Accounting is a major part of any business, yet more and more companies outsource their accountancy.
Why is that? What are the benefits of hiring your own in-house accountant?
For small businesses, outsourcing can be a blessing, cost-wise. But after your revenue passes a certain point, you may be better off with a full-time bookkeeper. How do you work out if that's the right solution for your business?
These are questions you can ask yourself :
- What is the most cost-effective solution for my business?
- What are the reasons why I should hire someone instead of outsourcing?
Here are the pros and the cons to help you find out
- Your accounting needs may be very specific, specialized or unusual. If this is the case, outsourcing may cost you more than hiring your own accountant.
- When you hire someone, you're free to set the tasks they perform. Outsourced services usually come within a package that may not always fit your needs.
- Proximity is your main ally! A few steps to the office next door is much easier and faster than an email or a phone call to someone at the opposite end of the country or even a continent away. And someone who's in the same building as you will be available in a few minutes, if not instantly. So no "Please hold the line..."
- Multi-tasking is a must in growing companies. External workers will either not be keen on offering this or won't have the time or skills to meet your needs. Having someone in-house means the function can evolve in a similar way to the business and quickly and easily adapt to fulfil your company’s new needs.
- Having your very own accountant also brings an often-forgotten value to your business - loyalty. An outside accountant will have other clients and will therefore not belong to your company the same way. Added to which you can never be sure that sensitive information about your business will stay within your four walls.
- When external accountants work, they might follow a process that may not be the same as yours or even fit with the way your business operates. By choosing an in-house accountant, you also (to some degree) choose the way things work.
- Chances are that some points of the year will be quieter than others. This means your full-time in-house accountant will be less useful than they are during the busy periods, resulting in high costs but low benefit at these times.
- If you have little knowledge of accounting, it could be much harder to recognize the perfect candidate to hire. Opting for outsourcing with a good firm ensures you get an expert.
- Setting up your rules will be time consuming and a little bit of expertise will come in handy. If the accountant you choose is fresh out of school, don't be surprised if there are constant revisions in the first years. And without experience, chances are revisions will not only be improvements.
- Hiring someone means you'll have to foot the bill for the complete package - salary, benefits, office space, accounting software, etc. When outsourcing, you pay a monthly fee that frees you from all these added costs.
Now that it's clearer (hopefully) what will work best for you, here are a few tips on how choose an accountant or an accounting firm.
Hiring an in-house accoutant
- If you go the in-house route, it will be a major plus for your company if your accountant is more than just a bookkeeper. Any extra knowledge such as managerial accounting, budgeting or financial planning is very welcome.
- If you feel the person you're interviewing doesn't seem to understand how your business works, don't hire them! It's very important that an accountant has a good flair for opportunities to improve the way your business works.
- The most obvious reason for which you would want an accountant is because you don't know much about accounting, so how can you make sure that your candidates are not pulling a trick on you? Ask for recommendations from previous companies, and also proof of certifications.
- Here's some more information about hiring an experienced candidate.
Going for outsourced accountancy
If you think that outsourcing is the best solution for you, there are may things to take into consideration before you take the final call.
- First of all, it could be more than just the quality of their services that influences the reputation of an accounting firm. Some accounting firms are more susceptible tax controls and draw more scrutiny for some reasons. Choosing a company like this puts your business in the crosshairs of tax inspectors, which is always very stressful.
- Along with that is the way the accounting company works. Some have chosen to keep up with the times and offer online tools and process your documents digitally, so they can get the work done every week. Some others have decided to stay old-school and will be able to do your accounts much less frequently.
- It's also important to know the extent of the services that are being offered. Will they advise you or are they just there to "do the work you can't do yourself"? A good piece of advice is priceless and can win you ten times what it's cost you. Accounting is the key function, but expertise in taxes is highly recommended too.
- Speaking of costs, price is of course determining. Some companies won't hesitate in charging you 3 or 4 times the amount others do, so it's really important to know if the investment is worth it. If you own a small business, you should consider a contract with fixed fees - it'll protect you from unforeseen expenses. Keep in mind though that they will probably limit their services to what's normally inside the work package.
- And finally, what's your relationship with them like? If you find the person can't handle the tasks you give them with the necessary calm and flexibility, check other firms before you settle for one and see who you feel best with. You can also call their current clients and get their opinions.