Business owners often need to make tough decisions for their company. It may seem like just needing to choose one over the other but it is not that simple. One aspect of business that owners need to figure out is their accounting. This sector of business can make or break a company. Proper accounting and bookkeeping is considered as one of the elements of a company’s growth and success. This helps track the finances of the business. A business owner may choose to have its bookkeeping done in-house or have it outsourced. When deciding between outsourcing and in-house full charge bookkeeping, businesses need to consider various factors, including cost, control, expertise, scalability, and confidentiality. Each option has its pros and cons, and the right choice often depends on the specific needs and circumstances of the business.
In order to help you decide, let us break down the two choices presented.
| Outsourcing Full Charge Bookkeeping | |
| Pros | Cons |
| Cost Efficiency: Outsourcing can be less expensive than hiring a full-time employee because you avoid costs associated with employee benefits, office space, and equipment. | Less Control: You have less direct oversight over day-to-day bookkeeping activities. |
| Expertise on Demand: You gain access to a pool of professionals with a breadth of experience and specializations. | Communication Barriers: There may be challenges with communication, especially if the outsourcing company is in a different time zone or speaks a different language. |
| Scalability: It’s easier to scale up or down as your bookkeeping needs change without having to hire or lay off staff. | Privacy Concerns: There’s a risk of sensitive financial information being exposed to third-party providers. |
| Focus on Core Business: Outsourcing allows you to focus on your core business activities without being distracted by administrative tasks. | Quality Variability: Service quality can vary greatly depending on the outsourcing firm, and you may have limited recourse if the work is not satisfactory. |
| Risk Mitigation: The outsourcing firm may have better systems in place to ensure compliance and mitigate risks related to financial reporting and transactions. | Dependence: Relying on an external provider can be risky if their business faces challenges or if there’s a breakdown in the relationship. |
| In-House Full Charge Bookkeeping | |
| Pros | Cons |
| Control and Oversight: You maintain direct control over your financial data and bookkeeping processes. | Higher Costs: Full-time employees come with additional costs like benefits, taxes, office space, and equipment. |
| Team Integration: Your bookkeeper can be integrated into your team, understanding the nuances of your business more deeply. | Recruitment and Training: Finding and training the right person takes time and resources. |
| Immediate Access: It’s generally easier to communicate with someone in-house and resolve issues quickly. | Fixed Resource: Unlike outsourced services, you can’t easily scale down your in-house resources without going through layoffs |
| Data Security: Keeping data in-house may reduce the risk of information breaches, as the control over data remains within the business. | Potential for Down Time: If your bookkeeper is sick or goes on vacation, their work doesn’t get done until they return. |
| Stable Work Relationship: An in-house bookkeeper is more likely to develop loyalty to your company and may contribute to a stable work environment. | Limited Skills and Knowledge: An individual bookkeeper may not have as wide a range of skills or experience as a team of professionals from an outsourcing firm. |
Since each choice has its own pros and cons, the decision that you make should be based on a careful assessment of what your business needs. You have to considered the size of the business since smaller businesses with simpler transactions may benefit more from outsourcing, whereas larger businesses may require an in-house team. Another thing to consider is the company’s growth phase. Fast-growing companies may prefer the flexibility of outsourcing and start-ups may benefit from outsourcing so they can focus on growing their business. One should also consider budget constraints. If the budget is tight, outsourcing can be a cost-effective solution.
Ultimately, some businesses may find a hybrid approach to be the best solution, keeping core bookkeeping functions in-house while outsourcing supplementary tasks to manage workload peaks and gain external expertise when needed. The key is to regularly assess the bookkeeping function’s effectiveness in supporting the business’s strategic financial goals and make adjustments as necessary.