Outsourced Accounting vs. Hiring an In-House Accountant: Which Is Best?
Outsourced accounting vs hiring an in-house accountant boils down to your business’s size, cash flow predictability, and need for specialized expertise. If you need flexibility, cost savings, and scalable services, outsourced accounting often wins; if you require full-time, dedicated oversight and deep internal collaboration, an in-house accountant may be the right fit.
I’ve guided hundreds of business owners through this exact decision over my 15+ years building Complete Controller. The choice isn’t just financial—it’s strategic. Your accounting function is the foundation that either propels your growth or creates unnecessary friction. Let me walk you through how to make the right choice for your unique situation.
What is the difference between outsourced accounting and in-house accounting?
- Outsourced accounting provides external expertise on flexible terms, while in-house accounting offers dedicated internal staff, both with distinct cost structures and control levels
- Outsourced services offer specialized knowledge across multiple industries without the overhead of employment costs
- In-house teams provide a constant presence and deeper integration with the company culture and operations
- The cost difference typically shows outsourced solutions costing 20-40% less than comparable in-house staffing
- Your choice should align with your growth stage, the complexity of your financial needs, and available resources
Understanding Outsourced Accounting vs Hiring an In-House Accountant
When weighing outsourced accounting against in-house options, you’re essentially choosing between two fundamentally different business models. This decision impacts everything from your monthly expenses to how quickly you can scale financial operations.
Difference between outsourced accounting and in-house accounting
- Outsourced accounting means partnering with an external firm that provides accounting services on a contractual basis. You’re essentially renting expertise rather than building it internally. These services typically operate under a defined scope with predictable pricing models—either fixed monthly fees or hourly rates.
- In-house accounting involves directly employing accounting professionals who work exclusively for your company. These team members become part of your organizational structure, culture, and daily operations. They’re on your payroll with all associated employment benefits and responsibilities.
The control dynamic differs significantly between models. With in-house staff, you have direct oversight of daily activities and immediate access to your accounting team. Outsourced relationships operate through established communication channels and scheduled touchpoints, trading some immediacy for efficiency.
- Scalability is where outsourced services often shine. External firms can typically expand services without the hiring delays, training periods, or personnel management challenges that come with growing an internal team.
Accounting service vs internal team
When comparing service agreements to employment relationships, the differences become clearer:
- Service-level agreements (SLAs) govern outsourced relationships, outlining deliverables, timelines, and performance metrics. These are contractual obligations with clear remedies if expectations aren’t met. In contrast, job descriptions for in-house staff evolve over time and performance management follows human resources protocols.
- Turnaround times for deliverables operate differently. Outsourced firms typically work within contracted schedules, while in-house teams can shift priorities based on immediate needs. The trade-off? Outsourced firms often maintain dedicated headcount behind the scenes to ensure service continuity, while in-house operations can be vulnerable to staff absences or turnover.
- Technology platforms represent another key difference. Outsourced providers typically invest in enterprise-grade systems that would be cost-prohibitive for individual businesses. They bring established integration points with popular business software, often simplifying your technology ecosystem.
Pros and Cons of Outsourced vs In-House Accounting
Making the right choice requires honestly assessing the advantages and limitations of each approach against your specific business needs.
Outsourced accounting benefits
The accounting outsourcing advantages start with specialized expertise. External firms bring experience from multiple industries and company sizes, applying best practices that a single in-house accountant might never encounter. You essentially gain a team of specialists for the price of a single employee.
Key benefits of outsourcing finance include seasonal scalability without staffing challenges. During tax season or year-end close, outsourced providers can allocate additional resources without you needing to hire temporary staff. This flexibility extends to rapid onboarding—typically days instead of the weeks or months required to hire and train an in-house accountant.
Additional advantages of using outsourced accounting services include access to multi-industry best practices. Your business benefits from methods refined across dozens or hundreds of other companies, rather than being limited to what a single accountant has experienced in their career.
In-house accountant pros and cons
The in-house accountant pros and cons balance sheet shows significant advantages in dedicated focus and cultural alignment. Your in-house team lives and breathes your business daily, developing deep institutional knowledge. However, this comes with substantial overhead burdens—not just salary, but benefits, workspace, training, and technology costs.
Team collaboration flourishes with in-house accounting. Your financial staff can participate in cross-functional meetings, provide immediate feedback on financial implications of decisions, and develop relationships throughout the organization. This builds valuable institutional knowledge that can be difficult to replicate in an outsourced model.
