In-House vs. Outsourced Accounting: The Complete Decision Framework
- Rick Ruberg
- Nov 6
- 11 min read
What is Outsourced Accounting?
Outsourced accounting is when a business hires an external firm to handle its financial operations (including bookkeeping, accounts payable and receivable, payroll, month-end close, and financial reporting) instead of maintaining an in-house accounting department. Companies typically pay a fixed monthly fee and gain access to experienced accounting professionals, enterprise-grade software, and scalable support that grows with their business.
Now, let’s look at what that decision actually feels like.
The $150,000 Question That's Keeping You Up at Night
Sarah, a CFO at a $20 million manufacturing company, sat staring at two pieces of paper.
On her left: a job offer letter for a new senior accountant at $85,000 plus benefits, her third attempt to fill this position in eighteen months.
On her right: a proposal from an outsourced accounting firm to handle the same workload for $4,500 per month with a dedicated team.
The math looked simple. The decision felt impossible.
If you're reading this, you're probably in Sarah's shoes.
Maybe your accounting team is drowning.
Maybe you're wondering if you should hire more people or try something completely different.
Maybe you're a business owner doing the books yourself and you know it's time for a change.
Here's what I know after working with hundreds of business owners over the years. This decision is the financial foundation that will either launch your company forward or hold it back for years.
Let me be clear up front. There's no one-size-fits-all that works for everyone.
The professional services firm down the street might save a fortune outsourcing while the manufacturing company next door needs their accounting team on the plant floor every day. The fast-growing tech startup might thrive with outsourced accounting while the stable family business runs better with the same bookkeeper they've had for fifteen years.
What you need is a framework to figure out what's right for your specific business. That's exactly what this guide gives you.
By the time you finish reading, you'll understand the true cost of both options, learn seven critical factors that should drive your decision, see what works at different company sizes, and walk away with a clear action plan.
Let's start by talking about money, because until you understand what you're really spending, you can't make a smart decision.
What You're Really Spending on Accounting
Most business owners have no idea what their accounting function actually costs. They know accountant salaries and benefits, but they're missing huge chunks that add 40 - 60% to the total bill.
The True Cost of In-House Accounting
When you hire accounting roles, salary is just the starting point. Here are 2025 national averages including benefits at 28%:
A staff accountant costs $55,000 to $75,000 base.
A senior accountant runs $75,000 to $95,000 base.
An accounting manager costs $90,000 to $120,000 base.
A controller runs $120,000 to $180,000 base.
If you're in San Francisco, New York, or Seattle, add 25-30% to those numbers.
But that's still not the full picture. Here are the hidden costs most people miss:
Recruiting costs you $15,000 to $30,000 every time you hire.
Job postings, recruiter fees at twenty to twenty-five percent of first year salary, interview time, and background checks add up fast. The average time to fill an accounting position is forty-two days of reduced productivity.
Training takes three to six months before someone is fully productive.
You're paying full salary but getting forty to sixty percent output. Plus someone on your team spends time training them instead of doing their own work.
Software costs multiply per user.
QuickBooks Online Advanced runs $200 per month per user. NetSuite costs at least $999 per month per user. Add expense management, AP automation, and reporting tools, and a four-person team easily hits $5,000 to $8,000 monthly. That's $60,000 to $96,000 per year just for software.
Turnover happens every three to four years on average.
When someone leaves, you lose institutional knowledge, remaining staff absorbs their work, and you start the expensive cycle again. Average turnover cost is one hundred fifty percent of annual salary.
Someone has to manage the team.
If that's the CFO spending twenty percent of their time on management, that's $40,000 of the CFO's $200,000 compensation allocated to overhead.
Physical costs add up.
Office space runs $500 to $1,200 per employee monthly in major markets. Computers and furniture cost $3,000 to $5,000 per person. IT support takes time. Supplies and overhead accumulate.
Backup and redundancy require investment.
Cross-training takes time. Overtime during busy periods costs extra. The bus factor risk—what happens if your key person leaves—is real.
Continuing education is mandatory.
CPAs need ongoing training. Everyone needs software updates and professional development. Conferences and memberships cost money.
Let me show you a real example.
A $20 Million Company's True In-House Cost:
One controller at $140,000 base, one senior accountant at $85,000, two staff accountants at $65,000 each equals $355,000 in base salaries.
Now add everything:
Benefits at 28%: $99,400
Payroll taxes: $27,200
Software (4 users): $8,000
Recruitment/turnover (amortized): $22,000
Office space: $18,000
Management time (15% of CFO): $30,000
Equipment/IT/misc: $12,000
Total: $571,600 per year
That's 2.86% of revenue going to accounting. Most companies are shocked when they see the real number.
What Outsourced Accounting Actually Costs
Outsourced pricing varies based on what roles you need and where the provider is located. Here are the common models:
Monthly retainer packages are most common.
Basic bookkeeping runs $1,500 to $4,000 monthly.
Mid-level packages with month-end close cost $4,000 to $8,000 monthly.
Full controller-level service runs $8,000 to $15,000 monthly.
Comprehensive service with a dedicated team costs $12,000 to $25,000 monthly.
Basic packages include transaction recording, reconciliations, AP and AR processing, payroll, and monthly financial statements.
Standard packages add month-end close, journal entries, variance analysis, cash flow forecasting, and quarterly reviews.
Premium packages include controller oversight, technical accounting support, multi-entity consolidations, audit support, and CFO-level consultation.
Setup fees run $5,000 to $25,000 covering system access, chart of accounts cleanup, historical data fixes, process documentation, and training. Some services cost extra: year-end audit support ($3,000 to $8,000), tax prep ($2,000 to $10,000), and special projects ($150 to $200 per hour).
The Same $20 Million Company, Outsourced:
Premium package at $10,500 monthly equals $126,000 annually. Setup fee amortized over three years adds $5,000 yearly. Additional services add $12,000. Software is included.
Total: $143,000 per year
That's $143,000 outsourced vs. $571,600 in-house.
A savings of $428,600 annually, or 75%.
Table 1: Cost Comparison by Company Size
Company Revenue | Typical In-House Annual Cost | Typical Outsourced Annual Cost | Average Potential Savings (Range) |
|---|---|---|---|
$5M – $10M | $180K – $280K | $48K – $96K | $100K – $180K |
$10M – $20M | $280K – $420K | $84K – $156K | $150K – $260K |
$20M – $50M | $420K – $650K | $144K – $240K | $200K – $410K |
$50M – $100M | $650K – $900K | $240K – $420K | $230K – $480K |
These savings are dramatic, but cost isn't everything. A 50% cost reduction means nothing if quality suffers, you lose control, or you can't get strategic insights when you need them.
7 Factors That Should Drive Your Decision
Making this choice on cost alone is like buying a car by price tag only. Cost matters enormously, but it's one piece of a bigger puzzle.
This framework examines seven factors that together reveal your optimal model. Some will point clearly in one direction. Others might conflict. Your job is to weigh them based on what matters most to your business right now and where you're headed.
Company Size & Operational Complexity
Your size and complexity create fundamental constraints on what can work.
Table 2: What Works at Different Company Sizes
Revenue Range | Setup | Annual Cost | Why This Works |
Under $5M | Outsourced or Part-Time Bookkeeper | $24K – $60K | Transaction volume is low and complexity limited, outsourcing provides scalability without full-time overhead. |
$5M – $20M | Hybrid: Outsourced Accounting + Fractional Controller | $60K – $150K | Need oversight and analysis, but not a full-time controller; hybrid model balances cost and expertise. |
$20M – $50M | Evaluate Case-by-Case (Hybrid or Premium Outsourced) | $120K – $350K | Depends on transaction volume, entity count, and internal process maturity. |
$50M – $100M | In-House Team + Selective Outsourcing | $240K – $650K | Daily coordination and strategic alignment require internal staff with outsourced support for efficiency. |
$100M + | Full In-House Finance Department | $650K + | Institutional knowledge, strategic integration, and real-time collaboration become essential at scale. |
Beyond revenue, transaction volume matters enormously. Professional services with fifty clients are easier to outsource than e-commerce processing thousands of daily orders. Multiple entities, locations, currencies, or business models multiply complexity.
