Whether your business is a start-up, a small company, or a medium-sized one, you need the right bookkeeping and accounting team to manage your finances. Proper financial management is crucial for any business as it keeps the company stable and ensures due diligence to legal requirements.
With their growing financial needs, entrepreneurs often think about hiring in-house personnel or outsourcing accounting and bookkeeping services. To help business owners weigh which option is better suited to their business needs, listed below are some factors to consider.
Hiring and Training Process
Hiring a new accountant requires time and effort to properly evaluate which candidate is the right fit for the job. Additionally, it will take some time before the new staff fully adjusts to the company’s operations. Business owners often prefer someone who has at least a few years of relevant experience and requires minimal training to use existing systems and processes.
Meanwhile, outsourced firms already have the human power and technologies in place, eliminating the challenge of screening numerous candidates and most training needs.
Cost is a major deciding factor for many business owners as they want to ensure justified returns on their investment.
When hiring in-house accountants, entrepreneurs will not only pay for their workers’ salary but also other benefits like health insurance, paid holidays, and sick leaves, among others.
In the US and Canada, accountants’ and bookkeepers’ average annual salary ranges from about $44,000 to $58,000 and can go up depending on their qualifications. Although some can work with a lower salary grade, it can be challenging to find a well-skilled and reliable employee who is okay with such an offer.
If these figures seem out of the budget, it might be more cost-effective to outsource instead. You will only have to pay for the services you need and do not need to worry about overhead costs.
Outsourcing accounting firms usually charge an hourly rate or offer an all-in-one monthly fee structure with total cost clarity. On average, these fees range from $500-$2,500 per month based on the complexity of services required.
In-house accountants often vary in terms of knowledge and skills, which may result in inconsistencies with their work quality. Some have certifications and in-depth training, proving their competency with the latest norms, while others with an accounting background might not be up-to-date with these new practices.
As accounting and bookkeeping firms have the means to keep their team of experts well-versed on the latest industry standards, outsourcing their services might offer better consistency.
The usual work schedule for in-house accountants and bookkeepers follows the 9-to-5, 40-hours-per-week standard. However, when urgent matters requiring their attention occur outside this timeframe, they might be delayed until the next working day. Similarly, the employee’s work will likely be pushed back if they are on leave.
Conversely, accounting and bookkeeping outsourcing firms typically offer extended working hours or even 24/7 services. As they cater to various types of businesses with different operating hours, these outsourcing companies often need to be flexible to address urgent concerns promptly.
Data Security Concerns
As you entrust your business’s financial information to someone else, you want to make sure that these valuable data will not fall into criminal hands. Likewise, you want assurance that the in-house accountant you hire will not embezzle your funds or endanger the establishment. Hence, it is imperative to thoroughly screen candidates during the hiring stage to prevent fraudulent individuals from entering the company.
According to the Association of Certified Fraud Examiners (ACFE), occupational fraud commonly targets four areas: operations, accounting, executive and upper management, and sales. Furthermore, small businesses are more likely to be victimized by corporate scams, particularly if they do not have adequate security measures to detect these risks.
On the other hand, these incidents are less likely to occur in outsourced accounting firms for several reasons. They usually do not have the kind of access an in-house staff has to the company. In addition, most outsourced financial service providers have auditors to monitor processes and ensure that illicit activities do not transpire.
A clean reputation is paramount with most outsourcing financial agencies. If they get involved with scams, it can destroy their image, resulting in customer distrust and other losses.
There are many qualified accountants ready to be hired by entrepreneurs. Correspondingly, several online accounting and bookkeeping services have also emerged in the market to help businesses with their financial management needs.
Before finalizing whether to onboard accountants or outsource financial services, business owners must understand their operational requirements to choose the more suitable option. Thoroughly considering the benefits and drawbacks of these services can help direct them into the right decision.
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