Should You Hire in or Outsource Your Accounting?

As your business grows, it quickly becomes apparent that you can’t do everything on your own. There simply aren’t enough hours in the day to do all of the sales, marketing, payroll, bookkeeping and the actual work your company performs. It isn’t too long before a growing business needs to be able to hand off some business functions to someone else in order to keep growing.

One of the first areas to go is usually accounting services. Many small business owners simply don’t enjoy this task, and others just don’t have the time. One of the big decisions you’ve got to make is whether you want to hire an accountant or bookkeeper, or whether you want to use outsourced accounting services.

Is it time to bring someone else in?

You need to start out by determining whether or not you need to have someone else do your accounting. For purposes of this discussion, we’re going to roll both bookkeeping and accounting into accounting services; technically, an accountant is your “big picture” person, while a bookkeeper does the daily tasks of balancing the books and paying the bills.

Here are some reasons you might decide it’s time to either hire or outsource for accounting services:

•Your business is growing rapidly, along with the number of accounts you have.
•Your business involves inventory or other elements that make accounting more complex.
•You no longer have the time (or even just the desire) to handle your own accounting.

Once you hit that point, you can make a choice between hiring a full-time accountant and outsourcing for accounting services.

When you hire an accountant

Hiring an accountant to work for you, either as a part-time or a full-time employee, gives you a number of benefits. For starters, it gives you someone who is at all times familiar with the accounting and financial information in your business. That means they can help you make the right financial choices. It also means ready access, and that your books will almost never fall behind by a day or more.

Hiring an accountant also means some other things. It means payroll and payroll taxes. It means worker’s compensation insurance and unemployment insurance payments. If you’re prepared to start hiring people for your business, an accountant is a good place to start. You just need to understand that there will be greater costs than the accountant’s hourly wage. Hiring an accountant is often best for companies with complex financial data, or for companies that employ 25 or more people.

When you outsource your accounting services

Outsourcing is another option. If you’re a sole proprietor, or if you have a business with very few employees, outsourcing the accounting function can be a good choice. This is also true if you are in a business that doesn’t involve a lot of regulatory accounting reporting requirements.

The primary advantage of outsourcing for accounting services needs is cost. You pay an accountant for the work they do, without any overhead. You don’t have to worry about payroll taxes or maternity leave. If you don’t like the job that your accountant is doing, you simply find a different one.

Outsourcing your accounting services also means that you’re relying on someone whose primary concern isn’t your business. It doesn’t matter to an outsourced accountant whether your business succeeds or fails in the long run. The only vested interest they have is the fee you pay them when you need them to do work.

Another downside to outsourcing is that it’s easy to fall behind. You bring an accountant in on an as-needed basis, which means your books will often be several weeks out of date. This makes it awfully hard to keep on top of your business’ health.

Employee versus contractor and the law

There is something else you need to consider in regard to accounting services. If someone works primarily for you, if you determine their working conditions and methods, the law may treat that person as an employee rather than a contractor. You need to spend some time getting familiar with the differences between them, or it could come back to haunt you at tax time.

Ultimately, the choice to have someone else handle your accounting is a necessary one. Small business owners can’t do it all themselves, and businesses can benefit from the expertise that comes from working with an accountant. The key is to hire the right kind of accountant for your business and to make sure the accountant you choose is reliable and qualified.

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