When to bring your accounting team in-house

13 May, 2021
Tom Mercer

Tom Mercer

4 minutes
in house accountants

Should you hire an in-house accountant or work with a third-party accounting firm? 

Let’s address the elephant in the room. As an eCommerce accounting firm, we’re a little biased towards the outsourced accounting route over hiring both a full-time bookkeeper and financial controller. 

However, we’re taking our blinders off and saying there are many cases where business owners should absolutely hire an in-house accountant or even a full accounting team. 

In this post, we’re sharing when you should hire an in-house accountant or even an entire team so that you can make more informed decisions.

What does an in-house accountant do? 

From certified CPAs and controllers to financial accountants, management accountants, and tax accountants, the role will vary based on your business operations and accounting tasks. 

Pro Tip: There are some key differences between a controller, an accountant, and a bookkeeper. 

Since we specialize in eCommerce, most eCommerce founders’ first in-house finance team hire is a controller. This is a senior-level role that oversees the company’s finances, assists the founder and C-Suite with key financial decisions, and manages any third-party accounting and bookkeeping hires. 

How much does an in-house accountant cost?   

According to Salary.com, the average salary (with benefits) for a full-time controller in the U.S. is $221,227 USD (w/ benefits). 

The 5 key factors to consider before hiring an in-house accountant  

Here are a few things to consider when deciding which route to take. 

1. Your company’s needs 

Do you even have enough work to hire someone full-time? 

If you are doing less than $10 million in sales, the answer is probably not. The truth is there are plenty of low eight-figure businesses that are operating with 100% outsourced accounting and financial teams. They are able to funnel the money saved by not having full-time staff overhead into sales, marketing, and inventory. 

However, if your business has any of the following criteria, you might benefit from having the added flexibility and control of an in-house financial team member or a few: 

  • VC funding – Your business is looking to raise a seed round (or future rounds) 
  • Acquisitions – You are actively acquiring other businesses 
  • Global expansion – You are scaling quickly and building warehouses in different countries 

When the stakes are high, and your company is moving quickly, having a controller working only on your business for 40+ hours per week is a smart move.

2. Budget 

As we alluded to earlier in this post, in-house accountants and controllers aren’t cheap. At the minimum, you are going to spend at least $50,000 per year. You will likely spend a lot more than that.  

Most third-party accounting firms are considerably cheaper. They also come with the advantage of not being “a single point of failure.” 

For example, if Kevin, your one and only in-house accountant, decides to head to Mexico for a two-week bender, you are without any financial help. 

A reputable third-party accounting firm typically has backups and contingency plans in place. Therefore, if one accountant is on vacation or out sick, someone else can fill in.

3. Management time 

Anytime you hire anyone in-house, there will be more management and onboarding costs than a third-party hire. After all, you have to teach your new in-house hire all about your company, your mission, goals, values, products, and services, etc. Not to mention, there is a lot of HR paperwork around benefits, insurance, 401k plans, and company paid-time-off policies. 

Because of all of this, it is not uncommon for it to take 90 days for a new hire to be fully ramped up. 

Even when they are fully trained, you still need to set KPIs, manage them, and hold regular 1:1s. 

Plus, if it doesn’t work out with your in-house accountant, you have to fire them. This includes paying severance (in many cases!), revoking their access to all sensitive company information, and rehiring and training a new person to replace them.

4. Continuing education 

While an in-house accountant should know more about the company’s direction, products, and goals, they might be less up-to-date with any changes in the accounting industry. 

On the other hand, many third-party firms specialize in an industry or niche. For example, here at Bean Ninjas, we specialize in eCommerce businesses. This allows us to gain deep industry knowledge. 

In addition, third-party firms are constantly reading all of the latest news, taking courses, and getting (and updating) certifications. 

If your in-house accountant isn’t keeping up to date on the latest changes, your company could be at risk. For example, if your accountant missed a tax change, you might forget a form that triggers an audit or owe the government thousands of dollars in penalties.

5. Fraud prevention 

While the adage, trust but verify, is sound advice. The reality is most small businesses don’t have all of the necessary checks and balances in place. They are particularly vulnerable to fraud, with the median loss being $200,000.   

Any employee can commit fraud. A controller or in-house accountant has more access to sensitive financial information and opportunities to cover their tracks. 

For example, let’s say you hire Karen to be your in-house accountant. The first three years working together are going smoothly. Then, you start noticing weird inconsistencies between your bank accounts and financial reports in Xero. It turns out Karen has a compulsive gambling addiction and is up to her eyeballs in debt. What started out as fudging a couple of invoices to embezzle a few hundred dollars every few months snowballed into several thousand dollars each month.

This scenario is more common than you might think. 

One key to preventing the risk of fraud is to have multiple people involved in different phases of a transaction. This can be using a third-party accounting firm or in-house employees. 

For example, the person sending invoices shouldn’t be the same one updating your chart of accounts or running reconciliation reports.  This means that if anyone wants to commit fraud they would have to work with multiple people. In addition, here are seven additional steps you can take to protect your business from fraud.

You should weigh the pros and cons when deciding whether or not to hire a full-time accountant or a third-party accounting firm, like Bean Ninjas.

If you do decide that the third-party accounting route works best, we can help. Whether you are looking for a virtual CFO, accounting, or bookkeeping support, we can help. Schedule a free call with a Bean Ninjas team member today.

Posted By

Tom Mercer

Tom Mercer

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