The early days of any company are all about resource management. Life as a startup is perilous. The companies who survive and thrive are usually the ones who find ways to do more with less. That could mean having employees who pull double duty and fill multiple roles. It may mean working a grueling schedule. It could also mean outsourcing certain key functions.
Outsourcing can be a great way for a startup to leverage experienced and skilled talent without breaking the bank. You only pay for the work you need, so you can avoid long-term commitments and robust compensation packages. You can use outsourcing to minimize your costs and slow your burn rate.
The big question is which services you should outsource and which you should bring in-house. You can outsource virtually anything, from marketing to human resources to legal to IT and more. If you’re in the seed stage and have only a few employees, you might outsource almost everything. If you’re a more mature startup, it could make sense to handle some of those functions in-house.
What about accounting, though? Accounting is a critical function in any business. If your books and financial documents aren’t clear and accurate, it’s difficult to make smart decisions.
Accounting may be an important part of your business, but is it so important that you should handle it in-house? Should you hire an in-house bookkeeper or accountant? Or outsource the work to an accounting firm?
The answer depends on your company’s unique needs and goals. Below are a reasons why each could make sense.
Why Outsource Your Accounting?
For most startups, outsourcing is an effective accounting solution, for the following reasons:
When you outsource work, you only pay for the services you need. If you’re a startup, you may not have enough bookkeeping or accounting work to require full-time help. You can protect your capital by outsourcing those services and only paying for the work you need. As your business grows, you can expand your services.
Expert Advice & Service
As you likely know, talent can mean the difference between survival and failure as a startup. If you can recruit smart, experienced, innovative people, you can get a leg up on the competition.
Unfortunately, you may not have the budget to hire an experienced, skilled accountant or even bookkeeper on a full-time basis. However, outsourcing gives you access to high-level financial talent without straining your budget. You only pay for the work you need and you share your accountant with other clients. That helps you get expert advice at a fraction of the cost.
Clean, Credible Financial Statements for Investors
Raising capital is one of the biggest accounting challenges for any startup. An experienced accounting firm can make sure your books and your financial records are up-to-date and accurate.
They can also provide you with valuable consultation and advice through the fundraising process. For example, they may help you determine how much you need to raise given your current burn rate. Or they might provide business valuation so you know what your company is worth. It’s tough to get that kind of insight from an in-house bookkeeper.
Why Go With an In-House Solution?
For most startups, an outsourced relationship with an accounting company is the right solution. However, there could be instances in which an in-house professional makes sense.
Niche or Unique Needs
Maybe you operate in a highly-specialized industry that has unique accounting or bookkeeping methods. Perhaps you’re struggling to find a firm or outsourced company that fully understands your needs. In that case, it could make sense to hire a bookkeeper to manage in-house.
In many startups, it’s common for employees to pull double-duty. People may work in sales and customer service or pull two roles in product development and marketing. It’s possible that you have an employee who has bookkeeping experience and can fill other roles. In this case, it could make sense. However, you’d likely still want outside expertise on things like raising capital and preparing financial documents.
Not sure which is right for you? Talk to an accounting firm that provides bookkeeping and other services to startups. They can help you determine which services are right for you and how you can take advantage of experienced accounting talent without busting your budget.