However, recruitment and turnover challenges present significant risks. Finding qualified accounting talent remains difficult in most markets, and losing a key finance person can disrupt operations for months. According to industry data, replacing a skilled accountant typically costs 50-200% of their annual salary when considering recruitment, training, and productivity losses.
Cost Comparison: Outsourced vs In-House Accounting
The financial equation often drives the final decision between outsourced and in-house accounting, but the true cost comparison of outsourced vs in-house accounting goes beyond simple salary figures.
Cost comparison of outsourced vs in-house accounting
The Bureau of Labor Statistics reports the median annual wage for accountants at approximately $77,250, but that’s just the starting point. When you add employment taxes, health insurance, retirement contributions, and other benefits, the total compensation package typically increases by 25-40%.
In contrast, outsourced accounting services operate on predictable flat-fee or hourly outsourced rates. A comprehensive outsourced accounting solution might range from $2,000-$7,500 monthly, depending on complexity and service level, with no hidden costs for paid time off, training, or turnover.
Beyond personnel costs, consider software subscriptions, hardware, and office space. In-house accounting requires investing in accounting software licenses ($300-$500 monthly per user for robust systems), computer equipment ($1,500-$3,000 per employee), and physical workspace (approximately $400-$700 monthly per employee in most markets).
Outsourced providers absorb these infrastructure costs within their fee structure, typically passing along economies of scale in software licensing and eliminating your need to provide physical workspace.
Is outsourcing accounting worth it?
When considering if is outsourcing accounting worth it, look beyond direct cost savings to broader value metrics. Harvard Business School research shows that outsourcing specialized functions like accounting delivers strategic advantages beyond simple cost reduction.
ROI benchmarks should include time saved by leadership (typically 5-10 hours weekly for small business owners), error reduction (outsourced firms maintain multiple review layers that reduce costly mistakes), and advisory value from specialized expertise.
The break-even analysis for small businesses typically shows that outsourcing becomes financially advantageous at the point where you need advanced accounting skills but can’t justify a full-time controller’s salary. For many companies, this occurs between $1-3 million in annual revenue.
Making the Right Choice: How to Decide Between Outsourced and In-House Accounting
Your decision framework should align with your growth trajectory, financial complexity, and organizational culture.
Tips for choosing an accountant
When evaluating potential providers, assess their industry experience in your specific sector. Financial requirements vary dramatically between manufacturing, professional services, e-commerce, and other industries. Ask pointed questions about their familiarity with your unique challenges.
Examine their technology stack compatibility with your existing systems. Integration capabilities between your operational software and accounting platforms can significantly impact efficiency. Request demonstrations of how data flows between systems.
Always check references from businesses similar to yours in size and complexity. The tips for choosing an accountant should include speaking with current clients about responsiveness, accuracy, and proactive communication.
Consider cultural fit and communication style regardless of whether you’re hiring in-house or outsourcing. Your accounting function needs to effectively collaborate with your team, so alignment in communication preferences and problem-solving approaches matters significantly.
When to hire an in-house accountant vs outsourcing
Several trigger points indicate it might be time to consider when to hire an in-house accountant vs outsourcing. Revenue thresholds often serve as useful markers—many businesses consider in-house staffing once they consistently exceed $5 million in annual revenue, though this varies by industry.
Transaction volume provides another indicator. When you’re processing hundreds of monthly transactions requiring coding and reconciliation, dedicated resources become increasingly valuable.
Compliance complexity also drives the decision. If your business operates in highly regulated industries or across multiple tax jurisdictions, specialized expertise becomes critical regardless of your chosen model.
Understanding when to hire a bookkeeper vs an accountant depends on your financial sophistication. Bookkeepers manage day-to-day transactions while accountants provide analysis and strategic guidance. Many businesses begin with outsourced bookkeeping, then add either outsourced or in-house accounting as they grow.
How to decide between outsourced and in-house accounting
The scorecard method offers a systematic approach to this decision. Rate each option on four dimensions:
- Cost: Total financial investment required
- Coverage: Breadth and depth of financial expertise
- Control: Direct oversight and integration capabilities
- Continuity: Resilience against turnover or business changes
Weight these factors based on your priorities, then score each option from 1-10. This structured approach helps remove emotion from a decision that significantly impacts your business operations.
