“This week’s Ask Manny question comes from Chelsea.”

Question:

My bookkeeper is retiring soon. She has been doing our books for the past 9 years, so suffice to say it’s been a very long time since I’ve had to hire someone for this position. I’m torn between hiring a bookkeeping firm to continue doing our books, and hiring an in-house staff person. Any advice on the direction I should go?

Answer:

There’s no right or wrong answer to these questions as with most things, the answer is that “it depends.”

First let’s look at the scenario in which you hire someone in-house. Two questions immediately come to mind: a) What is your proposed salary budget? b) Who on your team will manage the person?

There are essentially two levels of skill that you can hire: a Bookkeeper, and a Controller. Bookkeepers enter information into your accounting program, generates invoices, pays bills, processes payroll, etc. Controllers implement financial processes and systems, review and quality control the information in your books, manage the bookkeeper, etc. This point is important: Controllers are at a higher skill level than Bookkeepers, and hence are responsible for managing and providing assurance that Bookkeepers are doing an adequate job. Bookkeepers are lower skill level personnel and should NOT be left unmanaged. So, if you are going to hire in-house, you really need to: a) Hire a Bookkeeper but already have someone on your team who can act as Controller; b) Hire a Controller but have someone(s) on your team that can act as Bookkeeper(s), or c) Hire both a Controller and a Bookkeeper. In other words, you need to ensure that BOTH positions are covered. Otherwise you have an incomplete financial department.

This now goes to the question of salary. What do you propose to pay the person. At the time of this writing, Bookkeepers typically go anywhere from $30k/yr to $45k/yr, whereas Controllers range from $60k/yr to $80k/yr. Quite a salary difference which highlights the different skills sets and expertise required. Make sure that you budget accordingly depending on which person(s) need to be hired.

This, of course, can lead to a large salary cost that you may not have expected.

This is one of the advantages of hiring an outsourced firm to manage your finances. With a firm (such as ours!), you will be supplied with both a Bookkeeper and a Controller. Having both of these people on a fractional basis can significantly reduce your expenses and accomplish the same goal. For example, it’s quite possible to outsource the entire function, including the Bookkeeper and Controller, for less than $10k/yr. Contrast this with the $100k/yr you would have to pay if you hired these staff members directly. That’s about a 10x savings!!

And this is before we even touch the discussion of ongoing training and development, extra desk space and equipment, increased overhead, benefits and time off, etc. These quickly add up to a lot of unforeseen cost.

Can it make sense to hire directly versus outsource? Sure. But usually only in the circumstances when you can truly afford to have both Bookkeeping and Controller level staff. If you cannot, then you are most likely too small to hire these functions directly and still get the results you need.

If you are wresting with this decision, we would love to chat with you. Please book a consultation and let’s explore your options. We will provide you with a fair and honest assessment of what we hear and some direction on how to move forward.

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