Small businesses often deal with the confusion of whether they should manage their books themselves or get professional help. When companies are in their nascent stage with not many financial transactions, it may look simple enough for business owners to take it upon themselves to do the accounting. However, as the business scale, accounting becomes much more than “debit what comes in, credit what goes out.”
When a business starts growing, the number of financial transactions, statements, and accounting activities also grows equally. Accounting helps keep track of liabilities, assets, income, and cash flow. Keeping track of the business’s financial performance allows owners, investors, and other stakeholders to make informed decisions regarding the business.
This is why accounting is considered the most critical job, and accountants rank above all other staff. This is because they’re entrusted with sensitive financial records and responsible for keeping everything on track. Now, the question arises whether to opt for in-house accounting or hire accounting services. Here’s a brief guide to help you decide.
The Quality of Work
As you know already, accounting is the most crucial aspect of any business, regardless of size. This is because they handle sensitive data, including financial accounts and transactions. Considering the sensitive nature of the job and the risks involved, you must consider the option that consistently offers accurate and high-quality accounting.
In-house accounting refers to the team of accountants you have hired full-time on the company’s payroll. You can hire a Certified Public Accountant (CPA) with a complete understanding of all the generally accepted accounting principles (GAAP). Alternatively, you can hire someone fresh off the job market or a self-taught accountant referred by top management. Depending on the type of candidate, the level of control and quality of work will be impacted.
On the other hand, hiring a professional accounting service gives you a higher level of control and the ability to fine-tune the quality of work. Usually, such accounting firms have a team of highly skilled and dedicated accountants with a keen eye for details.
Moreover, you can get a wide range of accounting solutions, ranging from payroll to monthly financial accounts management with accounting services. As such, the range and quality of work are much higher. You can find out more about the range of services provided by contacting the best accounting services in your area.
Cost to the Company
After the quality of the work, what is the next most important factor to take into consideration? The cost to the company for hiring an in-house accountant or outsourcing is one of the most significant pressure points, especially for small and medium-sized businesses.
Hiring an in-house accountant or a team of accountants requires more funds with an assured and justified return on investment. Typically, the costs of in-house accounting default to the higher side because of the expenses like health insurance, sick leaves, and pension funds, apart from the monthly salary.
If a business is fortunate, they might chance upon a highly skilled accountant with a lower pay scale. Other than that, from the business perspective, outsourcing turns out to be more cost-effective. Professional accounting services usually charge as a monthly fee structure or an hourly rate. This makes it easier for businesses to find skilled accounting services at an affordable rate.
The UK has a law called Working Time Directive or Working Time Regulations. This law dictates that unless you’re in a job that requires 24-hour staffing like armed forces, emergency services, or police, you can’t work for more than 48 hours a week on average. This means 8 hours a day for a six-day week or 9 hours for a five-day week.
Accounting doesn’t fall in the 24-hour emergency services. This means your in-house team will typically be working 9-5, and the work will be in motion during a typical workday. Any emergency work that crops up after working hours will often be delayed until the next working day unless you have a very dedicated team.
On the contrary, accounting firms typically have several teams working on a rotational basis in shifts. And if not, they will often work for extended hours if need be. If you are a business that works odd hours or typically long hours, outsourcing accounting is the way forward.
Loyalty Towards the Business
Recently, a report revealed that the embezzlement frauds have increased from 15 cases worth £8 million in 2020 to 26 cases worth £15.9 million in 2021. One of the most curious and interesting cases reported involved a company secretary who stole £1.7 million from their employee to go on a horse buying spree, which they considered an addiction.
Accounting frauds are a severe issue and might cause severe financial damage to your business. Unfortunately, companies are more likely to fall prey to fraud with an in-house accounting team. The main reason behind this logic is that employees are more susceptible to get tempted to forge the books. And since they have full access to all confidential data of the company, they can go unnoticed for a long time before they are caught.
On the other hand, accounting firms build their entire reputation and place in the market based on trust and reliability. To this extent, most accounting firms have a dedicated and experienced team of auditors to ensure that no frauds are being committed. Quite obviously, their involvement in scams and cons will make their business crumble.
Before deciding on in-house accounting or outsourcing, assess and evaluate your business and evaluate where you need help. Understand that no two companies are ever the same and will have different issues. Therefore, factor in the pros and cons of both options mentioned in this article and decide which is the best fit for your business.