Understanding your company’s financial picture, in a granular way, is critically important to your success as a business owner. Unfortunately, not everyone possesses the fundamental accounting skills required to run a business. Often the function is outsourced, but sometimes it makes better sense to hire someone internally to address your accounting needs. This blog post will explore the circumstances under which you should hire a full time, in house accountant.
It depends on your size
Smaller companies, and startups in particular, usually don’t have sufficient payroll resources to grow their team. As you bootstrap your way through those beginning years, it makes better sense to outsource the accounting function. Make sure that those outsourced services include:
• Billing & collections
• Tax compliance
• Accounts payable
• Financial modeling
Outsourcing is obviously a more affordable choice. However, as a company scales, it makes better sense to hire someone to perform at least the more senior-level accounting tasks. Someone who is more intimately involved with the company, on a day to day basis, will have better strategic insight and will be in a position to help guide decision-making more thoughtfully.
It depends on the complexity of your needs
Are you calling your accountant on an almost daily basis? Perhaps you have a part-time bookkeeper working for you, and it’s no longer meeting your needs. Usually, you will feel the pinch when your needs exceed the capabilities of an outsourced option.
Companies generating more than $1 million in revenue annually are probably starting to experience an overload in the day-to-day management of their financial interests. But more importantly, they need better and more consistent strategic support.
It depends on the demands of your industry
Related to the prior consideration is the nature of the industry in which you operate.
Do you work in a highly regulated industry? Are the compliance demands considerable? What are the implications if you don’t properly document your transactions?
Industries that are highly regulated (healthcare, insurance and financial services) often demand stricter internal controls that can be difficult to manage, even with outsourced support. An internal accountant can help respond to external requests for financial information and can mitigate risks by improving business relationships and maximizing efficiencies.
Taking the leap
If and when you decide to take the leap and hire an internal and full time accountant, you want to make sure that you track the cost against the business benefits going forward. Sometimes hiring a bookkeeper, and hiring an outside firm to prepare your year-end statements, is a more practical and affordable way to go.
For more information on outsourced resources and to help you make a decision about your accounting needs, contact Miller Bernstein today.