How to Hire an Accountant: Freelancer vs. In House vs. Outsourcing

As a business owner your finances should be a top priority. But, they should not consume all of your day. When you are short on time, an accountant can come in for the assist. This is your complete guide on how to hire an accountant.

We help you figure out:

  • If it is the right time to hire an accountant
  • Which accounting role is needed
  • What type of financial service provider is best for you
  • How to interview an accountant

Adding an Accountant to the Company

Let’s explore what an accountant can do for you, and how much you can expect to pay.

Why Hire an Accountant?

  1. Oversight: Account reconciliation, bookkeeping, and budget planning. 
  2. Taxes: An accountant will lead you through the complexities of filing your taxes. They will keep track of due dates, prepare forms and find ways to save you money. They can precisely relay information to the government on your behalf.
  3. Consultation: Having an accountant is a financial resource for advice, when you want to grow your company. They will provide a roadmap to cash.  
  4. And more: Depending on the structure of the business, an accountant can take on a variety of additional tasks like: inventory, hiring, contract negotiation, getting a loan, investments etc.

When to Hire an Accountant

Basic accounting is not rocket science. You can watch YouTube videos and read books for a few weeks, to get the hang of the basics. In time, the tasks may get more complex. Your financial picture may fall into one or more of these categories:

  • Spending 10 hours per month on bookkeeping 
  • Haven’t done any tax planning through the year 
  • Late on tax returns 
  • Earning over $200,000 per year 
  • Unsure where cash outflow is going 
  • Constantly surprised by large tax bills

If you are experiencing any of the above, you should examine your time and your budget for accounting.

Ask yourself 

Do you, or someone on the team, have the ability and time to take over accounting?

If the answer is YES – a DIY approach might be the best fit for you at this time. 

If the answer is NO then before jumping ahead, consider the following:

  • What does your time cost?
  • What is your budget for an accountant?
  • What level of expertise do you need in the accountant?

What are typical accounting roles?

Here is a breakdown of hierarchy in the accounting department. Depending on the professional level of your new employee, supervision will be required. Below is the position’s responsibilities, the average U.S salaries, and who they report to:

Bookkeeping

Typically an entry level position in any accounting department – bookkeepers will be responsible for Accounts Payable and Accounts Receivable transaction entry into account systems: tracking invoices, payments, bills, and transactions in organized ledgers. In larger accounting departments there may be separate roles for AP and AR. Additionally they produce timely reports of ledgers for review.

  • Education: Associates of Bachelors Accounting or equivalent experience
  • Salary: $38,000-$49,000 annually

Staff Accountant

Entry level accountants with 2-3 years of bookkeeping or general accounting experience. In addition to doing bookkeeping duties they can prepare financial reports and fill out tax forms under the supervision of the controller.

  • Education: Bachelors Degree in Accounting
  • Salary: $39,000 -$55,000 annually

Senior Accountant

Senior accountants are more seasoned, with 3-8 years of accounting experience. They are capable of all junior duties: bookkeeping, preparing detailed financial statements and tax forms for review. They also assist with information systems setup, and research of ad hoc items.

  • Education: Bachelors or Masters Degree in Accounting
  • Salary: $50,000-$65,000 annually

Controller 

Controller will be a senior accountant with the most technical knowledge. They will guide the team, implementing best accounting practices, while ensuring the company has adequate cash flow for all expenditures. They manage the accounting department and approve all work of junior staff.

  • Education: Bachelors Degree in Accounting or Business Management or equivalent experience
  • Salary: $72,000-$113,000 annually

Chief Financial Officer (CFO) or Head of Finance

At the top level of the finance department. They will have 10+ years of experience in leadership. They come with an advanced understanding of company operations, accountant level processes, and information systems. A CFO is the visionary of the finance team. Using insight from financial statements, they create projection models to determine the best use of resources. This keeps a company compliant and will optimize for growth. While Head of Finance will make sure everything is executed according to plan. This position relays all financial aspects to the CEO and founders. 

  • Education: Bachelors Degree in Finance and Accounting or MBA
  • Salaries: Head of Finance $120,000 – $200,000 annually; Chief Financial Officer $230,000-$500,000 annually
Freelance accountant working at a desk with coffee and a stack of papers

3 Types of Accounting Service Providers

Upon reading the roles above, let’s explore the types of accountants for hire. Which employment setup is right for your business? In your search, you will encounter three types of accounting service providers: Freelancer Accountants, In House Staff Accountants, and Outsourced Accounting Firms. Each provider has pros and cons:

Freelancer Accountants

A freelance accountant is a free bird. They enter a contract with your business that has specific deliverables. For small businesses, or a yet to be funded start-up, this route is recommended. As a whole this type of accountant offers specialization, flexibility, and low overhead. 

Pros

Specialization: You can hire a freelance accountant for a specific task eg. bookkeeping, taxes, audits, etc. 

