Do I Need a Full-Time Accountant or Can I Use a Fractional Accountant?

Every day we talk with people who aren’t sure if they should hire an accountant full-time or use a part-time accounting service. As an accounting provider helping them to answer this question is something that we really take pride in doing because it allows us to assist small and mid-sized business leaders in a way that’s truly meaningful to the future of their organizations.
​
We’re going to walk you through the types of questions we ask and information we provide when having this kind of discussion with business owners and hiring managers to get you thinking about which resource will best fit your needs. If you would like to speak to someone about your specific business needs, reach out to us for a complimentary consultation today! Let’s dive deeper into understanding how a fractional accounting role differs from a full-time accountant and when you need which to achieve your business goals!

---

​Fractional Accounting Defined
A fractional accountant (also known as a “consulting accountant” or “outsourced accountant”) is an accountant who works in a less than full-time capacity, which can include:

• Ongoing part-time work (ex. doing 15 hours of bookkeeping/accounting work each week)
• Short-term work (ex. offering accounting additional support temporarily during an audit or business project that has significant accounting needs)
• Interim work (ex. filling the gap after an accountant has left until a replacement can be hired)

A fractional accountant may work remotely, onsite, or in a hybrid arrangement but will be treated as an independent contractor rather than a full-time employee.

Ideal Use Case Scenarios
There are many reasons to hire a fractional accountant instead of opening up a full-time role! Hiring a fractional accountant is a great option for a startup or small business that has bookkeeping and accounting needs, but those needs don’t necessarily necessitate a full-time role yet. A fractional accountant can be hired to handle some or all of a company’s accounting activities as a steppingstone until they grow enough to require a dedicated person in this role. Fractional work in this scenario offers a cost-effective, flexible solution that can grow with the business. For larger companies that already have a full-time accountant or accounting team a fractional accountant can be brought into the role in an interim capacity to fill the gap when an accountant is lost unexpectedly to something like medical leave, a better opportunity, or family emergency. A fractional accountant can be brought in very quickly in this kind of situation to prevent business disruption. Additionally, a fractional accountant can be brought in to augment an existing team’s capabilities when there is a significant increase in accounting work to handle overflow work.

Key Questions
When deciding between a fractional accountant and a full-time accountant, ask the following questions:

• How much work do we have for this role now and how much will we have in the foreseeable future?
•  How long will we truly need this resource?
• What is the budget for bringing someone in?

When there’s not enough work to justify the cost of a full-time employee, the company’s needs are short-term, or the hiring budget is limited, hiring a fractional accountant is going to be your best option!

The Benefits of Fractional work
One of the biggest benefits of hiring a fractional accountant is cost efficiency. When a full-time accountant is hired in-house, their employer incurs the following expenses:

• Recruiting costs – searching, verifying credentials, running background checks, relocation (when needed), signing bonus, onboarding, training
• Employment costs – salary, health insurance, paid time off, retirement benefits, employment taxes, performance bonuses

The overall cost of hiring an accountant will include all these kinds of expenses. Subsequently, it usually shocks employers when they analyze discover that an accountant’s salary is only around 70% of their total cost to their employer. The rest of the cost is comprised of other employee-related expenses, which can be very steep initially and continue to add up over time. One way to avoid this significant ongoing expense is to hire a fractional resource instead.

Using a fractional accountant ensures you only pay for what you need when you need it. It’s a la carte accounting at its finest! And because you only pay for as much or as little time as you need, it allows flexibility for companies as they grow and expand over time. By using an outsourced solution instead of hiring in-house, companies can turn what would have been a high fixed cost into a more manageable variable cost, to improve cash flow management. 

Accounting Trends
As accounting and finance roles have gotten more complicated over the years due to increasing regulatory and compliance requirements, the workflow associated has increased proportionally as well. Bringing in fractional personnel is a great way for companies to handle the added work. In fact, this is the primary reason why many business leaders are beginning to lean more heavily on fractional resources.  As Michael Burdick explains when discussing how fractional experts can ease pressure on overextended teams, 

Navigating these challenges requires CFOs to shift some of their fixed costs — the greatest of which is typically headcount — to variable costs. That doesn’t necessarily mean having fewer employees but having the elasticity to flex up and down depending on needs. As opposed to having maybe 10 full time employees as your base team, maybe you have seven, and then you flex up and down with fractional experts …based upon the needs of that specific time period.

​How to Make a Fractional Model Work
If you’re skeptical about using a fractional accountant, go slow and take the steps needed to ensure it will be a successful fractional engagement:

• Clearly define the scope of work before anyone is brought into the role.
• Establish bookkeeping/accounting deliverables and deadlines.
• Utilize an accounting policies and procedures manual to guide all activities.
• Encourage frequent, thorough, and proactive communication.
• Time the use of a fractional resource to align with important accounting activities and deadlines.
• Provide thorough IT support for all accounting/finance technology.
• Ensure fractional employees are treated as independent contractors instead of employees in terms of how compensation is handled and what is expected of them.

When you need a fractional accountant, we can help! Our team of US-based accountants have experience with companies across all industries and growth stages, which provides them with tremendous expertise to draw on when coming alongside new clients. We’ll meet you where you are to provide accounting services that are customized to your needs and goals. The part-time accounting services we offer can supply as much or as little support as you need to keep your business running smoothly. Contact us today for more information!