Implementation Strategy: Transitioning and Managing Your Accounting Model
Once you’ve decided which approach best suits your needs, a thoughtful implementation plan ensures a smooth transition.
Effective accounting strategies for small businesses
Regardless of your chosen model, certain effective accounting strategies for small businesses apply universally. Implementing cash-flow forecasting prevents nasty surprises and enables proactive management of your financial position. KPI dashboards that track key metrics provide visibility into business performance beyond simple profit and loss statements.
Automated workflows reduce manual intervention and associated errors. Document workflows for accounts payable, accounts receivable, and financial reporting to ensure consistency regardless of who performs these functions.
Robust document management systems are essential for maintaining audit trails and supporting documentation. Whether you choose outsourced or in-house accounting, implementing standardized document naming and storage protocols simplifies retrieval and improves compliance.
Best practices for hiring an accountant vs outsourcing
Develop comprehensive onboarding checklists that cover system access, process documentation, and knowledge transfer. For outsourced relationships, establish detailed service-level agreements that clearly define responsibilities, deliverables, and performance metrics.
Implement appropriate NDA requirements to protect sensitive financial information, especially when working with external providers who may serve multiple clients in your industry.
Schedule regular performance reviews regardless of your chosen model. For outsourced providers, this means quarterly service reviews against agreed metrics. For in-house staff, traditional performance management processes apply.
Invest in continuous training to keep financial staff current on regulatory changes and system enhancements. This applies equally to in-house teams and outsourced providers, though the responsibility for training typically shifts to the provider in outsourced relationships.
Financial management solutions for businesses
Modern financial management solutions for businesses leverage technology to improve accuracy and reduce manual effort. Cloud accounting platforms enable real-time visibility into financial performance from anywhere, supporting remote work and management oversight.
Implement appropriate access controls that balance security with operational needs. Role-based permissions ensure staff can access the information they need without exposing sensitive data unnecessarily.
Establish robust security protocols that protect financial information regardless of where accounting functions reside. This includes multi-factor authentication, encrypted communications, and regular security assessments.
Trust, Communication, and Compliance in Accounting Partnerships
The human element remains critical in accounting relationships, regardless of whether you choose in-house or outsourced solutions.
Building client trust with your accounting partner
Establish regular status calls to maintain alignment between your team and accounting resources. These touchpoints should follow a consistent agenda that covers performance metrics, upcoming deliverables, and emerging issues.
Implement transparent reporting that provides visibility into your financial position without requiring accounting expertise to interpret. Visual dashboards that highlight key metrics and trends support informed decision-making throughout your organization.
Utilize client portals for secure document sharing and collaboration, especially with outsourced providers. These platforms maintain audit trails while enabling efficient information exchange.
The human side of accounting relationships cannot be overlooked. Managing change requires clear communication about why you’ve chosen your accounting model and how it benefits various stakeholders. Setting realistic expectations about transition timelines and potential challenges builds trust during implementation.
Compliance considerations for outsourced vs in-house accounting
Data privacy regulations like GDPR, SOX, and SEC rules impact how financial information must be handled, stored, and protected. Ensure your chosen accounting model addresses these requirements through documented policies and procedures.
Implement robust internal controls that prevent fraud and ensure accuracy regardless of where accounting functions reside. Separation of duties becomes particularly important when working with outsourced providers who may not be subject to your direct supervision.
Maintain comprehensive audit trails that document financial transactions and decisions. These records prove invaluable during regulatory reviews or financial audits.
Develop risk management protocols that identify potential vulnerabilities in your financial processes and establish mitigation strategies. This proactive approach prevents small issues from becoming significant problems.
Case Study: How Great Jones Scaled with Bench’s Bookkeeping
When Great Jones expanded its direct-to-consumer cookware brand, they faced growing financial complexity without wanting to build an in-house accounting department. Their switch to Bench’s outsourced bookkeeping services delivered impressive results: 30% reduction in accounting overhead costs, 50% faster month-end closing processes, and significantly more leadership time focused on product development and growth initiatives (Bench, 2022).
This real-world example illustrates how outsourced accounting can support rapid scaling without diverting precious management attention to building internal financial infrastructure.
Conclusion
Choosing between outsourced accounting vs hiring an in-house accountant represents a strategic decision that impacts your financial operations, compliance posture, and growth capacity. Throughout my years building Complete Controller, I’ve seen businesses thrive with both models when the choice aligns with their specific needs and growth stage.
