In-House vs Outsourced Bookkeeping: Which Is Best For Your Business?
Small businesses seeking to earn their place in the market must maximize their operational resources. This means findings ways to save on business costs by availing of outsourced services instead of hiring internal staff.
As with other business processes, there are pros and cons in hiring an outsourced bookkeeping services and employing an in-house bookkeeper. If you’re trying to find out which option will work best for your business, this article will help you arrive at an informed decision.
In-House vs Outsourced Bookkeeping: Quality Of Service
When hiring a bookkeeper and accountant, you’ll be looking at experience and a proven record of performance from other firms. You’ll also need to check for other qualifications and their background.
At the onset, the screening process sounds easy. Unfortunately, you’ll realize that it’s not, especially if you don’t have bookkeeping and accounting knowledge. If you only have the faintest idea about what this business process involves, you might end up not hiring the best candidate for the job. Granting that you managed to hire the best, this new employee might not be able to provide the kind of service your business requires.
Opting for an outsourced bookkeeping service allows you to have access to professionals. These companies operate in strict standards, and employees are continuously trained and upskilled. In addition, third-party bookkeepers will have access to the latest financial software technologies so you won’t have problems choosing one who’s adept at using the software your business operates on.
In-House vs Outsourced Bookkeeping: Fraud Prevention
There are specific set of internal controls that every bookkeeper and accountant must follow to ensure that the financial process and reporting are accurate and timely. These review and auditing processes also aim to reduce the risk of fraud and help keep all your business finances in order.
Despite these quality checks, though, there are horror stories about accountants colluding with bookkeepers to divert huge amounts of money to their bank accounts. Simply put, the risk of fraud is extremely high when hiring in-house employees to handle your finances.
Seeking the involvement of an outsourced bookkeeping company means there’s lesser fraud risk because other persons who don’t have ulterior motives in your company are in charge of spotting discrepancies and potential issues.
In-House vs Outsourced Bookkeeping: Focus
In-house bookkeepers normally have lean months, and thus are often assigned with other administrative tasks. These other tasks can undoubtedly take their work away from their financial duties. This is crucial because as a business owner, you should be aware of your enterprise’s financial soundness with the help of a bookkeeper and an accountant.
Having to outsource bookkeeping work means your entire team can focus on their core duties. In the same vein, it means that your business won’t have to deal with delayed and erroneous monthly financial reports, allowing you to monitor cash flows more efficiently.
One main benefits of outsourcing is to provide the client with more efficiency and productivity in running their business. Having to outsource some of the processes means the company can focus on expanding the business.
In-House vs Outsourced Bookkeeping: Costs
For most small businesses, this may be the deciding factor. In considering costs, however, it’s easy to overlook the rest of the benefits that you’re mandated to offer when hiring a bookkeeper.
The average pay for a bookkeeping, accounting, and auditing clerk is USD$42,410, according to the Bureau of Labor Statistics (BLS). However, as a bookkeeper can’t perform the entire accounting process without the proper certification, your business needs to hire an accountant, who earns a median pay of USD$73,560, per BLS.
Besides these yearly salaries, your business will have to provide employees with benefits and insurances and the tools—for instance, an accounting software—office space, and other equipment to help them perform their tasks well.
Meanwhile, industry estimates indicate that outsourced bookkeeping services can cost a small business anywhere from USD$400 to USD$2,500 per month, depending on the specific tasks required. This means that a small business can spend up to USD$30,000 for outsourced bookkeeping services yearly, which is still cheaper that hiring an full-time in-house bookkeeper.
Businesses will have different bookkeeping requirements and, thus, need different levels of bookkeeping services on a regular basis. If you think you don’t need specialized bookkeeping service, you may opt for an in-house bookkeeper, provided that the costs of keeping one is cheaper than having the service done by a third party.
On the other hand, if your business needs custom bookkeeping services and financial reporting, consider hiring trained professionals from an outsourcing company to provide high-quality and accurate output.