Blog » The Role of an In-House and Outsourcing Accountant in the Present Scenario!

The Role of an In-House and Outsourcing Accountant in the Present Scenario!

Last updated: 13 Sep, 2023 By Harinder Pal Singh | 6 Minutes Read

Every business operates differently, but there are several functions that run identically in all the businesses, with accounting being the primary one. Now, business owners have two choices for getting their books managed; either they can hire an in-house accountant or opt for outsourcing accounting services. Earlier, most of the businesses followed the traditional in-house approach, but due to the additional benefits associated with outsourcing, the latter is fast becoming the first choice.

Justify the Need First

Before you even think of the outsourcing or in-house option, figure out how much accounting work you have. If you are just starting out or are running a small business, your accounting need will probably be less. So, it all comes down to the scale on which your company operates and generates the accounting work to be handled. Both in-house and outsourcing options are there, but you need to choose that best that meets your requirements.

Comparing In-House vs. Outsourcing Accountant

Financial Data Security

The biggest concern that business owners have is nothing but the security of their financial data. Usually, in a company, people handling the books are the ones who reconcile. So, this leaves them with several opportunities to make fraudulent changes that are hard to catch by owners.

Outsourcing companies follow a proper workflow where every step in the accounting work is taken in the presence of everyone and is also cross-checked on an open platform using the latest cloud-based accounting software. Such accounting and bookkeeping software provides an additional layer of security against cyber-attacks.
Timely Financial Reporting

The financial reporting process varies from company to company depending upon the number of monthly transactions, industry specifications, regulatory compliance, and more. Accountants need to focus completely on financial data throughout the month in order to prepare accurate financial reports. The problem with in-house accountants is that they have other roles and responsibilities as well, like allocating time for human resources.

Moreover, when a business flourishes, the priority of recording invoices, bill payments, and data entry takes over financial reporting. With outsourcing, you can be assured of timely financial reporting since it has a team that will be completely dedicated to this since it will not be involved in any of your other business activities.
Cost Factor

For several small and medium-sized firms, the cost is the biggest driving factor when choosing between in-house and outsourcing accounting. The average annual salary of a full-time in-house accountant and bookkeeper is around $60,000 and $45,000, respectively. Apart from this, overhead costs in the following make it even more costly:
- - Payroll Taxes
  - Vacation/Sick Days
  - Medical/Benefits
  - Retirement Plans
  - Placing Advertisements, Scheduling Interviews, Testing, and Training of New Hires
On the other hand, you need not get concerned about the overhead costs at all with outsourcing. Also, the average annual cost of outsourcing accounting and bookkeeping services is around $60,000 ($5,000 per month) that is way less than the combined cost of $105,000 of in-house bookkeeper and accountant. Apart from this, outsourcing saves owners against investing in the latest accounting software and infrastructure while allowing them to leverage technology through collaboration.
Accounting Expertise

The leading outsourcing players have accounting professionals with years of experience and unmatched skills developed over the years. This is something that lacks when it comes to in-house accountants. Also, since outsourcing accountants serve multiple industries, their knowledge base is pretty huge. They can help business owners against any financial constraint they might be facing by guiding them through deep financial data insights for effective decision-making.

Industry Leaders’ Insights on In-House vs. Outsourcing Accountants

Finn Cardiff, CEO, and Founder of Beachgoer

We don’t have an in-house accountant because it doesn’t make it financially viable for our business model. Instead, we hire a freelance outsourced team to do the job with equally amazing results and turnover time. With outsourcing, we only pay for the services we need, when we need them.
Kate, Interior Designer and Owner/Writer for Swankyden

Based on experience, outsourcing is the more cost-effective choice if you have a small business. This is especially true if you’re just starting out since you still don’t have enough resources on your payroll to start growing your team. But as your company starts to grow and its revenue passes or reaches a certain point, then hiring an in-house accountant may be the best option to do at least some of the more accounting tasks at a senior level.

Also, hiring someone directly involved with the ins and outs of your firm on a day-to-day basis is a good idea. The reason being not only will he or she have a better strategic insight, but will also guide you through the decision-making process more thoughtfully.
David Meltzer, CEO of East Insurance Group

Having an in-house accountant is needed, especially when a company is starting out. This is because in-house accountants can have a clear understanding of the financial situation of the business and can explain it properly to the proper individuals.

Not only that, but they can also provide good feedback and advice on how to act. It may cost more, but it will pay off in the end when the financial situation of the company is under control. There can be no concession against keeping track of company expenses. People in the company have their respective roles, the accountant is a vital part of the company, and any changes to the current set up will be difficult to manage, especially during a pandemic.
Jeremy Harrison, Founder, Head Of Content Strategy Hustle Life

As a small entrepreneur, there’s really no need for an in-house accountant. The only time you get the services of a full-time accountant is when you’re scaling. Before you scale, make sure you have an accountant so he can set up everything for all your future transactions.

The accounting needs of a small business can be handled by accounting software. I use FreshBooks for all my accounting needs. Even though I have no previous background in accounting, managing your own business will require you to understand and learn it. The use of accounting software will only enhance and speed things up. Ultimately, you need to know how to do your accounting on your own.
Matt Woodley, Online entrepreneur and the founder of MoverFocus

I’ve outsourced all of my bookkeeping and accounting requirements as I have found it much more cost-effective and easier than having an in-house accountant. We’ve been able to save money as well as time by outsourcing to an accounting firm which has helped us greatly with scaling our business.
Mike Charles, Owner, Unified Pest Control

When deciding if your business is at a point where you may need to hire an accountant to keep on staff, there are a few things that you must consider. The first thing that may drive this type of need is if your company is experiencing rapid growth. If your accounting needs are changing on a regular basis, having an accountant on staff can help with this period of change.

