgeable

This is one painful truth you need to face: most in-house accountants are not updated on the latest government policies on tax requirements and business operations. These provisions can change each year incrementally. Yet, these minor changes can be significant for small businesses.

A professional accounting firm makes it their responsibility to learn about these changes and help you carry them out since it is a linchpin of their business to be updated on tax law and modern accounting methods at all times.

In-house teams provide basic services

If you think that you only need to have the most basic accounting services, think again. Sooner or later, you will need more in-depth analyses of your financial situation to help you meet your long-term business objectives.

In-house bookkeepers and accountants usually process invoices, settle bills, and do payroll. Indeed, these are important services you need for your operations. On the other hand, professional accounting companies do not just maintain the books; they provide you with reports that help you evaluate your organization’s finances and make informed judgments about your business’s future.  Many firms also offer advanced services such as CPA and CFO consultations on an as-needed basis.  

Outsourcing accounting can provide meaningful reporting

When you choose to outsource, you can pick exactly what you need for your organization. Studies have shown that existing employees work more efficiently and behave more appropriately when working alongside an outsourced team.

Professional accountants can help establish streamlined procedures and train your employees with best practices. They will also produce accurate reports whenever you need them.

Cost differences 

The cost will always be a significant determining factor when choosing an accounting and bookkeeping service. A full-time accountant’s annual salary is around $72,000, while a bookkeeper will demand $45,000 annually.

On top of their base salary, there are other costs, such as payroll taxes, medical, retirement, vacation, and sick leave. Then there will be recruitment costs, testing, and training of new employees. With outsourcing, you do not have to worry about any of these expenses.

Outsourced bookkeeping and accounting services, especially those with employees abroad can cost anywhere from $2,500 to $5,000 a month per bookkeeper, depending on the services you need.  By simply doing the math, many companies are moving toward outsourcing solutions. 

Conclusion

Outsourcing is very attractive for businesses of all shapes and sizes because it is a cost-effective strategy for companies who want to cut operating costs. For this reason, many companies are looking for the services of outsourced accountants. These accounting services can provide any organization with auditing services, payroll, taxation, and other similar services.

There are many options out there for accounting services that are private, secured, and cost-effective. If you want to grow your business, consider outsourcing your accounting so you can focus on the important task of running your business.