Growing companies always have big dreams. Part of those dreams is growth, success, and maybe some wealth as well. There are two kinds of business owners when it comes to their thoughts on their back office accounting: 1) owners who want to hire accountants before there is a significant need, and 2) owners who won’t hire until they are absolutely forced to do so. Rarely does a business hire individuals for their accounting needs at exactly the right time. How to solve this dilemma…outsource the accounting function and back of the house processes. Think about this cost breakdown, a CFO costs between $100,000-250,000 depending on the size of the Company and location (let’s assume its $150,000 for this example). An accountant to do the day to day work will cost $35,000-50,000 (let’s assume $40,000 for this example), your tax preparer another $2,000 and so on. If you follow that model and assumptions, the cost incurred by your company would be $192,000 plus employer taxes, plus benefits, plus 401K, plus the hardware necessary for the individual to do their work, plus increased office space required, plus, plus, plus. With all those pluses, your fees are sure to be close to $250,000 per year for those two employees. That’s a significant cost to incur when you’re still in the growth phase of your business.
On the opposite end of the spectrum, you can use an outsourced accounting department with experienced accountants and CFO types at a fraction of the cost (let’s assume $5,000 per month). If you compare that to the above scenario, it’s a $190,000 savings. Think of having all your back office, accounting and year tax needs taken care of each month for about the same price as that staff accountant. That also means no training, no benefits that need be paid, or extra costs incurred.
In the above example, we used $5,000 as a base amount, but generally such services start at $500 and go up depending on the size and complexity of your operations. In the end, it costs you not to consider having an outsourced accounting department.
dbbmckennon is a full service CPA firm with offices in Orange County and San Diego focused on providing quality accounting and consulting services at reasonable rates. For additional complimentary information regarding this topic or other questions you may have please call one of dbbmckennon‘s offices located in Southern California or contact us here.