When your business is large enough to warrant a separate accounting branch, most companies struggle to decide whether they should hire an in-house accountant, or trust their finances to a third party accounting firm. And there’s no question that it’s a tough decision. There are different costs to weigh, not to mention the level of service you think you’re going to need, and the very idea of trusting your company’s finances with someone that’s not you. While no one can make the decision for you, it’s good to know what some of the general differences are between an accounting firm and an in-house, full-time accountant. Here’s a few things to know before your company decides which option might be best for you:
Cost
There is going to be a bit of a cost difference between hiring a firm and hiring a single accountant. First of all, if you hire someone to your own staff, you’ll have to consider benefits, bonuses, and just general salary. And if you plan on keeping them around, you’ll also have to think about yearly pay raises. On the other hand, if you hire an accounting firm, you’ll just be paying for the services you need, when you need them. Though it’s possible that on a service-by-service basis, the in-house accountant is cheaper, when you add up salary and benefits, you’ll likely pay less to simply have a firm take care of just the financial services your company really needs.
Service
It’s also a good idea to consider what exactly it is your company needs help with when it comes to finances. An in-house accountant will be great at advising you which business purchases are good ideas and filing your taxes every year, but they are only one person. If you just need a minor services that are fairly straightforward, and if you hire an accountant who specializes in your industry, they’ll probably do an awesome job, but know that they are slightly more limited than a firm. When you opt to have an accounting firm handle your business’ money, you’ll have an entire team of accountants with different specializations and areas of expertise, which can come in handy when you have more in-depth questions or are looking for a unique service or audit. In hiring just one accountant, you are giving up the expertise of an entire firm at your fingertips.
Overhead
If this is the first time someone besides you will be handling your company’s finances, recognize that overhead is another cost you’ll need to consider. In hiring an in-house accountant, you’ll have to purchase the equipment and programs they’re most comfortable with to adequately take care of your finances, which adds to your overall accounting and finance budget. If you already have those programs and equipment, then you should be fine, but if not, it’s important to remember that extra cost. An accounting firm who uses those sorts of programs every single day will already be equipped with the highest-tech, most up-to-date equipment on the market.
Efficiency
Depending on the amount of financial support you need, it’s good to remember that there are likely to be times when your accountant won’t have much to do. Taxes are pretty seasonal, and if you’re not making major business decisions every day, then their workload isn’t going to be all that great, making them relatively inefficient in the off season. While major corporations do often have accountants on-staff, if you don’t plan on using them every day, it doesn’t always make sense to create a salaried position for an in-house accountant. That’s why many middle-market companies and businesses do opt to hire an accounting firm. You only pay them for the work you need, rather than a year-round salary. For many companies, this flat fee pay scale is much more cost effective.
Scalability
No matter where your business is now, that’s likely to change in six months, right? Whether you expand or streamline your processes, there’s almost no business that remains stagnant over years of business. In that line of thought, you need an accountant or firm who can accommodate your business’ growth over time. If you opt for an in-house accountant, you’ll want to choose one who can handle additional tasks and financial services as your company grows. If you’re looking for an accounting firm, you’ll want to choose one with the manpower to handle whatever your expanding industry has to throw at it. Typically, it’s easier to expand with an accounting firm, simply because they have more employees who specialize in your industry, but that doesn’t mean that an in-house accountant can’t handle growth either. Whichever option you choose, make sure it’s scalable, and can flex with your company’s growth.
Trust
Regardless of who you choose, make sure you’re picking an accounting professional you can trust. Some businesses opt for an in-house accountant because they feel someone on the payroll has more incentive to make better business decisions. Others choose an accounting firm, because they know these are decisions firms make every day, and they understand that firms have the experience of a wealth of professional accountants behind them. No matter what, trust is paramount. You need to be able to check references of either the accountant or accounting firm you’re looking at. Though an accounting firm is likely to have more clients, you can still talk to an individual accountant’s previous employers to get an idea of how well they can perform in your company.
If your company’s decided an accounting firm is the best option for your finances, be sure to get in touch with the professionals at Steensma Novotny PLC. We’ve been in the business since 1984 and pride ourselves on offering our clients personalized, small firm service with large firm experience. Give our office a call at 231-728-5176 or contact us online today!