Growth Stage & Trajectory
Rapid growth (30%+ annually) favors outsourcing. You scale instantly without hiring lag. Costs stay variable. Risk reduces if growth slows. But add strategic leadership (fractional CFO or controller) for oversight and planning.
Warning: if growth is chaotic, fix that first with systems.
Stable businesses (0-10% growth) can optimize in-house teams beautifully. Predictable workload makes sizing easy. Long-term teams build deep knowledge. Risk: stable can become stagnant. If your team hasn't improved processes in five years, that's a red flag.
Downsizing or restructuring makes outsourcing attractive. Scale down without layoffs. No morale hit from cuts. Convert fixed costs to variable quickly. Preserve continuity during transition.
Planning to sell in 12-24 months? Professional accounting becomes critical. Outsourced providers specializing in exit prep ensure GAAP compliance, professional presentation, and clean books. Companies with professional accounting command ten to twenty percent higher valuations. On a $20 million sale, that's $2 million to $4 million more in your pocket, far more than any accounting costs.
Control & Access Requirements
In-house makes sense when you need daily face-to-face collaboration (manufacturing floor), complex interdepartmental coordination, on-site culture is important (traditional industries), highly sensitive data creates competitive advantage, or you want immediate walk-down-the-hall access.
Outsourcing works when you're already cloud-based, comfortable with remote communication, documents live in shared drives, you don't require physical presence for other roles, processes are documented, and monthly or quarterly financial reviews suffice.
Hybrid captures both benefits. Keep a controller in-house for strategy, relationships, and leadership meetings. Outsource transactional work, AP, AR, payroll, reconciliations, close execution. For success, establish daily standups, weekly status meetings, monthly close reviews, and quarterly strategic sessions.
Expertise & Specialized Knowledge
One accountant can't be an expert at everything. In-house teams are capable generalists who know your business well but lack deep specialized expertise. For a $20 million company, you can't justify full-time specialists in technical accounting, multi-state tax, industry-specific methods, lease accounting, or treasury management.
Outsourced firms maintain specialists you access as needed: technical accounting experts, industry specialists, tax compliance teams, systems implementation pros, and process improvement consultants. You don't pay full-time for expertise you only need occasionally.
Real example: Your company signs a 3-year contract. Your bookkeeper isn't sure about revenue recognition.
In-house scenario: they google it, maybe call your auditor at $400 per hour, might get it wrong.
Outsourced scenario: they escalate to the firm's revenue recognition team who've handled this hundreds of times, get the right answer, document it properly, implement correctly, all included in your monthly fee.
When accounting goes wrong, costs explode. Audit errors waste time and money. Tax positions that fail IRS scrutiny cost thousands. Revenue recognition mistakes spook investors. Compliance violations trigger six-figure penalties.
Technology & Systems
Honestly assess where you are. What system do you use? Cloud-based or installed? How old? Does it integrate with other systems? Are processes automated or manual? Can you generate reports easily? Is everything documented?
If systems are a mess, outsourcing won't magically fix them. Right sequence: clean up chart of accounts and processes first, implement proper software second, then transition to outsourced or optimized in-house third.
Risk Tolerance & Compliance
Low-risk industries (professional services, SaaS, retail) work well with outsourcing. Standard practices, limited specialized compliance, straightforward financials.
Moderate-risk industries (manufacturing, distribution, hospitality, real estate) can go either way. Some specialized requirements but well-understood and manageable.
High-risk industries (healthcare, financial services, government contractors, multi-national operations) require careful provider selection. Intense regulations, significant penalties, specialized knowledge needed.
Outsourcing is possible but demand deep industry expertise, verify regulatory understanding, check track record, ensure strong contracts, maintain oversight.
Interestingly, outsourcing often improves internal controls. Small companies can't achieve separation of duties with one or two people. The same person enters and approves transactions, reconciles accounts they access, records revenue and handles deposits. This creates fraud risk.
