The decision between whether to use outsourced accounting services, do it yourself, or hire someone to handle it in-house can be a challenge. While many choose to do it themselves, enough are outsourcing to support a growth of 2.2% in the accounting services industry this year. Some choose regular accounting firms or DIY their bookkeeping, while others opt for white-label accounting services. So what’s the best choice for your business? Let’s discuss In-House vs. Outsourced Accounting with the pros and cons of both keeping your accounting in-house and using outsourced accounting services.
In-House Accounting
In-house accounting refers to a company managing its financial records with its own employees. This means accountants directly hired by the company handle tasks like bookkeeping, generating reports, and tax preparation. In essence, it’s the traditional way of handling a company’s finances, with the accounting team working internally rather than relying on an external firm.
Pros and Cons of In-House Accounting
For some, handling their accounting in-house is their default option. Here are the plusses and minuses of either DIYing your accounting or having an employee do it.
Pros of In-House Accounting
1. Precise control
You can maintain precise control over the process. For some companies, control over their accounting may offer some benefits, particularly for those who prefer a hands-on approach to all aspects of their business’s operations.
2. Easier Rapport with In-House Accountant
It’s easier to establish a relationship with an in-house accountant. You may see an in-house accountant five or more days a week if they work for you, and, for some business owners, this has value. You can foster a trusting relationship as you get to know your accountant. This connection can make you feel more comfortable providing detailed financial information.
Cons of In-House Accounting
1. Expensive
In-house accounting services can be very expensive. Whether you hire a full-time or part-time employee, using an in-house accounting service can be costly. The average salary for an accountant, according to Payscale.com, is $52,233, which can quickly impact your budget.
2. Quality Variation
In-house accounting services can vary significantly in quality. With an individual or even a small team of accountants working for you, you may not get the kind of comprehensive, thoughtful accounting you need. Without a team of voices and accounting minds supporting a decision, there’s a higher chance of mistakes or oversights. The chances are far greater when you do it yourself, particularly due to understandable biases business owners may have.
Outsourced Accounting
Outsourced accounting involves handing over your business’s financial tasks to a third-party firm. This can range from basic bookkeeping to complex financial reporting and tax prep. Instead of hiring in-house accountants, you pay an external specialist to manage your accounts, ensuring your finances are in order and freeing you up to focus on running your core business.
The Pros and Cons of Outsourced Accounting
Outsourcing your accounting by hiring a white-label accounting firm or using outsourced bookkeeping services also comes with benefits and drawbacks.
Pros of Outsourced Accounting
1. Professional Service
You get reliable, professional service. Bookkeeping and accounting services for small businesses provide you with highly skilled and experienced professionals who put their expertise to work on your behalf.
2. Cost-Effective Option
It’s less expensive. Whether it’s tax preparation accounting, auto repair shop accounting services, or restaurant bookkeeping services — you can pay less for detailed, comprehensive accounting services if you outsource your solution. Whether you pay a monthly subscription or a flat fee for services, the investment can be far less than what you would pay an in-house CPA.
3. Time-Saving
You save time. With outsourced accounting for retail businesses, construction bookkeeping services, or other industries, the amount of work you have to do is minimal. So there’s no need to rush and stress at the close of your fiscal year or other times when the pressure is on—your outsourced solution has you covered.
Cons of Outsourced Accounting
1. Overspending
You can accidentally overspend on outsourced accounting services, particularly if you lose track of what you have them do for you. For companies that charge by the service, it’s best to keep track of the services you request, as well as how much each one costs.
2. Micro-Management Hurdle
It may be difficult to micro-manage your services. When your outsourced solution is many miles away, you may have difficulty checking their work throughout the day or conveying concerns the minute they arise. If you’re used to in-house accounting services, it may take a little while to get used to someone on the outside handling your finances.
Use a Combination of Both In-House and Outsourced Accounting
You can also opt to use both, particularly if you own a small-to-medium-sized business. For example, you could keep some of the simpler accounting in-house and outsource the more time-consuming tasks. Also, if your in-house team—or you—don’t feel confident doing a certain kind of accounting, you can let your outsourced solution handle it.
Whether you choose to outsource some or all of your accounting, you can rely on PABS for reliable service that saves you time and money. To learn more, connect with PABS today.
