In-House vs. Outsourced Accounting: How to Make the Best Choice

In-house bookkeeping can cost 65-150% more than outsourcing. One Decimal client said finding someone to handle all their accounting was like finding a "needle in a haystack."

As businesses grow and adopt new technologies, in-house teams struggle to manage everything. Even Boeing outsourced its accounting to India to save costs and simplify processes.

Outsourcing is faster and cheaper; in-house teams provide control but switching is hard. Explore our complete guide to decide which option best suits your business needs.

Understanding In-House Accounting

In-house accounting means internal staff handle financial tasks. These employees handle accounting, bookkeeping, HR, and technical support. Finding one person with all these skills can be tough. Some companies prefer an internal team due to their knowledge of the business, but this comes with drawbacks. Manual tasks can lead to burnout and high turnover.

Cost is a key factor in deciding whether to hire an in-house team. The average accountant’s salary is around $45,560 per year, with benefits adding another 31%, bringing the total to $59,683. Considering extra costs like training and turnover, outsourcing is often more cost-effective.

According to Forbes, Business owners excel at their core products, such as making burgers or developing technology. This makes in-house hires sensible for essential roles. But, tasks like accounting are often better outsourced to experts, allowing owners to focus on growth. Many small businesses combine many roles into one hire, which can cause inefficiency. Outsourcing is a smart choice if a full-time position isn't needed. During rapid growth, outsourcing accounting helps owners focus on their core business. Outsourcing lets owners focus on strengths while specialists handle tasks for growth.

Example:

About 60% of small businesses use in-house accounting, but this declines with growth. For instance, ISBX continues to handle its accounting, citing control over operations as a key benefit. But, this limits access to best practices and process improvements from external providers.

In-House Pros:

• You can oversee everything.
• You can solve problems immediately.
• They can tailor their work to your business needs.
• Keeping things in-house reduces data risks.
• In-house staff understand your company culture.
• They can address issues right away.

In-House Cons:

• Salaries and benefits can be expensive.
• You might not have access to as much expertise.
• You need to manage the team.
• Adjusting your team can be tough as you grow.
• You may need to buy software.
• Losing employees can disrupt operations.

Understanding Outsourced Accounting

Outsourcing accounting means employing an exterior team to manage financial services. This includes accounts payable/receivable, expense reporting, and payroll. Outsourcing delivers expert knowledge, simplifies processes, and rarer mistakes. Businesses can outsource accounting for about $23,000, saving tens of thousands, with costs ranging from $12,000 to $24,000.

Example:

Prominent companies like Boeing and Walmart outsource accounting to lessen costs and enrich efficiency. The global accounting outsourcing market is set to reach fifty-three billion dollars by 2026.

Pros of Outsourced Accounting:

• Outsourcing can lower costs because you avoid salaries and benefits. Hiring from countries with lower costs can save you 30–70%.
• Access to advanced technology and automation
• Adaptability to changing regulations and industry standards
• Reduced risk of turnover
• Easier to scale as the business grows
• You can find skilled professionals with specialized knowledge.
• They know the rules, helping you avoid penalties.

Cons of Outsourced Accounting:

• Some providers may have hidden fees or lack flexibility
• Traditional CPA firms may focus more on tax preparation than ongoing visibility into operations

Top 5 Companies for Outsourced Accounting

If you decide to outsource, here are good firms to consider:

1. Near: Near helps businesses hire skilled accountants from Latin America, saving money.
2. TOA Global: TOA Global connects companies with experienced accountants from various countries.
3. Auxis: Auxis provides services like accounts payable and financial reporting to help businesses.
4. Meru Accounting: Meru offers cheap bookkeeping for SMEs.
5. Bench Accounting: Bench provides customized bookkeeping and tax services for small businesses.

Conclusion

Outsourcing accounting saves money, provides professional services, and boosts your business. In-house accounting offers control and personalization but can be costly and time-consuming. The best choice depends on your business needs and goals. Make sure to think about both options before deciding.

If you want to save costs and find great accounting talent, consider working with EA. We can help you build a strong remote accounting team. Book a free consultation call today to see how we can help you manage your finances better!