Making the Decision: Internal vs External Accounting for Your Business

As a business owner, you may be considering whether to invest your resources in an internal or external accounting function. This is a crucial decision that requires careful consideration. In this blog post, we will explore some key factors to consider when deciding between an internal or external accounting function, including the scope of compulsory accounting events, resource capacity, availability, and access to experts.

One important factor to consider is the scope of compulsory accounting events, such as VAT registration, payroll taxes, and the compilation of financial statements. These events involve significant responsibilities, including calculation, submission, and payment obligations, and non-compliance can result in heavy penalties and interest charges. It is important to ensure that the accounting function you choose is capable of handling these responsibilities effectively and accurately.

Another factor to consider is the capacity and availability of the accounting resource, whether it is an internal team or an external accounting firm. An internal team may offer a higher level of availability, but may be limited in terms of access to experts and third-party resources. An external firm, on the other hand, may offer access to a wider range of experts and a knowledge database, but may be subject to occasional delays.

When deciding between an internal and external accounting function, it is also important to consider the contracts and commitments involved. An internal accountant may be subject to a long-term contract that can be difficult to exit, while an external accounting firm may offer more flexibility through short-term contracts. In terms of cost, an internal accountant may have a higher gross salary, while an external firm may charge a retainer fee.

Ultimately, the decision between an internal and external accounting function will depend on the specific needs and goals of your business. It is important to carefully consider these factors and to engage with a trusted accounting firm to help you make an informed decision. With careful planning and a clear understanding of your business’s needs, you can choose the accounting function that best supports your financial success.