Do you need an in-house accountant or bookkeeper as a small business owner?

At some point in your journey as a small business, you’ll probably encounter a common dilemma – you need an accountant.

But what’s the best solution for your business? Should you hire an in-house resource, outsource the work to a third party, or try and manage it all yourself?

Having someone in-house who handles all the finances can be handy. You’ll always have someone to give your business some much-needed admin support.

Plus, having someone who knows how to structure and manage the business’ finances is useful, but is it necessary? This largely depends on your budget and needs.

Pros & Cons of in-house accountants and bookkeepers

Having an in-house accountant or even an entire accounting team has many pros and cons.

One of the main benefits is sheer availability. You’ll always know if your accountant or bookkeeper is at work that day. You’ll never have to wait on hold for them again.

If you need that sort of instant support on a daily basis, then recruiting an in-house finance person will be a huge help.

Whoever you hire will also acquire a really in-depth knowledge and understanding of your business and industry. This can result in more specific advice and even a greater sense of loyalty. Instead of working with dozens, or even hundreds of different clients, you’ll have their full attention and focus.

The main downside of an in-house accountant is the cost. Not only do you need to think about salary, there’s also auto-enrolment, company benefits and general office costs/equipment to consider. It’s the main reason why people tend to outsource.

Outsourced accounting services

Outsourcing is perhaps a more efficient way for small businesses to manage their accounts than recruiting an in-house employee.

Many SMEs would rather not hire a permanent employee just because of costs. Whilst using a high-street accountancy firm might seem expensive, there are digital accountants who are much cheaper, and either option is cheaper than hiring a full-time employee.

The good thing about an accountancy firm is that you usually get a team that can work together to meet all your needs. That means you don’t have to rely on just one person (who could be off sick or on holiday when you need them).

Plus, outsourcing to an agency or firm gives you access to a range of services, from accounting and bookkeeping to payroll management, as well as financial and even legal advice.

The downside is that you don’t have someone on hand to work closely with. That said, many accountancy firms these days are wise to the niceties of customer service. Shop around and find someone who will assign you a personal accountant to work with rather than an account manager.

Combination approach with bookkeeping software

One option for a small business looking to save on accounting fees is to take a combination approach.

This means that rather than outsourcing all your accounting and tax work to a firm, you do some of it yourself and get a firm to help with the rest.

The simplest way is to do your own bookkeeping and give your accountant access to records.

This can save on bookkeeping costs, for which firms usually charge per transaction. For those businesses with lots of transactions each day (for example, retail establishments), bookkeeping can end up being pretty expensive.

The good news is that you don’t need to be an accountant or professional bookkeeper to keep basic records these days.

Bookkeeping software – such as FreeAgent, Xero and Clearbooks – handles much of the work for you and is often simple to use. Usually, all you need to do is automatically confirm the transactions pulled into the software from your bank account.

This method ensures that you handle the basic bookkeeping yourself but also have professionals on hand to contact for the more complex matters.

Could your existing staff help?

Another option is to train existing staff to help with certain accounting tasks. While it’s certainly an option, it’s one to consider carefully.

An untrained person doing your accounts will not save you money if they make mistakes!

While you might not have staff who can complete full company accounts, you might have staff who can handle basic bookkeeping or payroll tasks.

If you already have an admin who works with invoices and transactions, they will likely be able to handle inputting that data into bookkeeping software as well.

Not only will this save you the work of hiring someone new, but you’ll also save a nice chunk of change in wages too.

Recording payments and expenses doesn’t require much training as more complex tax and accounting work will, but it’s still worth making sure that staff are up to the task.

Just be sure that your employees are happy with the changes. Sitting down to discuss them ensures everyone is on the same page. The last thing you want to do is overwork your employees by giving them far too many things to do.

Hire or outsource?

To answer the question we started out with, no, you don’t need to hire an in-house accountant or bookkeeper. Plenty of businesses do well without a dedicated accountant working in-house.

Some businesses will benefit from having an in-house employee, but others prefer to outsource what they can.

If you want to save money, outsourcing to an accountancy firm and taking on the bookkeeping yourself is the most cost-effective approach. If you want an accountant to work closely with you or have complex tax needs and a decent recruitment budget, an in-house employee may be best.

This article has been written exclusively for ByteStart by Pandle – refreshingly simple online accounting software.