A business needs sufficient time to manage critical business tasks that affect its financial position of a business. Robust business processes like bookkeeping and accounting need proper attention and financial expertise. In the initial stages, a business can manage its accounting and bookkeeping processes independently. But with growth in the size of the business, an organisation may need to employ a full accounting department with roles assigned such as accountant, accounting manager, bookkeeper, and a CFO. The larger the size of an organisation, the more complex is the accounting process. Complex accounting and bookkeeping need financial assistance and expertise to minimise errors. Businesses either choose in-house or outsource the accounting and bookkeeping services. However, sometimes the costs of hiring and setting up an in-house department exceed a business’s budget requirements.
Hiring, managing, retaining, and training an in-house team adds to the company’s costs. An in-house team requires monthly wages or salaries and other benefits like health insurance, vacation pay, retirement, workers’ compensation, etc. However, outsourcing the accounting and bookkeeping services cut down all such costs because businesses only pay for what they need.
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Difference in costs
The cost will be a primary factor in determining whether one opts for in-house or outsourced bookkeeping services. As per the studies, the average salary of a full-time accountant is nearly around $72,000, whereas a bookkeeper demands $45,000 annually. In addition, there are other expenses such as medical, payroll taxes, sick leave, etc. It also includes hiring, managing, recruiting, and training costs.
On the other hand, outsourcing bookkeeping services does not include any mentioned expenses. Outsourced accounting and bookkeeping can cost from $2,500 to $5,000 per month per bookkeeper, depending on the type of services needed. The high costs of hiring an in-house team are a primary factor to consider by a business. Let us have a look at what hiring an in-house will cost your business:
What in-house hiring costs?
- More work pressure– When an in-house accountant or bookkeeper is hired, business owners must oversee, review, and double-check the books. Though an in-house team is hired to manage and look after the books, the business owners still need to monitor their work closely. It restricts the owners from focusing on the core business activities. With outsourcing, businesses are relieved and can easily devote their time and efforts to running the business.
- Only basic bookkeeping– An in-house team can only solve the basic bookkeeping needs of a business. An in-house team helps in processing payroll, invoices, billing, etc. The basic service allows getting the work done, whereas outsourcing accounting and bookkeeping services provide a collective knowledge of certified professionals to businesses. The experience and expertise of high-skilled professionals enable businesses to analyse their finances and make well-informed decisions.
- More risk– With an in-house team that manages all the bookkeeping tasks, mistakes can be made when only one or two people handle the books. There are chances of creating fake expenses and other misleading errors by an in-house team. On the other hand, outsourced professionals ensure accurate, honest, and transparent business records. All the records and books of accounts are double and tripled checked by multiple accounting professionals, so any inconsistency or oversight is easily spotted. A professional firm that handles all the bookkeeping matters reduces the risk of fraud and careless errors.
- Less knowledge about government regulations– Mostly, the in-house accountants or bookkeepers are not updated with governmental changes, modern accounting practices, or tax requirements. These matters affect the functioning of a business in the long run. A professional accounting firm is well updated with these changes and helps implement them in business operations.
As mentioned above, outsourcing bookkeeping services serves as a cost-effective and viable solution. Outsourcing accounting and bookkeeping services can be a solution to solve common problems that occur with an in-house team. Here are some compelling reasons to invest in an outsourced accounting team:
Reasons to invest in an outsourced accounting team
- The outsourced accounting team allows businesses to pay only for what they need. There is no need to commit to the cost of a full-time salary; rather, a monthly service plan can be chosen as per the business requirements.
- Businesses can scale up their accounting process with the input of a professional accounting team. An in-house employee has certain limits, and they cannot offer beyond that.
- Businesses are exposed to the knowledge and expertise of a wide variety of specialists. On the other hand, it becomes costly and time-consuming for a single employee to gain expertise.
- In an outsourced accounting team, several certified professionals provide services. Even in the absence of one financial expert, the business will not suffer. However, the absence of an in-house employee makes the business suffer.
Accounting and bookkeeping processes can be quite burdensome for a business. A sound accounting system is needed to ensure an accurate, quality-driven, and organised financial system. An in-house team has limitations, but a strong outsourced accounting team provides endless opportunities. A sound financial system forms an organisation’s base, which helps businesses survive and thrive in the long run.
Choosing outsourced bookkeeping services can prove to be a cost-effective option. However, the choice depends upon an organisation’s needs, requirements, and budget. In-house accounting might be right for some businesses, but an outsourced accounting team is right considering the cost factor.
A right outsourced accounting team enables businesses to streamline accounting and bookkeeping processes. Their reliable and cost-effective services help to keep a business on track. Thus, companies gain better control of their finances and improve financial intelligence to help grow their business.