Outsourced providers build in separation by design. One person enters, another reviews, a third reconciles. You keep final approval authority. This dramatically reduces fraud risk more effectively than small in-house teams can achieve.
For data security, require SOC 2 Type II certification, verify multi-factor authentication and encryption, check role-based access and security training, confirm background checks and penetration testing, ensure strong contractual protections including liability provisions and cyber insurance.
Reality check: Most small companies have weaker security for in-house teams than quality providers maintain. Your accountant probably uses weak passwords, unsecured home WiFi, personal devices, no two-factor authentication. Providers work from secured facilities with professional monitoring. Often outsourcing is more secure, not less.
Strategic Versus Transactional Focus
Ask yourself: what percentage of your time as business owner or CFO goes to transactional work versus strategic work?
Transactional work includes reviewing invoices, troubleshooting reconciliations, training staff, fixing errors, answering "where's my check," processing payroll, chasing receipts.
Strategic work includes analyzing trends, forecasting cash, budgeting, advising leadership, board presentations, identifying profit opportunities, planning, M&A analysis.
If over 40% of your time goes to transactions, you have a massive opportunity cost problem.
What would you do with twenty extra hours monthly?
The soft benefits of strategic focus often exceed cost savings by 10X.
Transactional tasks prime for outsourcing:
Data entry, invoice processing, collections, reconciliations, payroll, expense reports, journal entries, depreciation, account reconciliations, close tasks. These represent seventy to eighty percent of typical workload. These tasks can all be documented and executed remotely.
Strategic tasks to keep close:
Budget development, variance analysis, cash forecasting, scenario planning, business partnership, board communication, M&A evaluation, KPI development. These benefit enormously from deep company knowledge.
The optimal split:
Outsource seventy to eighty percent of transactional work, keep one hundred percent of strategic work in-house. Use savings to upgrade strategic capabilities. If you save $150,000 outsourcing, hire a stronger FP&A analyst ($80,000), invest in BI tools ($20,000), add fractional CFO for projects ($30,000).
Net savings: $20,000. Value created: massive upgrade in strategic capability.
Making Your Decision and Taking Action
You now have a complete framework examining costs, size, growth, control, expertise, technology, risk, and strategic focus. You have more information than most business owners have when making this decision.
But here's where most people get stuck. They read this, think about it, recognize they need change, then do nothing.
Six months later they're in the same boat.
Don't let that be you.
Here's what to do next:
First, complete an honest assessment this week. Block thirty minutes. Work through each factor honestly. Where do you fit on size and complexity? What's your realistic growth trajectory? How much control do you actually need? What expertise are you missing? Where do your systems stand? Give yourself a realistic score on each factor. This reveals your biggest pain points and best opportunities.
Second, share findings with stakeholders next week. Don't decide alone. Meet with your CEO, executive team, board, and key people who depend on accounting. Present your assessment. Discuss current state, what analysis suggests, what staying the same costs, what changing requires. Build consensus before moving forward. Major transitions without buy-in typically fail.
Third, commit to a deadline. Put an actual date on your calendar within ninety days for making a decision. Not "someday" or "when things calm down." An actual date.
Status quo is valid only if it's a conscious choice based on real reasons, not avoidance or inertia.
Fourth, execute your plan.
If optimizing in-house: document processes, identify bottlenecks, assess technology, invest in training, implement quarterly reviews, benchmark annually.
If pursuing outsourcing: evaluate multiple providers, check references, and follow a transition timeline (this takes months).
If implementing hybrid: define roles clearly, document handoffs, pilot one function first, measure for three to six months, establish monthly coordination meetings.
Your accounting function is a massive investment. But excellent accounting can drive that value in better decisions, optimized cash flow, and faster growth.
Companies that win make better decisions about deploying resources.
Optimizing accounting, whether building a stronger in-house team or leveraging specialized outsourced expertise, is one of the highest ROI decisions you can make.
Your competitors are evaluating these questions now. Some will optimize and gain real advantage. Others will stick with status quo and fall behind when busy tax season arrives.
Which group will you be in? That decision starts with action you take today.
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