Still deciding
Hiring a bookkeeper vs outsourcing: which one fits your size
The salary is not the cost, and the cost is not the whole question. Both of those get missed, and there is a size at which hiring really is the right answer.
Reviewed by Darren Lim, US CPALicence CPA.742536028 min read
At some point the shoebox stops working and there are two doors: hire someone, or send it out.
Most comparisons of this are written by whichever side is selling. We are the outsourced side, so here is the version that includes the parts that go against us.
The salary is not the cost
Whatever wage you have in mind, the real number is meaningfully higher. On top of the wage sits the employer half of FICA, unemployment insurance, workers compensation, and whatever you contribute to health cover — and then paid time off, which is hours you buy and do not receive.
Then the things that are not payroll at all:
- Software licences, and a seat for them
- A desk, a computer, a phone
- Recruiting, and the cost of getting it wrong
- Your time managing them, which is real and which nobody counts
- Cover when they are sick, on holiday, or leave
That last one is the sharpest. A one-person bookkeeping function has no redundancy. When they are away, nothing happens; when they leave, everything stops until you replace them, and you are usually recruiting under pressure.
Work out your own number rather than trusting a range from an article. The true cost calculator does exactly this — put in the wage you would pay, your payroll tax and comp rates, and the benefits, and it gives you the loaded annual cost. That is the figure to compare against, not the salary.
Where in-house genuinely wins
This is the part the outsourced firms leave out.
High transaction volume. Past a certain size the work becomes a real full-time job, and at that point paying someone a salary to do forty hours is more efficient than buying forty hours of anyone's service.
Work that needs someone physically there. Cheques to collect from the mailbox, paperwork the crews hand over, a counter, a walk-in customer. If your process genuinely depends on someone being in the building, remote does not solve it and you should not pretend otherwise.
A job that is only partly bookkeeping. Many contractors do not need a bookkeeper — they need an office manager who also does the books, and who answers the phone, dispatches, chases receivables and orders material. That role is a hire, not a service, and outsourcing the bookkeeping portion of it does not make the rest go away.
You want it inside the business. Some owners want direct control over the person and the process. That is a legitimate preference and it does not need a business case.
Where outsourcing wins
You need the work done properly, not done nearby. Reconciliation, categorisation and monthly close do not benefit from proximity.
You cannot recruit for what you cannot assess. This is the underrated one. Hiring a bookkeeper means judging bookkeeping competence, and most contractors cannot — which is why so many discover a problem two years in, after a lender or a CPA finds it. A firm can be changed in a month. A bad hire is a much longer, more awkward problem.
You want more than one set of eyes. A single bookkeeper does the work and also checks it, which is not a control. Review by someone else is the thing that catches errors, and it is structurally hard to arrange with one employee.
Coverage. Illness, holidays and resignations do not stop the month closing.
You are not sure yet. Outsourcing is reversible in a way a hire is not.
The middle option nobody mentions
You do not have to choose one.
A very common arrangement at the size where this question comes up: an office administrator inside the business who does the day-to-day — entering bills, sending invoices, chasing receivables, handing over paperwork — and an outside firm doing the close, the reconciliation and the reporting.
That splits the work along its natural seam. The parts that need someone in the building stay in the building. The parts that need accounting judgement and a second set of eyes go outside. It is usually cheaper than a full-time experienced bookkeeper and it produces better books than either half alone.
If you are stuck between the two doors, this is very often the answer.
How to decide
Four questions, in order:
- Does any of the work genuinely require someone on site? If yes, that portion is a hire. Be honest — "it would be convenient" is not the same as "requires".
- Is there enough work to fill the role? If not, you will end up paying full time for part-time work, or filling the gap with tasks that were never the point.
- Can you assess the work? If you could not tell good bookkeeping from bad, hiring means taking a two-year bet on an interview.
- What happens when they are away? If the answer is "nothing happens", price that.
The thing to do before either
Whichever way you lean, the useful move is the same: find out what your books look like when they are done properly, before you commit to a path.
Right now you are comparing two options against a baseline you cannot see. One month closed properly gives you the baseline — and then the comparison is between two real things rather than two brochures.
Related
How we do this
We build this into your books. Starting with a month that costs you nothing.
We are the outsourced side of this comparison, and we are the right answer for a contractor who needs the work done properly but does not need someone in the building. Where you genuinely need a person on site every day, we will say so.
- Every transaction categorized, accounts reconciled, the month closed
- Reviewed and signed by Darren Lim, US CPA — licence CPA.74253602
- The Two-Day Guarantee: Your first month back in two days, or the next month is free.
The honest way to settle it is to see what finished work actually looks like before committing to either path. We do your most recent month in full, free, signed by a US CPA — and you keep it whichever way you decide.