When small businesses begin to grow, one of their most significant decisions is whether to handle accounting in-house or outsource it. Accounting is essential to maintaining accurate financial records, preparing taxes, and ensuring the business’s economic health. However, many business owners wonder if hiring an in-house accountant is worth the cost or if outsourcing accounting services for small businesses would be more cost-effective. The decision is often made based on the cost of accounting versus what the benefits and efficiencies will be by outsourcing. Let's explore the information needed by small businesses to decide which one is best for you given your needs, available resources, and long-term goals. Read more at Streamline Your Finances with Outsourced Accounting and Bookkeeping Services.
In-House Accounting Costs: More than Just Salary
If you’re going to hire an in-house accountant, salary is one of the first things you’re going to need to consider. According to the U.S. Bureau of Labor Statistics, the average annual salary for an accountant in the U.S. is about $73,000. However, for a small business, the cost doesn’t stop with the salary. Business owners must factor in the following:
Benefits: Health insurance, retirement plans, paid time off, and other benefits can increase the base salary by 30 to 40%.
Training and Development: Accountants need to keep up to date with tax laws and financial regulations so they have to keep being trained. The training can cost from a few hundred to thousands of dollars a year.
Office Space and Equipment: If you have an in-house accountant, you will have to provide office space, equipment, and software tools. Put another way, small businesses might need to purchase accounting software like QuickBooks or employ IT staff to keep up with systems.
The hidden costs of hiring a full-time employee can be quite high: the total annual cost of an in-house accountant can easily exceed $100,000. This is why while hiring an accountant, the cost of your business isn’t just the salary.
Outsourcing Accounting Services: Cost-Effective and Flexible
Outsourcing accounting services for small businesses can offer high-cost savings and flexibility. One of the reasons why so many small business owners like to outsource their accounting is that they can get the services of a high-quality accounting firm at a cost that does not carry the overhead of hiring a full in-house team. Read more at Are Accountants Worth the Cost? Understanding Their Value for Businesses.
Here are a few key advantages to consider:
Lower Base Cost
Businesses pay only for the services they need instead of paying full-time salaries. Outsourced accounting firms usually charge based on a flat fee, hourly rate, or a retainer monthly. For example, a basic bookkeeping service might be $300 – $500 per month, or a more thorough financial service like tax planning and financial reporting, which can cost you $1,000 – $5,000 per month, depending on the service.
No Employee-Related Overheads
Benefits, training, and office space are easily avoidable while outsourcing accounting services for small businesses. It is especially cost-effective for businesses that don’t need accounting services full-time. Read more at Outsourced Finance and Accounting-Why It’s a Smart Move for Small Businesses.
Scalability
Accounting outsourcing allows you to scale up and down accounting services as you need to. They can also outsource firms that can provide more specialized services if the business grows, or if the company needs more complex accounting tasks without having to hire more staff.
In reality, research from Intuit showed that small businesses that outsource their accounting services can save 25 to 40% of their total accounting costs. Read more at Outsourced Finance and Accounting-A Complete Guide for Small Businesses.
Specialized Expertise, without the Premium Price Tag
Outsourcing accounting services for small businesses is one of the biggest benefits because you get access to specialized expertise without the premium price. Many outsourced accountants have high knowledge and experience in many industries and accounting standards like GAAP (Generally Accepted Accounting Principles), tax laws, financial reporting, etc. Read more at How Financial Advisors and Outsourced Accounting Can Transform Small Businesses.
For small businesses, this means getting professional-level accounting without the high cost of having a Certified Public Accountant (CPA) or other specialized in-house personnel. Businesses also can outsource those functions that require highly specialized advice (e.g., tax planning or business forecasting) without needing to have a full-time accounting expert on staff.
Outsourced bookkeeping services are available to assist you with everything from basic day-to-day financial management to more advanced tasks like audits and financial analysis at a lower cost. Read more at How Outsourced Accounting Services and Bookkeeping Help Entrepreneurs Manage Finances.
Time Savings and Increased Productivity
While calculating how much does an accountant cost, it includes the time that the business owner or his internal staff spends on accounting-related tasks. Time spent on managing financial statements, payroll, tax filings, and bookkeeping could be spent growing the business. Outsourcing accounting services for small businesses allows the owners to focus on strategic decisions, customer acquisition, and other important aspects of running the business. A Deloitte study showed that small businesses that outsourced non-core functions such as accounting grew 33% faster than those that did everything in-house. However, outsourcing allows you to maximize productivity by freeing your team to focus on more important tasks, and that drives profitability. Read more at How Outsourcing Accounting Services Helps Small Businesses Save Time and Money.
Reducing Risk and Better Compliance
For small businesses, outsourcing accounting can save them from errors, fraud, and non-compliance with tax laws. Accounting firms know the ins and outs of ever-changing regulations, and tax codes so that the business is kept up to date and not paying penalties.
For instance, businesses that don’t comply with IRS filing deadlines, or make errors on tax forms, will face penalties or audits. Mistakes like these can be costly, and they hurt the business’s reputation. Accounting is outsourced for a reason – it eliminates the chance of errors and helps you have peace of mind that your finances are in the hands of professionals.
By outsourcing your bookkeeping you are in the hands of professional people who are committed to making sure your financial records are accurate and compliant with the law while minimizing any liability that might come your way. Read more at The Benefits of Outsourcing Accounting Services for Small Businesses.
Conclusion: Which Option Is Best for Small Businesses?
Ultimately, the decision between outsourcing accounting services and in-house accounting depends on your business’s specific needs and growth trajectory. If you're a small business owner trying to manage costs while ensuring compliance and accuracy, outsourcing is often the more cost-effective and efficient choice. With outsourced accounting services, you can focus on growing your business while leaving the complexities of accounting to professionals.
Hiring an in-house accountant may be the right decision for businesses with highly complex financial operations, but for most small businesses, outsourcing accounting services provides a more affordable and flexible solution that helps you save time, money, and resources.
No matter which option you choose, it's important to carefully assess your needs and choose a service model that aligns with your business goals. For small businesses that are ready to experience the advantages of outsourcing accounting services, it’s time to find the right outsourced partner to streamline your finances and help your business grow.
If you’re ready to streamline your financial management, 406 Consulting can guide you through the process. Our experts specialize in delivering tailored solutions that help small businesses thrive. Reach out today to explore how we can help you prosper.
