In-House vs. Outsourced Accounting: A Cost and Capability Comparison

You're at a crossroads. Your business has grown beyond basic bookkeeping, and you need professional accounting. The question: hire internally or outsource?

Most business owners default to comparing salaries. "A controller costs $120K. An outsourced firm charges $5K/month. Easy decision." But that comparison misses most of the picture.

The true cost of an in-house team includes benefits, software, training, recruiting, management time, and the risk of turnover. The true value of outsourcing includes expertise breadth, scalability, and reliability. Let's break down both.

The True Cost of an In-House Accounting Team

For a $10M revenue company needing professional-grade accounting—monthly closes within 10 days, clean financials, proper controls—here's what an in-house team actually costs.

Direct Compensation

A typical $10M company needs at minimum a controller and one staff accountant. Salary alone: $150,000-$225,000.

Benefits and Burden

Add 25-40% for benefits:

• Health insurance: $6,000-$20,000 per employee annually (employer portion)
• 401(k) match: 3-6% of salary ($4,500-$13,500 per employee)
• Payroll taxes: 7.65% FICA plus state unemployment
• PTO/sick time: 3-4 weeks is typical (not an out-of-pocket cost, but a productivity cost)
• Other benefits: Life insurance, disability, professional memberships

For a controller at $120K + staff accountant at $65K = $185K base, add ~$55K in benefits. Total compensation: ~$240,000.

Software and Technology

Conservative estimate: $10,000-$30,000 annually for a mid-market accounting technology stack.

Recruiting and Turnover

Finding good accounting talent is hard. Budget for:

• Recruiting fees: 15-25% of first-year salary for agency placement ($15,000-$35,000)
• Job postings and sourcing: $500-$2,000 if doing in-house
• Interview time: 10-20 hours of management time per hire
• Onboarding: 40-80 hours before new hire is productive

Accounting turnover averages 15-20% annually. Every 3-5 years, expect to replace a team member. Amortized recruiting cost: $5,000-$10,000 per year.

Training and Development

• CPE requirements: $500-$2,000 per CPA annually
• Software training: $500-$1,500 per person when systems change
• Professional development: Conferences, courses ($1,000-$3,000 per person)

Management Overhead

This is the hidden cost most people miss: your time. Managing an accounting team requires:

• Weekly 1:1s and team meetings (2-4 hours/week)
• Review and approval of financials (2-4 hours/month)
• Performance management, feedback, HR issues (variable)
• Problem-solving when things break (variable)

If your time is worth $200/hour as a business owner, 4 hours/week of accounting management = $40,000/year in opportunity cost.

The True Cost of Outsourced Accounting

Outsourced accounting pricing varies by provider, scope, and complexity. Here's what to expect.

Typical Pricing Models

• Flat monthly fee: Most common. Fixed price regardless of transaction count (within reason).
• Transaction-based: Price per invoice processed, check written, etc. Less common for full-service.
• Tiered packages: Bronze/Silver/Gold with different service levels.
• Hourly: Rare for ongoing accounting; more common for special projects.

Price Ranges by Company Size

For our $10M revenue example: expect $4,000-$7,000/month, or $48,000-$84,000 annually.

What's Typically Included

• Transaction processing (AP, AR, bank reconciliation)
• Month-end close
• Financial statement preparation
• Management reporting
• Basic controller oversight
• Software (often included or passed through)
• Unlimited questions and support

What Costs Extra

• Audit preparation and support (project-based)
• Tax return preparation (usually separate engagement)
• Special projects (system implementations, cleanup)
• CFO/FP&A services (strategic finance, forecasting)

Side-by-Side Cost Comparison

The math: Outsourced accounting typically costs 50-75% less than an equivalent in-house team. For our $10M revenue example, that's $150,000-$300,000 in annual savings.

Beyond Cost: The Capability Gap

Cost is only part of the decision. Capability matters too—and this is where small in-house teams often struggle.

Expertise Breadth

A two-person in-house team knows what they know. An outsourced firm brings collective expertise from serving many clients:

• Revenue recognition specialists who've implemented ASC 606 dozens of times
• Multi-entity consolidation experts
• International accounting experience
• Industry-specific knowledge (SaaS metrics, manufacturing cost accounting, etc.)
• Audit preparation specialists

Coverage and Redundancy

What happens when your controller takes vacation? Gets sick? Quits?

• In-house: Operations stall. You scramble to cover. Critical knowledge walks out the door.
• Outsourced: The team has backup. Processes are documented. No single point of failure.

Scalability

• Scaling up: Outsourced providers can add resources immediately. Hiring takes 3-6 months.
• Scaling down: Outsourced scope can flex. Laying off employees is painful and expensive.
• Handling peaks: Year-end, audit prep, or M&A activity? Outsourced teams can surge. In-house teams burn out.

Technology and Process

Quality outsourced providers invest continuously in their technology and processes:

• Best-in-class software stack (they've tested everything)
• Refined processes from serving many clients
• Security and compliance infrastructure (SOC 2, etc.)
• Automation expertise (they make money by being efficient)

When In-House Still Makes Sense

Despite the cost and capability advantages of outsourcing, in-house accounting is sometimes the right choice:

• Scale: Above $50M-$100M revenue, dedicated internal resources often make sense, though you might still outsource specialized functions.
• Real-time operational needs: If accounting is deeply integrated with daily operations (high-volume retail, complex inventory management), in-house staff may be more responsive.
• Regulatory requirements: Some heavily regulated industries require certain functions to be performed internally.
• Culture and control: Some business owners simply prefer having their team in-house, even at higher cost.
• Exceptional talent: If you can recruit an exceptional controller who fits your culture, that relationship may be worth the premium.

The Hybrid Model

Many businesses find the sweet spot isn't pure outsource or pure in-house—it's a hybrid:

• Internal bookkeeper + outsourced controller: An in-house person handles daily transactions and vendor relationships; outsourced controller manages close, financials, and oversight.
• Outsourced accounting + internal finance manager: Outsource the accounting operations; have one internal person own the relationship and handle ad hoc analysis.
• Outsourced everything + fractional CFO: Full outsource of accounting operations, with strategic fractional CFO services for planning, forecasting, and board reporting.

The hybrid model gives you local presence for daily needs while leveraging outsourced expertise for professional-grade accounting.

Making the Decision

Use this framework to decide: