What Will it Cost me to Outsource my Accounting?
Outsourcing accounting is trending in the business world.
Depending on the role you choose to outsource, entrepreneurs reap many benefits, like:
- Accurate and timely financial insight
- Strategic support and guidance
- More time to work on the business instead of in it
- Cost savings
If you’re exploring this option for your business, one of your primary questions is most likely, what will it cost me to outsource my accounting?
The following article will answer this question based on New Economy’s numbers so you can have a rough estimate of the total cost savings you’ll receive from outsourcing your accounting.
Know What You Need
Before you begin to think about the cost of outsourcing your accounting, you need to be clear on the kind of service you need, whether it be an accountant, controller, or CFO.
Each service has a different function, so you want to make sure you’re outsourcing based on your needs.
An accountant is tactical in nature and takes care of the basic financial management that is required for compliance and business success.
A controller is a bit more experienced and typically leads the accounting staff. They’ll have more insight into your business and have the ability to make operational improvements to your financial system.
A CFO is a strategic partner and will work with the CEO to perfect the business model and ensure the business is meeting its financial goals.
For more detail about each role, check out our article on the topic. It’ll help you select which service is the right fit for your business so you can properly outsource your accounting.
Let’s Define the Cost Savings (Sorry for the data and detail, we are number crunchers!)
The cost of hiring a full-time employee can pile up, and this is before you even think about the time and salary.
However, outsourcing your accounting to New Economy offers plenty of cost savings in a few key areas.
- We cover the training investments for each team member and make sure they are continuously developing new skills and growing professionally. In fact, we invest between $5k-$10k per employee each year.
IT and Technology
- We cover all of the IT and technology investments which is roughly $5k per employee each year.
- We cover all of the fringe benefits including payroll taxes, 401k match, and health insurance. To put this into perspective, this means we are investing between $15K-$20k per employee each year based on a $75k salary.
- We cover all of the management time on each account which can be a bit more challenging to quantify. However, you are now valuing your own time.
So as you can see, New Economy covers anywhere between $25k-$35k in costs that, when you outsource your accounting, you do not have to assume. And keep in mind, these numbers don’t include salary.
Before we Jump into Salary, Consider the Time that You Need
When you take into account the costs above and include a salary of $75k per year, you’re now shelling out anywhere between $100k-$110K for a full-time employee. However, this begs the question, do you really need a full-time employee?
We are learning that many internal accounting hires are pulled into operations or admin work. When this happens, they are being overpaid and under-challenged. And you run the risk of losing them.
To avoid this, you need to understand the true time needs in accounting. This will reduce your investment in this area.
For example, a full-time controller could cost between $80K-$125K, but if you only need a 50% schedule, your cost will reduce dramatically.
Now onto Salary, Keeping in Mind we are Focused on Growing Small Businesses and Startups
Let’s take a look at the typical salaries for hiring full-time:
- A new accountant can cost anywhere from $55K-$65K
- An experienced accountant can cost anywhere from $65K-$80K
- A Controller can cost anywhere from $80K-$125K
- A CFO can cost anywhere from $125-$200K
In our experience, most growing small businesses and startups don’t need full-time accounting help.
So the true cost savings of outsourcing your accounting while still obtaining top-tier talent would be:
- $25K-$35K on technology, training, and benefits
- 20%-30% of the salary by leveraging the team member in their unique ability and removing all admin and operational type work
Interested in Outsourcing Your Accounting to New Economy?
At New Economy, we believe outsourcing is a great way to help you gain control of your finances to make smart decisions to build and grow your company.
Our team comes from a great culture where they are nurtured and developed and we are proud of the awesome service they deliver.
Based on the above, you can see that there can be significant cost savings in outsourcing your accounting.
If you are interested in learning more about our service, reach out to us today!