Many small businesses don't have the volume of financial transactions that necessitate hiring a full-time -- or even part-time -- bookkeeper or accountant on staff. Then again, the financial situation of their business is such that they could benefit from more regular financial review and planning and up-to-date accounting -- instead of leaving every invoice, receipt, and ledger to hand off to the tax preparer at the close of the fiscal year.
Hiring an outside accountant or accounting firm on a consulting basis is a good first step for a growing business. The outside firm can often cost less than the salary and benefits of a full-time employee and, at
the same time, you may be getting a higher level of advice from a CPA or a tax accountant, the latter of whom usually is a licensed CPA and a lawyer specializing in tax law. Even with the latest and greatest accounting and tax software, it still may be easier to farm out your financials to a CPA firm that can manage your books online through secure software-as-a-service programs than to maintain those software programs in-house.
Outside accountant
An accounting firm usually handles the following accounting functions:
Tax return preparation
Preparing financial statements, including the balance sheet, income statement, and statement of cash
Analysis or problem-solving advice
Inside accountant
When the business grows in revenue and the transactions become more complicated, it is time to consider hiring a full- or part-time inside accountant. Since the outside accountant's fee grows with the size of the business, the owner may see some cost savings by bringing some of the work in-house.
Duties and responsibilities of an in-house accountant usually include:
General ledger/chart of account maintenance
Responsibility for daily transactions
Financial statement preparation and analysis
Cost accounting and variance analysis
Treasury and cash management including bank reconciliations
Payroll and fixed asset accounting
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