Should You Hire an Accountant or Outsource to an Accounting Service Provider?

No matter how hands-on you are with your business, you can’t (and you shouldn’t, as experts would advise) handle everything yourself. Delegating less critical tasks is a proven strategy to focus on the core aspects of your business. Fact—even if you’re an accountant, it can be smarter and far more effective to have another set of expert eyes and a sharp mind to manage and analyze your business’ financial records.

Sounds cliché, but proper accounting is so important in tracking your business finances, ensuring profitability, and meeting all tax obligations. It gives you valuable insights for decision-making, improves financial transparency, and helps you secure funding—all for the long-term growth and sustainability of your business.

So, should you hire an accountant or outsource to an accounting service provider? Let’s answer this question as we weigh the key factors and help you make the best decision for your business today! 

Top 3 Options for Your Company’s Accounting Needs

Let’s say you’re not an accountant. You don’t have the time to learn all the tax and compliance regulations—and you definitely don’t want to mess up with any accounting software. 

No worries—there’s a solution. While it’s nearly impossible for you to do the DIY business accounting yourself, you still have three viable options to stay on top of the numbers and all government compliance requirements. 

Option 1: Hiring an In-House Accountant

When you hire an in-house accountant, you employ a full-time accountant within your company to handle all financial tasks. Depending on the quality of your hire, you can have a dedicated member of your team who can work exclusively for your business and be closely involved in your daily operations. 

Option 2: Hiring an External Accountant

Hiring an external accountant is almost the same as outsourcing, only to a single professional and not to an accounting firm. Since your hired accountant is not your full-time employee, his or her tasks and responsibilities are limited to the terms outlined in your contract. 

Option 3: Outsourcing to an Accounting Service Provider

Here, you engage with a firm or company that offers comprehensive and specialized accounting services. You outsource your company’s accounting needs to a team of professionals and experts, often with more resources and specialized knowledge than an individual accountant. 

Essential Questions for Making the Right Choice

Choosing among an in-house accountant, external accountant, and accounting service provider can be challenging—especially if you’re new to business and unsure of the specific accounting support you need. Here are the key factors to consider:

1. Do the Size and Stage of Business Matter?

Yes, they do! If you’ve just started your business, hiring an accountant can be a smart move. You may need help with how business accounting really works, your tax compliance, and other financial tasks, but it doesn’t mean that you bring in a full-time in-house accountant. After all, a few hours of expert help may be all you need. 

Now, as you scale up your business and grow your team, it makes sense to delegate financial responsibilities to someone more experienced. That “someone” may be a dedicated accountant, a whole accounting department, or an accounting service provider. 

2. Who’s Better for the Job—a Generalist or a Team of Specialists?

If you opt to hire an in-house accountant, then you should be looking for someone who is expert, experienced, and trustworthy. Admit it— these days, it’s never easy to onboard and retain an employee with a complete skill set. With outsourced accounting services, however, you can have access to top-notch professionals who can divide the tasks based on their expertise and who can perform their jobs more efficiently. Plus, you won’t have to worry about employee turnover. 

3. Which is the Most Cost-Effective Option?

What’s running through your mind may ultimately boil down to one thing — costs. Let’s talk about it. Hiring a full-time employee might seem practical at first, but you also consider the salary, employer shares to statutory contributions, bonuses, medical benefits, and even the penalties and legal fees that may come with all the compliance errors. Similarly, hiring an external accountant can be costly if you’re considering the amount of work to delegate.  

In contrast, outsourced accounting services often offer better value. You get access to a team of professionals with diverse expertise, scalable support, and more reliable systems while keeping costs in check. You can always ensure that your financial operations remain compliant and efficient without worrying about those penalties. 

4. Who Guarantees Backup and Business Continuity?

Accounting and bookkeeping roles can be very mentally and physically intensive and often lead to burnout, so hired employees generally don’t stay long in these positions. You may grapple with challenges in recruiting, retaining, and managing high-quality talent in-house. 

Contrary to this, outsourcing to a reliable accounting services provider ensures that all your financial records are secure and operations continue smoothly, without the concern about employee turnover. Remember, you are under a contract with a firm or provider, not just an individual, so expect less risks.  

5. Which Allows for Better Scalability?

As your business moves through different cycles, seasonal fluctuations, or periods of rapid growth, you may find yourself stuck in a frustrating loop of hiring and laying off employees. As a result, the constant shuffle can strain your internal resources and operations. 

By partnering with an outsourced accounting services provider, you gain the flexibility to scale your accounting support up or down as needed. You can easily adapt to business changes without the hassle of upsizing or downsizing your workforce.  

6. Who Has Better Access to the Latest Tools and Technology?

As a startup, you may not have the resources yet to prioritize investing in expensive accounting software and tools for your in-house accountant. The purchase, setup, and ongoing maintenance of these systems can quickly eat into your limited budget—funds that could be better spent on growth and core operations.

With the outsourced accounting services, however, you can gain indirect access to these advanced technological tools as part of the packages. You can benefit from top-tier solutions without bearing the burden of upfront costs or ongoing maintenance—allowing you to stay efficient and competitive while keeping your overhead low.