Entrepreneurs and small business owners often wear many hats, especially when first starting a business.

As the leader of a business, you have to be the brains and brawn of the entire operation, including human resources, customer service, inventory, production, quality control, sales and accounting.

It’s a lot to juggle, and as your business grows, you will start to outsource to professionals or hire for many of these positions so you can focus on working on the business and maintaining momentum.

Outsourcing your financial function

Your growing business’ finances are without a doubt one of the most important cogs in the wheel of your success.

Budgeting, data analysis and compliance can make or break your business, especially as it’s taking off. Mistakes in tracking cash flow or paying taxes can be devastating to your business and should not be left to chance.

When it comes to the role of your business’ finance function, there are a couple of options to consider: You can either hire an internal bookkeeper or accountant to handle the day-to-day work, or outsource your accounting to a professional certified public accounting (CPA) firm.

Each option has specific pros and cons, and which is right for your business often comes down to your budget, goals and risk tolerance.

When making this decision, it’s important to understand the difference between a bookkeeper and an accountant/CPA.

A bookkeeper handles your day-to-day finances, such as tracking income and expenses and writing the checks you sign. Generally, a bookkeeper manages your compliance and basic financial needs.

An accountant/CPA serves a more high-level advisory role to your business, offering interpretations of your data and providing guidance for decision-making using that data.

With these distinctions in mind, you can hire or outsource your finance function at any level you deem appropriate, from a basic staff level position to a chief financial officer (CFO). (Yes, even your CFO position can essentially be outsourced.)

Hiring a bookkeeper

Let’s look at the pros and cons of hiring an internal position:

Pros of hiring an on-staff accountant/CPA or bookkeeper:

• A moldable team member who can grow with your business
• Someone you can monitor daily and direct to suit your needs
• Constant face-to-face communication and physical presence
• Work that meets your various compliance obligations and satisfies stakeholders

Cons of hiring an on-staff accountant/CPA or bookkeeper:

• Overhead costs of
  • Desk space
  • Salary and benefits
  • Vacation/PTO
  • Technology
• Check-the-box compliance work often lacking in-depth analysis
• Potential turnover and hiring in a volatile job market
• Significant time and energy spent training and monitoring
• Enhanced risk for internal fraud
• Potential ceiling on skills and decision-making abilities depending on the level of hire

Finding a knowledgeable, competent and trustworthy professional to join your team and grow with you can take your business to the next level.

However, searching for and hiring the right candidate in today’s job market may create more stress and risk than you’re willing to take on.

Hiring a CPA

Now that we’ve discussed the pros and cons of hiring an internal accountant/CPA or bookkeeper, let’s look at outsourcing the function:

Pros of outsourcing to a CPA firm:

• Independent analysis of your data from a team of highly knowledgeable professionals
• A knowledge bank of experience from which you can draw right away
• Timely and accurate data when you need it
• One set fee without the additional overhead cost
• Less to no turnover in your finance function allowing for stability and peace of mind
• A level of service that suits your needs from basic bookkeeping to CFO

Cons of outsourcing to a CPA firm:

• Communication and physical distance may not be at a level with which you are comfortable
• Initial sticker shock may happen from the investment of working with a professional firm

If you’re on the fence about outsourcing your accounting due to the cons above, each of these concerns should be addressed with any potential firm upfront to ensure a good fit for your business.

Making the right choice for your business

Technology has made the execution of these functions from a distance a viable option for businesses of any size, and the right firm will work with you to ensure the communication and work performed to meet your needs and desires. Sticker shock usually subsides when you see the added value of consistent, accurate work.

No matter the stage or age of your business, you’re constantly making critical decisions about the future. The needs of your business today will not be the same as your business’s needs tomorrow, making flexibility and adaptability increasingly important in each of your business’s key functions.

You may find as you grow that a hybrid arrangement of hiring a team member to handle your daily accounting function and engaging with a CPA firm for high-level advising is a good balance for you.

Consider your goals and vision for the future and weigh the options available to you before making a decision that has the potential to impact the trajectory of your growing enterprise.

About the Author

Amber Goering is a Thinking Bigger Foundational Partner.

Amber is the founding shareholder at Goering & Granatino, P.A. She is a Certified Public Accountant with over 20 years of diverse industry experience.

She specializes in working with small to medium-sized businesses, advising on a full range of accounting, tax and consulting services. She enjoys tailoring these services to meet each client’s individual needs.

Contact Amber at:
Phone: 913.396.6225
https://www.ggkccpa.com