The second thing to consider is if your accounting needs are becoming more and more complex. As you grow, you may encounter situations where tax requirements, financial reporting, and other accounting tasks make having an in-house staff member essential since such a dedicated accountant makes smart business sense.

The third driver for the need for in-house accounting help would be if you are relying on an accountant to make critical business decisions. Understanding the financial health of the company is important, and having a staff member embedded in this work can make strategic sense.

And finally, if the cost of outsourced accounting work is increasing, it may be an easy decision when looking at the cost/benefit of having an in-house accountant.
Neal Taparia, CEO of Solitaired
1. With my first business, we eventually brought an in-house accountant as we grew in size and had various financial needs. Between bookkeeping, managing employee expense reports, managing cash and accrual accounting, and getting a real-time view on if our revenue was meeting our goals, we decided that we needed to bring someone in-house to focus on this. It impacted us significantly since we were able to get immediate business insights. For example:
- Through our in-house accountants’ insights, we were able to put in policies to manage employee expense reports.
- We also moved to daily forecasting because our accountant was able to get revenue reports, which helped us understand our business more precisely.
Having someone dedicated to all this only came when we grew in size to over 100 people, and where we had broader finance needs. Our in-house accountant played FP&A, controller, and accountant.

2. With my current business, we are still small, and we use a third-party bookkeeper to enter information and Quickbooks, and an outside accounting firm. I don’t want the knitty-gritty of accounting to be a distraction, which is why we outsource it. We have bigger fish to fry!
Jack Wang, CEO of Amazing Beauty Hair

I used to work with one, but stopped when I realized how costly it can get. I’ve always been about practicality and minimizing extra costs. So, from an in-house accountant, I instead worked with one who is on a contractual, consultancy basis. Then I learned to use accounting software, which is what I prefer, nowadays.

To answer the question, yes, an in-house accountant will help to answer questions and attend to immediate matters. But if you can learn using software, I would suggest going with that, instead.
Dennis Bell, Founder, and CEO of Byblos Coffee

For business owners like me, an accountant plays a vital role in my business’s success. Why? It’s because he’s entrusted with all of my company’s finances and is responsible for keeping everything on track.

I don’t have an in-house accountant working for me because I prefer to outsource instead. It’s considerably more cost-effective than hiring a full-time employee. I’m guaranteed that the services are reliable, accurate, and always up-to-date. They also restrict fraud by ensuring safety against multiple people reviewing my accounts.

What’s best is that they have procedures in place that eliminates the chances of a fraud. Having numerous people looking at my financial reports mean that issues will be identified in the early stages, so I can fix the problem and mitigate risk.
Paige Arnof-Fenn, Founder & CEO of Mavens & Moguls

Almost 19 years ago, I started a global branding/marketing firm. Because I only need an accountant for preparing and filing taxes, my business does not justify an in-house accountant, so I outsource it. Outsourcing can be done to fill a gap within a business. Outside expertise can be used to solve a problem identified as a hurdle to the next stage of growth. My advice, especially for small businesses, is to outsource anything that is not a core competency to focus all your resources on what you do best. I outsource legal, payroll, and accounting services for that very reason and put all my energy into building my brand and scaling my business.

To avoid problems, give your outsource partners the goals to achieve, then get out of the way. I file taxes in several states and prefer to have experts manage all the details, so nothing important falls through the cracks, especially with my finances!
Jennifer, Editor at Etia
Cost-effectiveness is one of the main concerns for small business houses, and for them, outsourcing is a big boon. But it doesn’t mean that you will not need a full-time bookkeeper in the future. In fact, in many cases, outsourcing can even be costlier than in-house accounting.
- With outsourcing services, it is possible that you have to purchase their full package, which you may not be able to utilize. Accounting needs to be specific and exact, and an in-house accountant will be able to perform those tasks for free.
- Secondly, an in-house accountant is closer to you who can make work more efficient, fast, and effective.
- Lastly, your in-house accountant can actually multitask, unlike outsourcing services. Multitasking is very important for any small and growing business, and for that in-house accountant can be pretty useful.
I outsource legal, payroll, and accounting services for that very reason and put all my energy into building my brand and scaling my business. To avoid problems, give your outsource partners the goals to achieve, then get out of the way. This is their area of expertise, so let them find the path; do not micromanage them; it will only lead to frustration.

Outsourcing is a smart idea even without a crisis and does not solve all of your growth problems, but it sure frees up a lot of time and energy that can be better spent on things I enjoy doing and can get paid well for.

As a mentor of mine once said, any problem that can be solved with money is not a problem if you have the money. Great advice, indeed!
Logan Adams, Founder of DC Marketing Digital Hour

Yes, once we could afford to, we brought in an in-house accountant. Cashflow and proper accounting practices can make or break a company. An in-house accountant will keep track of your accounts receivables, ensuring that you’re getting your dollars promptly so you can spend your money to grow the business.

I would recommend looking at an in-house accountant between 20-50 employees. At that point, the amount of work necessary to handle payroll, inventory, and accounting is around the equivalent of a full-time job. Before that, I would recommend a do-it-yourself approach, with a user-friendly software package to assist you.

Conclusion

Undoubtedly, both in-house and outsourcing accountants have their own pros and cons. The industry leaders have clearly explained as to what exactly you can expect with every option. It all comes down to your accounting needs and budget, and this is why outsourcing is highly preferred among business owners.

If you are looking for reliable accounting outsourcing services, consider collaborating with Cogneesol. We follow the best accounting practices, use the latest software, and take the strongest security measures to ensure the safety of your financial data. Contact us at +1 833-313-3143 or [email protected] to start your free trial!