For early-stage companies prioritizing cash conservation and flexibility, outsourced accounting typically provides the best value. As your organization grows and financial complexity increases, you might maintain outsourced relationships for specialized functions while gradually building internal financial leadership.
The key lies in honest assessment of your priorities, clear definition of performance expectations, and thoughtful implementation of your chosen model. Whichever path you choose, remember that accounting is more than transaction processing—it’s the financial intelligence that powers informed business decisions.
Ready to explore how outsourced accounting might transform your financial operations? Visit Complete Controller for a free consultation with our team of cloud accounting experts.
FAQ
What is the difference between outsourced accounting and in-house accounting?
Outsourced accounting involves contracting with an external firm to handle your financial processes on a service basis, while in-house accounting employs dedicated accounting staff directly on your payroll. Outsourced solutions typically offer flexible service levels and broad expertise without employment costs, while in-house teams provide dedicated focus and deeper integration with your company’s operations and culture.
Is outsourced accounting cheaper than an in-house accountant?
Yes, outsourced accounting typically costs 20-40% less than equivalent in-house staffing when you consider the full employment costs. Beyond salary, in-house accountants require benefits, training, workspace, software licenses, and management overhead. Outsourced services bundle these costs into predictable fees while spreading infrastructure costs across multiple clients.
When should a company hire an in-house accountant?
Companies should consider hiring an in-house accountant when they: 1) consistently exceed $5 million in annual revenue, 2) process hundreds of monthly transactions requiring specialized knowledge, 3) operate in highly regulated industries requiring constant compliance oversight, 4) need daily hands-on financial management integrated with operations, or 5) have reached a scale where building internal financial leadership aligns with long-term strategy.
What are the benefits of outsourcing accounting?
Benefits of outsourcing accounting include: access to specialized expertise without hiring costs, scalable services that flex with your business needs, reduced overhead for software and training, continuity during staff transitions or absences, multi-industry best practices and benchmarking, predictable pricing without surprise expenses, and the ability to focus internal resources on core business activities rather than accounting functions.
How do I choose between an outsourced accountant and an in-house accountant?
Choose by evaluating: 1) your budget constraints and growth projections, 2) the complexity of your financial operations, 3) your need for daily vs. periodic financial guidance, 4) your comfort with remote vs. on-site collaboration, and 5) your organizational culture. Create a scorecard rating each option on cost, coverage, control, and continuity, weighting these factors based on your specific priorities and strategic objectives.
Sources
- Bench. (2022, June 23). How Great Jones Scaled with Bench’s Bookkeeping. Bench Blog. https://bench.co/blog/great-jones-case-study
- Bureau of Labor Statistics. Accountants and Auditors Occupational Outlook Handbook. https://www.bls.gov/ooh/business-and-financial/accountants-and-auditors.htm
- Complete Controller. Accounting Outsourcing Economics. https://www.completecontroller.com/accounting-outsourcing-economics/
- Complete Controller. 9 Bookkeeping Tips for Small Businesses. https://www.completecontroller.com/9-bookkeeping-tips-for-small-businesses/
- Complete Controller. When Working with an Accountant: Ask These 6 Questions. https://www.completecontroller.com/when-working-with-an-accountant-ask-these-6-questions/
- Escalon Services. Outsourcing Accounting Services vs. Hiring an In-House Accountant. https://escalon.services/blog/outsourcing-accounting-services-vs-hiring-an-in-house-accountant-escalon/
- Harvard Business School Working Knowledge. Outsourcing Business Processes. https://hbswk.hbs.edu/item/outsourcing-business-processes
- Investopedia. Bookkeeper vs. Accountant: What’s the Difference? https://www.investopedia.com/articles/professionals/021516/bookkeeper-vs-accountant-whats-difference.asp
- KMCO. Comparing the Costs of an In-House Accounting Department vs. Outsourcing. https://www.kmco.com/insights/comparing-the-costs-of-an-in-house-accounting-department-vs-outsourcing/
- Novii CPA. Outsourced Accounting vs. Inhouse Accounting. https://noviicpa.com/insights/outsourced-accounting-vs-inhouse-accounting/
- Skalehive. (2022). In-House vs. Outsourced Accounting: A Cost Comparison. https://skalehive.com/blog/in-house-vs-outsourced-accounting-a-cost-comparison/
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
Brittany McMillen
Brittany McMillen