Should you hire a third-party accounting firm, a freelancer, or a full-time employee?
13 May, 2021
Tom Mercer

Tom Mercer

5 minutes
third party ecommerce accounting firm vs freelancer vs employee

When you were just starting out with your eCommerce business, it was common to do everything by yourself – including bookkeeping. However, as your business grows, this is rarely the best approach. 

As a founder, you need to think about what’s the best use of your time.

Is it bookkeeping, or should you be spending time on marketing, sales, sourcing new products, delivering a great customer experience, or supply-chain management?

Not to mention, if you don’t have prior background in accounting, you could be setting your business up for compliance issues, especially around sales tax and payroll. 

Fortunately, you have options when it comes to delegating your eCommerce accounting and bookkeeping, from hiring a freelance bookkeeper to a third-party accounting firm or hiring a full-time controller in-house.  

In this guide, we’re taking a closer look at the pros and cons of each approach.

When to hire a freelance bookkeeper

A freelance bookkeeper can save your eCommerce business time, ensure your records are being professionally maintained, and provide a fresh perspective on how you’re managing your business’s finances. This is also the most budget-friendly option.

While a bookkeeper helps you manage financial, administrative tasks, they typically don’t perform higher-level financial analysis or provide financial advice and insights. 

In addition, you’ll want to make sure to hire a certified bookkeeper and not a glorified VA who knows Quickbooks or Xero. You might save a few hundred dollars in the short term, but if anything was inputted incorrectly, you’d pay for it in lost time and money, usually at tax time.  For example, sales tax errors could cost you thousands of dollars. 

Criteria to consider:

Cost

  • Freelance bookkeepers’ rates vary based on their level of experience and the services offered. You’ll want to ensure the freelancer has the proper certifications and experience. 
  • Rates can range from as little as $15 per hour to as much as $150 per hour or more.
  • Cost can also vary based on where your freelancer is located. 

Flexibility

  • A freelancer is a great choice if you only need a few hours per month of help since you only pay for the time they are working on completing this fixed service.
  • You can establish with the freelancer what your work arrangement will be so you each benefit.
  • You can set up a contract agreeing to work with the freelancer for a specific amount of time. This strategy allows you to determine if the service is right for you and they are the right freelancer for your business. 

Management time 

  • You likely will need to orient them to your business, the software you use, and the flow of your overall work schedule as it relates to your finances, which takes time. (We strongly recommend hiring a bookkeeper who already has experience with the cloud accounting software that your business is using to cut down on training costs and time.) 
  • Ongoing communication will be needed to ensure a successful experience for you and the freelancer. That said, the longer you work together, the less time you’ll need to set aside to talk with them.
  • You’ll likely spend more time managing a freelancer than if you hired a third-party accounting firm that has their own team and workflow processes. 
  • You may be introducing a “single point of failure.” What happens if your freelance bookkeeper wins the lottery tomorrow and decides to quit working the next day? If you don’t have anyone else trained on this with appropriate accounting software access, you will likely need to spend a bunch of time and headaches training someone new.  
  • Scalability – Will the freelance bookkeeper be able to up scale up alongside your business as it grows? 

When to hire a third-party accounting firm

Depending on your business’s needs, you may want to hire a third-party accounting firm. Third-party firms often specialize in different niches, so you can find a firm that is knowledgeable in your industry. 

For example, Bean Ninjas specializes in eCommerce accounting. One of the advantages of working with a specialized firm – like ours – is that they’ve likely seen dozens – if not hundreds – of businesses that are similar to yours.  So, they’ll be able to help with setting benchmarks and spotting potential issues before they turn into a full-blown crisis. 

Criteria to consider

Cost

  • While more expensive than most freelancers, it is more cost-effective than an in-house controller’s salary and benefits package  
  • Prices will vary based on the firm’s experience and services offered, so you will need to keep in mind your needs when researching third-party firms.  

Flexibility

  • A third-party accounting firm can often take on more of your accounting, bookkeeping, and Virtual CFO needs than a freelancer 
  • One advantage of a team is that there will always be someone available to address your business’s needs and ensure that deadlines are being met. For example, if you hire a controller in-house and they decide to take a week-long camping trip without cell service, you don’t have that financial expertise for a week. With a third-party firm, if someone takes a vacation, the firm should have other people that can fill in during that time.  

Management time 

  • The amount of training and management time is significantly less when you go with a third-party accounting firm instead of a freelancer or a full-time hire. You’ll just need to tell them about your services offered and any complexities in your business during onboarding.  
  • Any reputable third-party firm will have their processes and procedures in place to streamline getting to understand your business and your accounting needs.
  • You will want to plan for ongoing communication – at least monthly – to ensure you always know what is happening with your financials and that your needs are being met.

When to hire a full-time controller

A controller is usually the first full-time financial hire in a company. They oversee the company’s finances, assist executives with financial decisions, manage any third-party accounting or bookkeeping hires, etc.   

The average salary (with benefits) for a controller in the U.S. is $221,227.  

Criteria to consider

Cost

  • This is the most expensive option, as a full-time, in-house controller will cost around $221,227 USD (w/ benefits). 
  • It usually doesn’t make sense to hire a full-time finance professional in-house until your business is doing at least $10M in annual revenue, acquiring other businesses, or seeking venture capital.   

Flexibility

  • With a controller, you have the benefit of having one person focused only on your business. 
  • This means they can act as a financial advisor on everything from sales deals to management decisions.
  • They can also manage any third-party accounting firms or bookkeeping freelancers. 

Management time (including training + ramp up)

  • Typically, when you hire someone in-house, it will require more management time initially. You are responsible for the onboarding process and ensuring the new hire has everything they need to be successful in their role.  
  • Full-time, in-house controllers will also need to be informed of employee benefits and company policies that you won’t need to spend time on with a freelancer or outsourced agency.
  • The ramp-up process can be longer in some situations because of these extra training elements. That said, over time, the full-time person will be more aware of company direction, upcoming changes, and policies that can ultimately make them more efficient.  

How to get the best out of whatever option you choose 

Whether you hire a freelancer, a third-party firm, or a full-time controller, it will depend on your company’s size, services needed, and scope of work. 

When interviewing them, here are a few questions you’ll want to ask. 

  • Do they have a proven track record of success? 
  • Have they worked with other companies in your niche? 
  • Are they certified and professionally trained? 
  • Are they familiar with the cloud accounting software that you use? 
  • Do they have established processes and workflows?

Related Reading: 10 questions to ask before hiring a bookkeeper

You’ll also want to balance the pros and cons of each option, so you find the right solution for your eCommerce business. 

Want to save time, money, and headaches with your bookkeeping and financial reporting? Check out our eCommerce Growth Partner packages.

Posted By

Tom Mercer

Tom Mercer

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