Flexibility: You make the contract. It can be something short-term, where you only pay for the work needed. You could contract with someone on a long-term basis for consistency. Or select someone who is willing to be an in house contractor for full collaboration. 

Low Overhead: You are not responsible for the same expenditures that come with having an employee. You don’t pay for a benefits package. Training in accounting software will be at no cost to you.

Cons

Relationship: Having short-term contracts with different freelancers could result in scattered books. It is best to maintain a relationship with one freelancer, in case of a financial snafu. 

Time: You may be subject to a freelancers schedule. They are balancing multiple contracts at once. You may be in line behind another client. Time zones could also be an issue.

Expertise: Depending on who you hire, a freelancer may not have the experience to review work themselves. They may require supervision or reviews from a Controller or CFO. 

Contract Prices 

General accounting and bookkeeping: $300-$500 month is typical, however contracts vary depending on tasks and experience. 

Tax Preparation: Averages $150-$475 

In House Staff Accountants

In house accountants are a qualified addition to your team. From 9-5 they will be your financial sidekick. An in house is best for their proximity, focus, and longevity.    

Pros

Proximity: Their financial prowess is a cubicle away. They work for you and should be intimately familiar with rules and regulation of your state. 

Focus: They are a personal accountant to your business. Depending on experience level, this position could serve all your financial needs. 

Longevity: While working with you they are a part of the team culture, aiding growth stages. They know the intricacies of the business, and are loyal to the brand mission.

Cons

Overhead: hiring an in house accountant means a salary and benefits package. Certain times of the year may require more or less work in accounting. 

Limitations: One person can only do so much. If overtime is becoming a regularity, having an accounting team will be in order. Additionally, for complex issues they may not have the skills to accomplish needed tasks.

Experience: Thorough training is an investment. This can be avoided by hiring an accountant with ample experience. 

Salary Price 

Average Part-Time: $27,500

Average Full-Time: $55,000

Outsourced Accounting Firms

This is a dedicated remote accounting firm. They are contracted to work with your business. Outsourcing is best for experience, productivity, and low overhead.  

Pros

Experience: Outsourced accounting firms have Controllers and CFO’s, on staff. Having all levels of experience gets the day to day tasks and high level processing solved. 

Productivity: They are self-sufficient, and manage themselves. Having autonomy from managing an accounting team keeps you focused on your goals as an owner. 

Team: Having multiple people ensures deadlines are always met. Plus the price of an outsourced accounting team can be equivalent to one salaried employee. 

Cons

Proximity: Outsourcing means that they will not be at the business location. Some outsourced firms contract workers outside of the U.S. Which could result in accounting errors, from a lack of regulation knowledge.

Independence: Their autonomy could mean they do not share all of your company values.

Communication: You won’t always be speaking with the same person. A firm will also be dealing with multiple contracts at once, so you could be waiting in line. 

Contract Price 

$500-$5,000/month for small and medium businesses. 

Accountant Hiring Platforms

When you hire an accountant it is like entering a new relationship. Handing over the books is no easy feat. It takes a certain amount of trust to open a door into your finances. Here are a couple of places to search.

Referrals

It never hurts to ask around. Referrals can be the easiest way to find someone that you can trust. Especially if you are looking for someone near you. Most firms thrive on word of mouth. Hit up Nextdoor, your new accountant could be a block away!

Hiring Platforms

  • Upwork is the largest freelancer platform. You can tap into a database of accountants. The site allows you to post a job, or search and invite someone that fits your needs. You can view applicant experience, set interviews, hire and make secure payments. 
  • PARO is an exclusive platform for financial freelancers. They vet every contractor to bring the very best in accounting. As a client you will get paired with a professional to work on your specific needs. 

Indeed/Glassdoor

Posting a job on these sites is fairly simple. You can hone in on exactly what your situation calls for. As well as find a person in the same geographical location.

Google Search 

Well established firms have an online presence. Googling “outsourced accounting firms” will point you to virtual and remote accounting firms.

Virtual interview with an accountant.

The Interview

Here are a few points to keep in mind when interviewing an accountant:

Accountant Traits To Look For:

Good social skills: they will be working with you, other employees, and your customers.

Business savvy: they should be knowledgeable on how to improve your business. 

Practice compliance: they should be well-versed in rules and regulations to avoid penalties and fines.

Freelance Accountant or In House Accountant Interview

  • When and where did you receive a license to practice?

If an accountant was licensed in another state make sure their license complies with your state guidelines. 

  • What is your experience? What types of clients have you worked with?

Isolating exact experience will help you decide whether they are a good fit. Their background will give you a holistic picture of their strengths/weaknesses and how this will affect your business. 

  • What would they add to the business?

Your accountant should have aspirations of a prosperous company. There is always room for improvement. During the interview process, probe to see if they have any ideas on how to help the business succeed. 

