Accounting is the process of maintaining the financial records of an organization in a systematic manner. This systematic maintenance of records displays the financial health of your company to the stakeholders. Also, having an accounting system helps in other financial processes like filing tax returns, managing cash flows, etc. There are two ways to set-up your accounting processes. You can either hire a full-time accounting or you can outsource the process to a professional firm. If you are considering setting up an in-house accounting team, then here are some pros and cons that you need to be aware of.
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Pros of an In-House Accounting team
1. Cater Specific Needs
Your business might have particular accounting needs that have to be taken care of. If this is the case, then hiring and setting up your own accounting team is more beneficial for you than outsourcing your accounting needs to an accounting firm.
2. Readily Available
This is one of the major pros of hiring and setting up an accounting team. When you have an accounting team at your workplace, you can reach out to them anytime during the day. So, if you have an emergency or need to know the status of any financial position, you can quickly get in touch with your team and get the information. The same may not be possible when you outsource your process as they will have multiple clients to cater to.
Cons of an In-House Accounting Team
1. Increased Costs
The cost of hiring and training an individual is one of the drawbacks of an in-house accounting team. Moreover, every time an employee leaves your organization, the attrition cost increases and this can also affect your accounting process. Furthermore, you need to offer incentives and perks to your accounting team. This is not the case when you outsource your accounting process as the professional accounting firm will only charge you for the services they provide.
2. Lack of trained employees
It’s difficult to judge how good a person is when you hire them. If the employee is not experienced or lacks proper accounting knowledge, then you will have to bear the cost of training. In the process, mistakes are bound to happen. As a result, the accounting process may not be accurate or it may not be updated. Some bookkeeping mistakes can prove to be very costly. For instance, if you miss out on entering a revenue entry, the profit amount will be less. This can have severe complications especially when you pay taxes for the incorrect profit figure. The CRA will charge a penalty for incorrectly filing the tax returns. Therefore, you need to be very careful that your employee is trained well to avoid such mistakes.
3. Problems when an accountant quits
When one of your accountants quits, your entire accounting process will be affected if you have not maintained it properly. This is a major problem for small businesses where usually there’s a small in-house accounting team. However, when you outsource the accounting process, you don’t have to bother if the accountant who manages your process leaves as they will find a suitable replacement for you.
The benefits of outsourcing your accounting process to a professional firm has more impact than its disadvantages, especially for small and mid-sized businesses. To outsource your accounting process and to have an error-free accounting system in place, get in touch with us.