Outsourced bookkeeping vs. in-house: what to do when your bookkeeper retires

Your long-term bookkeeper is retiring. You may have seen this coming or it may have hit you hard, but now you have a decision to make. Hire someone new, or outsource the role. Both work, but which one's right for you depends on a few specifics.

The math favors outsourcing under $10M

If you're under $10M in revenue, outsourcing is usually cheaper. A full-time bookkeeper means salary, benefits, payroll taxes, and the time it takes to manage all of it. Outsourcing scales with the work you actually have, with no full-time cost.

That can change eventually. Past a certain size, complexity can justify bringing it back in-house. But with modern technology, automation and AI, a lot more can be done with less. And those where bookkeeping is their profession can still be more effective.

Training

Bookkeepers rarely just do bookkeeping. They're the cost checker, the credit card sleuth, the one who is saving pennies that add up to dollars on a daily basis. Phone bills, subscriptions, overage charges, a trained bookkeeper can save you money on a daily basis.

Controllers rarely just do controlling. They predict cash, they run payroll, they check benefits, they quarterback the company's cost centers. Training and trust are key.

These roles need to be filled by trained professionals. A bookkeeper, a controller, an FP&A analyst, a CFO. You can't hire all, so you have to pick. Unless you outsource, and you pay a lot less for a fraction of each of these roles.

Ownership's involvement level

If ownership has a real grip on the numbers, they may want someone in house. This makes a big difference you shouldn't ignore. If you're hands-off, checking in periodically instead of managing the books day to day, then outsourcing usually fits better. However, any size team or leadership style can work with a remote team member, and you get a full team, not one person, and nothing breaks if that one person quits or gets sick.

Outsourced bookkeeping vs. in-house: which should you choose?

There is no universal answer here. But the decision comes down to three things. Are you big enough to hire your own controller as well as a bookkeeper? Do you have the skills to train someone in house? How hands-on do you want to be, and how easily can you deal with remote workers?

Frequently asked questions

Outsourced bookkeeping vs. in-house bookkeeper: which is cheaper?

For most businesses under $10M in revenue, outsourcing is cheaper. It scales with actual workload. An in-house hire costs salary, benefits, and payroll taxes regardless of how much work there is.

At what revenue size should a business consider outsourced bookkeeping over an in-house hire?

Businesses under $10M in revenue are typically well-suited to outsourcing. Past that, transaction volume and complexity can sometimes justify bringing the role in-house.

What happens to the phones and admin work my bookkeeper used to handle?

Outsourcing only replaces the accounting function. If another admin person can pick up phones and office tasks, outsourcing gets much easier to implement.

Is outsourced bookkeeping a good fit if I want to stay hands-on?

Yes, it can be. Owners who want daily, real-time involvement still have access to their team, but they just can't walk to their desk. With the advent of remote working, this has become a much easier barrier to overcome.

Can an outsourced bookkeeping team fully replace one in-house bookkeeper?

For the accounting function, the solution is often better, with more coverage and no single point of failure. For non-accounting office tasks, that coverage has to come from somewhere else.