Internal vs. Outsourced Bookkeeper
Each company has individual needs. Depending on how large your company is, you may be wondering if it would be advantageous to hire a bookkeeper to assist in managing your financial information. What would the cost be to hire a bookkeeper to keep on staff vs. hiring an external bookkeeping firm? There are some factors to consider besides the monetary factor when it comes to the cost.
When hiring an in-house bookkeeper, you would need to check references and credentials. Just because someone says he/she has bookkeeping experience, does not mean that this person is fully capable of all of the duties that would need to be fulfilled. Let’s consider everything that possibly needs to be done on a monthly/quarterly basis: basic knowledge of debits and credits, bank reconciliations, sales tax return (if applicable), payroll tax returns, depreciation, current vs. noncurrent loans, assets that should be expensed vs. assets that should be capitalized; let’s face it- the list goes on. Chances are that when you hire a bookkeeper at an accounting firm, you get all of this knowledge without having to do a ton of research. A majority of bookkeepers know what is expected of them and what questions need to be addressed once they are given a new client.
Internal bookkeepers do not necessarily know what is entailed for financial reporting. Should your company need financial statements compiled, a CPA needs to review your general ledger and make adjustments to ensure the accuracy of the financial statements. Hiring an experienced bookkeeping firm will minimize the amount of time to populate the financial statements. There would be fewer adjustments, if any, to be made, and there will be fewer questions and answers to go back and forth. The firm will also have reliable references when unknown questions or situations arise.
Deciding to hire an internal bookkeeper will prompt you to install internal controls within your company. Fraud is a greater possibility if you have your in-house bookkeeper approving purchase orders without management’s permission, then going on to sign checks. The purchases may not even pertain to the business but be recorded as business expenses. There would have to be a segregation of duties to eliminate the chance of fraud. Hiring an external bookkeeper would eliminate this chance and may detect potential wrong-doing if there are any unexplained major changes. Examples include unexplained charges on a bank or credit card statement or a higher than normal phone bill.
Business owners are faced with choices every day. I stand on the side of hiring a bookkeeping firm because I see what happens on this side of the fence. I have fixed inaccurate account postings, payroll return submissions, and errors, and inaccurate reporting of sales reported to the state. It saves time and money to have everything correctly posted and submitted the first time. If you decide to hire an internal bookkeeper, make sure he/she knows exactly what needs to be done and how to do them, or knows credible resources that can give the correct information on how to accomplish the task.
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