Which is Better: A Freelance Bookkeeper or An Accounting Company?

Organizations looking to outsource their financial needs often wonder who is best qualified to handle the intricacies of their business operations.

With the multitude of options available the landscape of potential financial solutions is vast. Factor in the solutions catered specifically towards SMBs, local businesses, privately-held businesses, and businesses in designated industries and the result is an overwhelming sea of possibilities.

​Within these choices are two distinctly different options – freelancers and large firms. 

Business owners tend to struggle with determining which type of provider will best suit their needs. Will a solopreneur or freelance bookkeeper be sufficient? Or is a larger accounting company a better option?

The answer can vary depending on individual business considerations, financial needs, duration of the relationship, and budget.

Freelance Bookkeeper

Pros:

• The most common reason that businesses choose to hire a solopreneur is because an individual has less overhead to consider when setting rates compared to an accounting firm. The result is typically a lower rate for services rendered. Additionally, they are often willing to customize services to stay within a certain budget for cash-strapped startups and small businesses.
• Additionally, freelancers do not typically require contracts or ongoing commitments to utilize their services, which makes them an attractive choice for ad hoc projects. Small businesses that are still learning to manage cash flow and companies with irregular cash flow models (such as seasonal businesses) appreciate the flexibility of only needed to pay for financial services as needed, rather than being locked into a contract.

Cons:

• Unfortunately, self-proclaimed experts without the skillset to support that assertion are a problem in every professional field. The result is a skepticism about freelancers in general. While many bookkeeper solopreneurs are qualified, knowing which ones can be trusted is a concern that many business owners have. Without personal recommendations to reply on, it can be difficult to determine exactly what kind of qualifications or experience level a freelancer will bring to the job.
• Furthermore, even among well-qualified freelancers, their lower volume of clients results in a smaller portfolio, which can make it difficult to determine which areas they specialize in for providing financial services and advice. While this may not be of utmost importance for some businesses, it can deter niche businesses or those with special circumstances to consider.
• Lastly, the value of the arrangement is highly contingent upon being able to work with the specific individual hired. Unlike an accounting firm, which employs many financial professionals, a freelancer is a one-person endeavor, so a disagreement or difference in methods or goals can end the relationship. This is one reason why solopreneurs tend to experience more client turnover than accounting businesses.  

Accounting Company

Pros:

• An accounting company is typically better at handling more sophisticated financial needs, like those for non-profit organizations and businesses with government contracts. Their in-depth understanding of accounting systems, tax considerations, and cash flow challenges make them the best choice for any organization with complicated finances.
• ​Additionally, accounting firms can help with more than just reporting, payroll, taxes, and other financial necessities for established companies, they can also aid in new business formation. An experienced accounting company can advise on business structure options as well as implement a financial management software.
• This wider breadth of offerings is possible due to the increased cumulative experience from having many financial professionals employed together. As a result, larger accounting companies are typically able to offer more specialized services with greater industry focus. With many accountants and bookkeepers working for the same company, business owners are also more likely to find someone who is a good match for their specific needs.
• With more employees, accounting companies have greater oversight over their operations. The result is work that is better governed and more likely to adhere to the most recent financial standards and best practices. Increased oversight is an especially salient point for less experienced business owners who are relying on a financial service to cover gaps in their own financial knowledge.
• Generally, accounting companies are more stable than solo operations, which provides better continuity for businesses utilizing their services as well. 

Cons:

• The biggest reason that business owners cite for not wanting to work with an accounting company is cost. It is true that an accounting company is usually more expensive than working with a freelancer on a monthly or annual basis. However, this is typically due to the nature of the work being performed. While bookkeepers can provide basic financial services like payroll and reporting, accounting companies do those same functions and more, such as filing taxes, implementing internal controls, managing cash flow, and creating budgets.
• While accounting companies are more likely to expect an ongoing service relationship, they can still work with businesses that only have occasional or ad hoc needs. For accounting firms that truly offer customized services, these offerings will be priced accordingly, and the cost will still be substantially less than hiring in-house for the same functions.

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