A Question we often get asked is whether a business should hire an in house accounting team or outsource their accounting work. This can vary depending on the business but there are pros and cons to each option.
With some of our clients, we see the business owners are primarily responsible for their accounting systems. Although this isn’t always the case since some have more experience than others. Ultimately, this may not be the best use of their time. Every company needs their accounting taken care of. In years past, we saw more internal departments. Now we have seen a change, in the last 5 years there have been more options available for outsourcing. The primary reasons for outsourcing have been cost savings, the shortage in the labor market, and leveraging technology and expertise knowledge. We have much better technology that allows business accounting to be done remotely. One of the main benefits of outsourcing is it can free up the business owners, CEOs and other internal team members to focus on strategy and growth.
Building an external team does have its cons. With an outsourced accounting team, the business owner may feel like they have less control of their financial data. Another possible downside is the third party source may not be familiar with all the needs and nuances of your business if not addressed properly.
In House Accounting
To build an internal team takes a lot of time, people with the right skillset. Another important thing is making sure the employees you do hire stay. Internal teams are great because they offer more control over the day to day accounting. Being able to reach out to your team whenever you need is very crucial for some business owners but not others. Housing an accounting team for your company does have its pros but it also has cons. When building an internal team, you must worry about having less resources and support for them. Cost also ends up being a big factor when it comes to an internal accounting team because it is much more expensive. You pay for employees, benefits, software, and training. It starts to add up.
Ultimately the decision between internal and external accounting comes down to several factors. Some businesses may benefit from a combination of both. Sometimes this means a small internal team working closely with an external team. Regardless of which method a business chooses, it is important to remember that accurate financial reporting is a crucial part of any successful business. If you need help with your accounting or any other financial items, reach out to us today.