Outsourced vs. In-House Bookkeeping: How to Choose

Managing your everyday finances is crucial to keeping your business on track—but let’s face it, it’s also one of the biggest time drains. As a result, there comes a point when every growing business needs to consider hiring a professional bookkeeper to stay on top of their finances.

But here’s the big question: Should you bring in an in-house bookkeeper or outsource the work to a professional firm?

Each option comes with its own perks and challenges, and the right choice depends on your business’s unique needs. Let’s explore the differences and advantages of both to help you find the best fit for your company. 

What Is In-House Bookkeeping? 

In-house bookkeeping refers to the traditional way of hiring someone to fulfill the bookkeeper role. Bringing someone “in-house” means they work within your business, and all financial record-keeping is handled internally. 

Whether you take someone on full-time or part-time, you are responsible for recruiting them, paying their salary, training them and all other aspects of their employment.

The Pros of In-House Bookkeeping

For many businesses, having a bookkeeper right down the hall can make all the difference. If you’re considering keeping your bookkeeping operations internal, here are some key advantages to think about:

Direct Control 

Having a bookkeeper working directly for you means you get to call the shots, and you can oversee all aspects of financial management. This level of control is sometimes necessary, especially if you work in an industry that involves highly sensitive or complex data.

Additionally, you can work with the bookkeeper to develop processes that are right for your type of business.

Immediate Access

Typically, an in-house bookkeeper is subject to working standard hours as set by your business. Even if they are part-time, you know when they’re available and can get quick answers during work hours. Need to clarify something? Just walk over—no emails, no waiting. Many business owners value that real-time, face-to-face communication. 

Familiarity 

Over time, your in-house bookkeeper will get to know you and your business inside out.  Every business is unique, so having a deep understanding of the industry and its quirks is extremely valuable.

The Cons of In-House Bookkeeping

However, having someone on-site isn’t always smooth sailing. Here are some challenges that can come with in-house bookkeeping:

Higher Costs

Hiring an in-house bookkeeper means more than just covering a salary. You’re also on the hook for the recruitment process, benefits, taxes, office space, equipment, and coverage during time off. All in, employment costs can run 20% to 40% more than the base salary.

Training

A bookkeeper who has a deep understanding of your business is an extremely valuable resource, but getting them there takes time. 

For small business owners already stretched thin, the upfront training—and ongoing development to keep up with changing regulations—can be a real challenge. 

Turnover Challenges 

If your in-house bookkeeper jumps ship to another company, you’re not only losing all the money you invested, but also all of their knowledge.

Starting the recruitment process again is time-consuming and costly, and there’s no guarantee the new bookkeeper will stay long-term.

What Is Outsourced Bookkeeping? 

Outsourced bookkeeping means handing your financial tasks over to an external provider. You typically agree on the level of service upfront and then pay via a rolling monthly or yearly contract.

Essentially, an outsourced bookkeeper does everything an in-house bookkeeper would do. Many providers even offer add-on services for more complex tasks such as CFO duties, financial modeling, forecasting and more.

Popular Outsourced Bookkeeping Solutions

There are a few different options when it comes to outsourcing your bookkeeping. The option you go with largely depends on your company’s size and needs. Here are the most common ones:

• Freelancers: Ideal for small businesses that only require a few hours of work per week. You can find them on platforms like Upwork or Fiverr, or even through a quick local search. 
• Virtual bookkeeping outsource firms: These online firms offer a team of bookkeeping experts and usually work with cloud-based accounting software like QuickBooks Online or Xero. However, they typically stick to bookkeeping and don’t offer full-service accounting or strategic guidance.
• Agencies: For growing businesses with more complex needs, firms like Finvisor provide full-service accounting, including CFO-level guidance, tax preparation and strategic financial planning. They will also typically provide back-office support in HR, payroll, benefits and more.

The Pros of Outsourcing Bookkeeping

When you outsource bookkeeping services, you can enjoy the following advantages: 

Cost Effective

One of the biggest advantages of outsourced bookkeeping services is the cost savings. 

When you employ the bookkeeper directly, you’re responsible for their salary, benefits, tax, equipment, training and everything else.

Outsourcing eliminates those overhead costs.. You only pay for the services you need, and you can scale up or down anytime, meaning you’re not stuck overpaying for financial assistance you don’t need.

Access to Experience and the Latest Technology 

When you go with an outsourced bookkeeper, it’s usually possible to find a bookkeeper who has direct experience and knowledge of your business industry. As well, reputable firms ensure their bookkeepers are up-to-date with best practices, regulations and tax laws—saving you the time and cost of training. 

Firms also use secure, cloud-based software to ensure your data is accurate, accessible, and protected—no outdated tools or risky processes.

Saves Time 

As a business owner, your time is gold, and the last thing you need is to drown in spreadsheets or spend weeks onboarding an in-house bookkeeper.

