To ensure the proper functioning of any business, maintaining well-organized accounting is essential. For this, you need the services of a professional accountant. There are several options in the market—you can use the services of a private accountant, hire an internal staff member, or turn to an accounting firm.
However, before making a decision, it's important to understand the advantages of each option. In this article, you'll find guidance on how to choose the right accountant, ensuring you receive professional services while keeping costs to a minimum.
First, let's explore the advantages and disadvantages of working with a private accountant, an in-house employee, or an accounting firm.
A private accountant can sometimes be a budget-friendly option, especially for small businesses, due to lower service costs. However, there may be limitations in terms of monitoring.
A private accountant offers the advantage of lower service costs, which may be attractive to small businesses. However, there are several key considerations:
- Private accountants typically don’t have professional liability insurance, leaving the business unprotected against losses caused by errors.
- Monitoring their work can be more challenging, which means there’s no guarantee that the accounting complies fully with the law.
- Accounting requires constant skills development, and a private accountant may not always guarantee ongoing competence.
An in-house accountant is convenient, but it comes with higher financial costs for the company.
The main advantage of an in-house accountant is their accessibility—they have a dedicated workspace in the office, making it easier for management to work with them. However, before deciding to hire an accountant full-time, three things must be considered:
- Additional staff equals additional expenses. Beyond salary, they will need a computer, desk, and office supplies, which are extra costs for the company.
- Similar to a private accountant, in-house staff also provide limited monitoring opportunities. In most cases, companies have to conduct internal audits to ensure that financial and accounting work complies with the law.
- The employer is responsible for the accountant’s professional development, which is an additional expense.
When working with an accounting (outsourcing) firm You are insured against errors and this reduces unnecessary costs.
An accounting firm has several important advantages over a private accountant and in-house staff:
- The work conducted by an accountant at an accounting firm is reviewed at three levels, significantly reducing the risk of errors.
- The client does not need to worry about the accountant's professional development and can feel at ease because the accounting firm takes responsibility for providing qualified services to the client.
- The company is free from office expenses that would be required for in-house staff. It only pays for the cost of the service.
- An accounting firm has the ability to provide accounting services to the client as needed, which may exceed the expertise of in-house staff. This eliminates the need for the business to allocate additional resources for specialised tasks.
For a business, the monthly cost of a private accountant might seem more affordable, but overall, the services of an accounting firm can prove to be safer and more beneficial in the long run.
The management’s task is to carefully assess all risks, costs, and advantages to make the right decision for the business. They must thoroughly analyze the specific services needed and evaluate how well the chosen accountant or firm can meet these needs with the required level of expertise.
Before selecting an accounting firm, it's a good idea to have an initial consultation with them to ensure that you are making the right decision. This will also give you a chance to understand the cost of the services in advance.