Outsourcing vs. In-house accounting: Which is best for your small business?

[Justina10]

As your small business grows, so do your financial obligations. And at a certain point, you may want to consider offloading those responsibilities to an expert. After all, the last thing you want to deal with at the end of the year is uncovering an accounting mishap or unforeseen tax burden.

While there are some great accounting tools that will help you keep your books straight (I’ll discuss more below), at a certain point it may be time to call in the experts. The next question you’ll have is if you need to outsource or hire in-house. 

In this blog, I’ll examine the pros and cons of outsourcing vs. in-house accounting so that you can make the best decision for your small business. 

When to hire a third-party accountant

Before deciding which choice is best, the first step every small business owner should take is to lay the foundation for a healthy accounting system. This includes what accounting metrics to track, and what software to use for easy integration.

From there, depending on which growth stage your small business is in will largely determine if a third-party accountant is the right call. When you’re in the early stages, your accounting needs will be more straight-forward and a third-party accountant is a great option for many reasons:

Advantages of third-party accountant

• More cost-effective than hiring an in-house accountant

• Can be used as-needed based on your business

• Will save you time and help increase profitability

Third-party accountants allow you to leverage their expertise without fully committing to hiring one. It’s an affordable option for small businesses starting out that would like strategic financial guidance for growth and profitability. With that said, there are some challenges to consider.

Challenges of third-party accountant

• Less control and visibility into financial operations

• Issues can arise with quality, work expectations, and deliverables

Since third-party accountants aren’t full time employees, you need to have realistic expectations for turnaround time. Setting clear expectations up front is key, as is doing quality assurance checks to ensure financial accuracy.

When to hire an in-house accountant

As your small business continues to grow, you will hit a point where hiring an in-house accountant may make the most sense. Having an in-house accountant gives you control over your financial operations, and helps you strategically position your business in a way that’s most advantageous to you.

Advantages of an in-house accountant:

• Immediate access to financial data for quick-decision making 

• An expert dedicated solely to your business operations

• Financial competency across your organization 

In-house accountants have the advantage of intimately understanding your business and its needs, which creates more accurate financial planning. Most importantly, in-house accountants are ideal for small businesses in competitive markets that need quick decision making. They do bring some unique challenges including:

• Hiring cost is considerably higher than third-party accountants

• Fiscal responsibility and liability falls squarely on your business

• Need to build out team and supporting resources for effectiveness

In-house accountants are advantageous, but costly. Not only do you need to consider the salary cost, but also the investment in resources needed and financial burden of any potential mistakes.

Can I Manage My Accounting Needs in HubSpot?

HubSpot has some great accounting features to help you with many of your billing needs. Whether you’re working with a third-party accountant or in-house, Hubspot’s CRM can easily integrate with your accounting system—creating visibility between sales and accounting. 

When and how to use HubSpot for your accounting needs:

HubSpot helps small businesses lay the foundation for a financially prosperous future through creating a streamlined, holistic view of your finances for easy management. 

HubSpot has an accounting extension API to easily integrate with many accounting systems. Using the API, you can accomplish some practical bookkeeping needs like:

• Syncing of invoices, currencies, and contacts from HubSpot to your accounting system

• Associate existing invoices and tax codes for products 

• Create workflows, lists, and reports for invoice management

• Connect with premier accounting apps (Quickbooks, Netsuite, Xero, etc.)

Accounting 

Deciding between outsourcing your accounting needs or taking them in-house is a highly personal decision. Hopefully, this article helps point you in the right direction based on where your business currently is in terms of maturity, and how you expect to grow over the next year. 

Regardless of which direction you choose, here’s a pro-tip—integrate your accounting tools into your CRM. This helps set you up for long term success by ensuring your entire team has a streamlined, holistic view of business finances in an easy, trackable way. 

After all, you deal with enough surprises as a small business owner—where your finances stand shouldn’t be one of them.