Entrepreneurial Money Management

Marci talks about the financial issues & concerns business owners’ face when running their own company.

CPA on Staff or Outsourced - Which is Better?

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If you find yourself staring at your accounting software wondering what the numbers actually mean in terms of true profit, or if you don't feel like you're up to date on sales tax and how to optimize your tax filings, it's time to think about getting a CPA to help you.  

The question is, do you hire one to sit at a desk in the office or do you pay for a CPA consultant at an accounting firm. The answer depends on how large your company is and how complex your finances are.  

Companies that deal with many transactions - retailers, general contractors, and distributors - generally need a CPA in-house when they start generating more than $2 million annually. The in-house CPA keeps data errors from proliferating between tax cycles. For example, if one of your clerks enters your cost of sales items as an expense all year long, by the time tax season comes along there will be a mountain of errors to correct.  The CPA on staff also helps you monitor your spending through the lens of your end-of-year tax implications. 

On the flip side, services companies that deal in human capital (billable hours and software) don't have as many transactions, so probably don't need a CPA on staff for a long time. 

Things to consider:

  • - Do you have enough work to keep a CPA busy more than 20 hours/week? If so, it's a good idea to hire in-house.
  • - Do you feel like your outsourced accounting firm is phoning it in, or are they strong advocates for you at tax time? If you ever doubt their commitment or level of effort, change firms or hire in-house.
  • - Do you think your financial data entry process is broken but don't know how to fix it? Bring a CPA in-house to get that running ship-shape. 

There are only a very few of us who started our own companies because we know and love number crunching, payroll calculations and tax accounting. We all need to be willing to allow someone else to be the expert in the areas where we are weak, and often this is a prime position to fill during the early phases of growth.  

Do you have a CPA on staff, or are you outsourcing? What has been your experience with these different scenarios?

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