As your business expands, you need more time to manage your business and spend less time thinking about your finances. That’s where an accountant comes in. I’m not talking about your CPA firm that you talk to once or twice a year for taxes, I’m talking about internal, everyday finances for your business. From reconciling and analysis to budgeting and bank audits, you need someone on your team who is an expert at accounting. So, it’s time to hire an accountant, right? Well, not so fast.
Hiring an internal accountant can be a daunting task. After all, you are handing over the single most important thing to your business’ success - your money. You need to be confident in his/her abilities and you need to trust that whoever you hire is the right person for the job. Ultimately, you also need to decide whether you should hire an internal accountant or outsource the job to an accounting firm. So let’s talk about the difference between hiring internally and outsourcing your accounting.
3 Pros of an Internal Accountant
#1: They are invested in your business
Hiring an internal accountant and putting them on your payroll makes them fully invested in your company. They are going to be overseeing and monitoring the financial health of your business on a daily basis and ensuring that you are on track for your goals. They are invested in the success of your business, as it is their financial source as well.
#2: You have access to them daily
Since your internal accountant is working on your business every day, you have access to them whenever you need them. You don’t have to worry about racking up an hourly charge every time you call them since you are paying them a salary. Having instant access to that internal accountant gives you peace of mind that your questions will always be met with an instant answer.
#3: Your budget is set
Budgeting is incredibly important when considering hiring an accountant internally versus outsourcing one. When you hire your internal accountant, you know exactly what their salary is and how to budget for it. You never have to worry about fluctuating hourly bills that you receive monthly.
3 Woes of an Internal Accountant
#1: High Salaries
Of course, when you set out to hire an accountant, you will quickly find that the good ones are not cheap. To hire an accountant that is a true expert and will be a good fit with your company will come at a high price tag.
#2: Analysis from One Person
When you hire an internal accountant to analyze and oversee the financials of your company, you are depending on one single person’s expertise to run your company. While this isn’t always a bad thing, you do need to be sure you are confident in this person as you are placing a huge responsibility on them.
#3: The Dreaded Two Week Notice
One of the hardest parts of hiring an internal staff member, accountant or otherwise, is the possibility of them leaving the company with little to no notice. While two weeks is the standard parting notice, not everyone gives the notice at all and sometimes it’s simply not long enough to interview, hire, and train a replacement. Having placed so much trust and duty in one person to have them leave your company high and dry is a terrible feeling and one most business owners find themselves in at some point in time.
3 Pros of Outsourced Accounting
#1: Pay as You Go
Hourly consulting and accounting rates allow businesses to only pay for what they need in an accounting firm. Even with flat fee-based structures, you can choose a la carte what you need for your business and only pay for the hours that you need without all the extra costs of having a full-time staff member. This helps small businesses get expert accounting help without having to break the bank in six-figure salaries.
#2: Team of Experts
When you hire an outsourced accounting firm, your business is not only getting the person you hire but also the team of experts that make up the entire firm. Even if you hire a single-person firm, that expert is typically backed by a team of business consultants that are utilized for support along the way. Outsourced firms have a reputation of their business to uphold, so they are often willing to go the extra mile to ensure your business gets the best advice possible.
#3: Outsider Opinions
While having an accountant on staff is helpful in most situations, there are times when your business truly needs an outsider’s perspective. For matters relating to vacation policies, health insurance changes, and even business expansion, an internal accountant will have a vested interest in the outcome whereas an outsourced firm will advise based on what’s best for your business as a whole.
3 Woes of Outsourced Accounting
#1: Lack of Control
When you hire an outsourced solution for accounting, you are often at the mercy of the systems and processes that your accounting firm uses. Of course, they are the experts on these things, but it removes the ability for you to easily oversee and control your finances. This is another area where you need to be sure, as a business owner, that you are comfortable and confident in who you choose as an accountant.
#2: Accessibility
Outsourcing your accounting to a consulting firm means that you are putting your finances in the hands of a firm who likely have other clients that they work on. Your business is not the only one they work on at any given instance, so you may not have full accessibility to them on your terms. So what happens if your bank needs updated financial statements - like, yesterday - and your accountant is booked up solid? Be sure when you hire an outsourced solution that you understand fully the availability of your team for questions and concerns that may arise.
#3: Fluctuating Rates
While many outsourced accounting and consulting firms, mine included, are moving to a flat fee structure rather than hourly, hourly rates are still the industry norm for accounting services and consulting. This may be great for the months when you are on cruise control and don’t need much from your accountant, but in those months of heavy workload, you’ll be hit with a hefty bill. This oftentimes creates budgeting havoc for small businesses.
So, which should you choose? Well, there’s no one-size-fits-all answer. As a business owner, you should take into consideration all of these pros and cons of hiring an internal accountant or outsourcing your accounting. There is no right or wrong answer across the board, but there is a best answer for your business. Taking the time in the beginning to hire the right person or the right firm will pay off in the long run and set your business up for financial success.