In-House or Fractional? How Should I Build My Accounting Team?

Bookkeeping, payroll, budgeting—these essential accounting tasks are the backbone of any successful business. If you are considering reevaluating your financial services, there are some crucial choices to make. The first is deciding what kind of accounting services are right for you.

Today, the major choice for accounting services comes down to in-house or fractional accounting.

From the new startups to established ventures, success and growth are only possible through diligent accounting practices. Both in-house and fractional accounting can provide the tools you need for elevating and securing your business, but your best option could depend on a variety of factors. Read on to discover the best way to build your accounting team.

What Is The Difference Between In-House or Fractional Accounting?

Before delving into the details of these distinct accounting practices, it is important to establish the key differences between them. 

In-House Accounting

For as long as there have been businesses, there has been accounting. In the past, businesses were tasked with building their own accounting departments to handle daily, monthly, and yearly financial tasks.

In-house accounting departments are typically staffed with:

• Bookkeepers
• Certified public accountants (CPAs)
• Financial advisors 
• Managerial accountants

These employees fulfill all financial needs while providing outside departments with regular accounting updates. Therefore, an in-house accounting team should be well-prepared to deliver standard information regarding cash flow, profits, tax information, and several other key financial figures.

Typically, the accounting team is headed by the chief financial officer (CFO), who interfaces with higher management and various department heads. The CFO is your intermediary between the accounting department and the C-suite executives.

Fractional Accounting

With the advent of complex accounting software and high-response telecommunication tools, it is no longer necessary to build an accounting department on your own. Today, fractional accounting services are available to businesses interested in reaping the benefits of an expert financial department without building it themselves.

Fractional accounting can provide your business with an outsourced financial teaming, offering services including:

• Budgetary management – Profits, losses, costs, and cash flow are the primary function of many fractional accounting services. From ensuring a positive balance sheet to reevaluating employee contracts and salaries, this crucial work can be done remotely by a hired team of highly skilled professionals.

• Business plans and strategies – While some in-house accounting teams may have their hands full with the daily operations of your businesses, a fractional accounting team has the bandwidth to develop and execute new business strategies to help your venture grow and prosper.

• Implementing internal rules and control – Fractional accounting teams are designed to put you in control of your business’ finances. Through direct communication, you can implement various internal controls from the top-down, instilling a sense of continuity and accountability across your entire business. Fractional accounting creates highly actionable scenarios for financial overhauls that can bring new successes.

Building Your Team: In-House vs. Fractional Accounting 

Before considering any financial changes, it is important to consider the work required to implement change. Building any team takes time, commitment, and resources, though the demands of in-house and fractional accounting are notably different.

In-House Accounting

For many small businesses and startups, early accounting needs are covered by founding team members. However—whether you have a primary CFO or are running the accounting department yourself—as your business grows, so do your accounting needs.

To craft an in-house accounting team, you will need to:

• Allocate resources – The cost for developing your team may vary widely depending on the size of your business, and every business will need to set aside time and capital to begin the team-building process. Your accounting team could easily cost upwards of six figures, requiring the movement of capital from one department to another.

• Access your needs – Are you interested in a bookkeeper, a financial manager, or several accounting professionals? Do you expect your business to expand quickly, requiring a team ready to take on your growing financial needs? Expect to hold meetings with stakeholders and begin an internal audit to settle on what is best for your business.

• Recruiting, hiring, and onboarding – Once you have prepared to bring on an in-house accounting team, the long process of finding suitable candidates begins. It may take several months to fill various positions and prepare them for their duties at your company.

Fractional Accounting

How can you shorten the team-building process without sacrificing the expertise and skills of a professional accounting team? Fractional accounting is the primary way for businesses to accelerate their accounting capabilities while saving time and money.

Fractional accounting services can streamline the process in the following ways:

• Personalize services – Avoid the expensive process of auditing your needs by connecting with a fractional accounting service that can access your businesses and offer a contract tailored to your specifications.

• Pre-selected team – By hiring a fractional accounting team, you will have access to a numerous financial professionals with expertise in your industry. Not only are these team members already vetted and available to work with you, but they are also backed by the fractional accounting firm, ensuring quality work and actionable results.

• Fast results – The time commitment required to build a complete in-house accounting team can lead to business slowdowns as resources are shifted and new positions are created. With fractional accounting, you can have your full accounting services up and running after a few consultations.

Managing Your Business: In-House vs. Fractional Accounting

Once your team is in place, you will still need to consider the upkeep and management of your accounting services. Again, consider the contrasts when managing your business with either an in-house or outsourced accounting team.

In-House Accounting

With an in-house team, you are on the hook for the various needs of your financial professionals. But, even if you have built a reliable and effective team, the continued costs to keep your services operating could put increased pressure on your business.

The ongoing costs for an in-house team may include:

• Salaries and benefits
• Increased real-estate costs
• Restaffing
• Regular training and retraining costs

Fractional Accounting

The responsibilities of a fractional accounting team are fairly straightforward. Costs will be consistent every month and, with a long-term contract, there should be no surprises.

Additionally, when working with a fractional accounting team, you can expect:

• Decreased operational costs
• Opportunities to expand services
• Regularly scheduled interactions
• Consistent team members

When employing a fractional accounting team, the issues of losing team members and reshuffling your organization are minimized, allowing you to focus on the work that matters.