  • Can you remember when you missed a deadline and how you dealt with it?

Ideally they should be honest about the past, everyone makes mistakes. Owning their past shows they have self awareness, and the ability to change.  

  • What do you do when you have a project due date and you can’t complete it on-time?

Your recruit should make deadlines a priority. They should know that it is okay to ask for help. Avoiding fees and penalties is the ultimate goal.   

  • What do you do when you are overwhelmed with a task?

Get a good sense of their reasoning skills. Look for statements like “slow down,” “re-organize,” and/or “prioritize.” Also they should feel like they are able to communicate with you in the event that they are stuck.

  • What types of software do you have experience with? 

Keep backend processes in mind when hiring an accountant. If your business is using certain software, see if they are familiar with it or have used something similar. Transitioning into the company or project will be much easier.

  • Are you a Certified Public Accountant (CPA)? 

Not all accountants are CPA’s. It means they have college credits equivalent to a Masters of Science in Accounting. They also worked at least 1 year under a certified accountant. Lastly they passed the CPA exam, which averages a 50% pass rate. This certification is handy for tax purposes.

Outsourced Accounting Interview with remote workers

Outsource Accounting Firm Interview

This isn’t a standard accountant interview, since a firm must agree to take you on as a client. Still treat as one! Below are critical questions to ask during your meeting. 

  • What are some typical clients you serve? 

You want an accounting firm that works with businesses of your size. If you are a business with 100+ employees you may not want to contract with a firm that exclusively serves start-ups.  

  • Do you have client references? 

If you get references, check to see if the firm is in good standing with their clients. You can also run a comparison of how their clients match up to you. However some firms have non-disclosure contracts, limiting the amount of information you have access to. Don’t forget, a google search could reveal some interesting client reviews.  

  • Do you specialize in my industry? 

You definitely want them to know something about your business. While specialization isn’t completely necessary, it will make things much easier. 

  • What is your process for onboarding new clients

This is a good way to figure out what they need access to. Also how much time they will be spending integrating you into their software or vice versa. 

  • How will you collaborate with my team?

It is ideal for a firm to have a relationship with your team to conduct business. Many operate remotely, get an idea of the type participation needed from you and your employees. They may communicate using certain platforms that need to be integrated into your company dynamic.

  • Do you have the capacity to take on another client?

While outsourcing firms have the ability to take on a large number of contracts, some may fall short when it comes to timeliness and communication. This is because they have taken on too much at once. 

  • How do you ensure you meet deadlines?

Deadlines should be a priority. If a firm mentions project management tools, calendars or assistants, it is a good sign they are organized.

Technical Accounting Interview Questions

Even though you might not have technical accounting skills – your accountant should. Below are technical questions to ask when interviewing an accountant. Helping you better understand their specific qualifications. 

Describe your month end close process

Every accountant should be familiar with how to close the books at the end of the month. You don’t particularly need to know the details but if they don’t know the details that is a red flag. 

What would do you if you realized an invoice created 3 months ago was an incorrect invoice and never should have been created? 

They should reply with “create a credit memo” to cancel the invoice. When the interview says they can simply delete or void it, this shows poor understanding of proper accounting procedures. You mess with your historical financials by deleting or voiding an invoice.

What are some of the reasons for bank reconciliation not matching a balance in the bank account?

Items such as:

  • Outstanding checks that haven’t been cashed 
  • Payment received but haven’t cleared the bank yet
  • Errors – payment that are marked as received – but are not actually present on the bank statement

What is the purpose of a deferred revenue account on the balance sheet? 

It exists to record revenues that are not yet recognized. For example: a client prepaid an invoice for entire year – but as per accrual accounting – you should only recognize the revenue earned. A deferred revenue account is there to capture the rest of the funds.

Negotiating Pay

When you land on that special accountant, you cover the tab. Finding a person with a certain skill set is half the battle, now it’s time to budget. Accounting prices vary widely. Here is what you can expect when you are negotiating pay.

  • Freelance Accounting: In this arena there is some wiggle room. Aim for what you can afford, drop a job post and see who bites. Upwork has a feedback system for job posts. Freelancers will tell you if you aren’t offering enough. If nobody is applying, make an adjustment in pay. If you are in dire straits, consider fiverr
  • In House Accountant: Location and experience level qualify salaries. The cherry on top are benefits. Devise a benefits package that matches up with the U.S. Bureau of Labor Statistics national average.
  • Outsourced Accounting Firms: They have different packages and plans to compare. They will devise custom plans with the addition of distinct features, for higher premiums.

Ready, Set, Crunch the Numbers

Congratulations you are ready to hire an accountant. You have all the information to: fill the position; work with the best type of financial service provider; and conduct an interview. The addition of accounting experience to the company will ease your responsibilities. You will be more productive with an extra seat at the table. We know you are in a new phase of business. We wish nothing but success. 

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