Top 5 considerations for deciding on hiring an in-house or outsourced accountant for your business.

Accounting plays an important role in running any business because it helps owners track income and expenses thus providing management with useful information for making business decisions. While there may be many thoughts on the preferred accounting solutions, the most common consideration is whether to hire an in-house bookkeeper or accountant, or choose an outsourced accounting team.

1. Nature of business

The type of business affects your choice to do in-house or outsourced accounting primarily due to the availability of office space to house an in-house accountant. For example, medical practitioners and cafe owners typically do not have in-house accountants as they do not require one to work at their premise daily. However, a trading company in the business of selling commercial goods may hire an in-house accountant to handle all finance matters in the back office. This brings us to the next point.

2. Scale of business

Logically, business owners' decision to hire an in-house accountant would weigh on the scale of the business. As the business expands, the volume of sales and expenditure increases too. To cope with the increase in workload on the accounting end, it would make more sense to hire an in-house accountant to focus on the numbers and statutory compliance matters, leaving management with more time and resources to focus on business development.

3. Cost

Hiring an in-house accountant would mean an additional staff on payroll. This means having to pay for additional monthly costs like salaries, Central Provident Fund contributions or Foreign Worker Levy, bonuses, medical and leave benefits, office and computer equipment, training, etc. Such fixed costs will not be applicable when outsourcing your accounting.

With outsourced accounting, you only have to pay for services which are required, for example monthly bookkeeping or payroll services, or annual preparation and review of Financial Statement. As such, monthly accounting expenditure may vary according to the needs of your business as compared to fixed monthly salary expenses when hiring an in-house accountant. Similarly, you are not required to provide office or computer equipment for your outsourced accountant.

4. Technical Expertise

It can be tedious and costly to keep updated with the frequent changes in accounting standards and tax treatments. While an in-house accountant will be more focused on handling your accounts, the outsourced accountant may have wider expertise while handling a variety of accounts in the industry.

5. Segregation of duties

Outsourcing your accounts provides an external level of review to your books. A separate eye may be able to detect mistakes in payroll computations or identify suspicious transactions. Early detection would allow business owners to address the issue and make timely corrections. Regardless of your decision to hire an in-house or outsourced accountant, it is crucial that your business has in place a check and balance system to decrease your risk of fraud.

Should I hire an in-house or outsourced accountant for my business?

Businesses with low to medium transaction volumes may benefit from engaging an outsourced bookkeeper and accountant to minimize payroll commitment. It is common for larger entities to have an in-house accounting team or accountant to prepare and oversee payroll, payables and receivables function. In this instance, engaging an outsourced accountant for optional review functions continues to provide benefits to the owners at reasonable costs.

Contact us for more information on the type of accountancy service most suitable for your business needs.