Outsourced bookkeepers can generally hit the ground running. They work autonomously, so you don’t have to spend your precious minutes overseeing what they do. Instead, you can focus on high-impact tasks like strategy, planning, and growing your business.

The Cons of Outsourcing Bookkeeping

While bookkeeping outsourcing services are highly beneficial, there are a couple of things to bear in mind before reaching out to one:

Possible Communication Delays

Outsourced bookkeepers often manage multiple clients, and they’re not down the hall from your office. That means you might experience some delays, especially if you’re in different time zones.

That said, seasoned professionals understand the value of clear, timely communication—and they’ll usually respond as fast as they can. Still, be prepared for the occasional wait.

Finding a Reliable Partner 

With so many options on the table, where do you even start to search for a reliable and trustworthy bookkeeper? The right partner should:

• Demonstrate they have current knowledge in your industry.
• Be able to produce genuine client testimonials.
• Show they have a work ethos that aligns with yours.
• Communicate reliably and fit in well with your operations.

You need a bookkeeper who will deliver consistent results, so the importance of choosing the right partner cannot be underestimated.

Here is a chart comparison between In-House Bookkeeping and Outsourced Bookkeeping, highlighting their respective pros and cons:

Key Factors to Consider When Choosing 

There is no “one-size-fits-all” approach to bookkeeping. What works for a remote tech startup may not suit a highly regulated healthcare company. 

To help you decide, think about the following aspects for your business:

• Business size and complexity: Typically, the larger a company is, the more likely it is to have an in-house team, particularly if there are multiple cost centers and departments. Complex business structures also require specialist expertise that are better facilitated in-house. 
• Required tasks and time: Are your bookkeeping tasks enough to sustain someone full-time? Or do you only have an hour or so of work per day?
• Budget: If your budget is tight, outsourcing is likely to be the cheaper option, especially when you consider all the associated costs of hiring in-house.
• Time to oversee: Are you willing to manage a bookkeeper, review reports and stay up to date with regulations? If not, outsourcing removes that burden.
• Expertise: Are you looking for a generalist bookkeeper? Or do you need someone with precise knowledge of your industry? If so, can this knowledge be found among outsourced options or does it need to be established in-house? 
• Scalability: Are you planning to scale your business anytime soon? If so, have you considered the impact on financial management and whether or not you’ll need to hire more bookkeepers?

Cost Comparison: In-House vs. Outsourced Bookkeeping

Budget is a huge consideration for many companies looking to streamline their bookkeeping process. Here’s a quick breakdown of the associated costs for each option. Of course, actual costs depend on many factors such as your company’s size and location, but this should give you a general idea:

Also consider the hidden costs of in-house errors or non-compliance—mistakes in reporting or outdated tax knowledge can lead to fines, compliance issues, and poor decisions. Outsourcing to experienced professionals often helps minimize that risk.

When to Keep Bookkeeping In-House vs. When to Outsource

So when does it make sense to keep bookkeeping in-house, and when should you consider outsourcing?

In-house is better if…

• You run a larger company and have the budget to hire a full-time bookkeeper as well as provide them with all the training and tools necessary for them to do a good job.
• You operate in a tightly regulated industry or require strict oversight and direct control over bookkeeping tasks.
• Your business has highly specific or niche requirements that would benefit from having someone who works closely with internal teams.
• Your bookkeeper requires close and frequent collaboration with other departments, and having them on-site would enable better communication and workflow.
• You require full alignment with company values and culture. This is difficult to achieve via outsourcing. An internal employee is more likely to embrace your company mission and ethos.

Outsourcing is better if…

• You want to reduce costs and pay only for the services needed. This is especially true if you don’t have the requirement for full-time or even part-time bookkeeping.
• You prefer access to experts without the hassle of hiring and training. You want someone who comes ready-equipped with the right tools for the job.
• Your business is growing and needs scalable financial management. As your business evolves, outsourced services can quickly adapt – adding new capabilities without the need for recruitment.
• You want to focus more on core business activities. Freeing up time spent on financial admin lets you concentrate your efforts where it counts.
• Your business operates remotely with no central office, or is widely distributed with no specific working location.

Final Thoughts

Whether you go for an in-house bookkeeper or an outsourced solution, there’s a lot to think about.

If you decide to outsource your bookkeeping, then we recommend speaking to a few providers first. Asking questions and detailing your needs will allow you to see if they are the right fit for your business. 

At Finvisor, we’re always happy to speak to prospective clients. Our aim is to ensure you have all the information you need to make the best decision.

We support businesses in all aspects of financial operations as well as back office functions such as HR, payroll, and benefits. Our bookkeepers have specialist knowledge in a growing number of industries, including SaaS, fintech, biotech and more.

We have tiered pricing packages and curated add-on services to make bookkeeping services affordable and relevant to each of our clients.

If you’re interested in learning more, then we welcome you to get in touch for a free introductory call.