Outsourced finance & accounting vs hiring in-house: what’s actually cheaper?

What's actually cheaper?

Your consulting firm hit $1.5M in revenue last year. You're done doing your own books. You need professional help. The question is whether to hire someone or outsource to an accounting firm.

You search "bookkeeper salary" and see $45,000-60,000. You get quotes from outsourced accounting providers at $1,800-2,200 monthly. Quick math: hiring in-house looks cheaper. $55,000 salary versus $24,000 annual outsourcing cost. Why would anyone outsource?

Because that comparison is incomplete, salary is just the starting point. When you calculate the full cost of an in-house finance hire, including benefits, tools, training, management time, and backup coverage, the numbers flip dramatically.

Outsourcing finance and accounting services typically costs $18,000-30,000 annually, all-in, while hiring in-house runs $65,000-95,000 when you include every real expense, making outsourcing 50-70% cheaper for consulting firms under $3M revenue despite higher perceived hourly rates.

Let me show you the actual math.

The visible salary difference dramatically understates the actual cost gap

Most founders start their cost comparison at base salary. That's where the math goes wrong.

An experienced bookkeeper capable of handling consulting firm complexity (project tracking, multi-state considerations, contractor payments) costs $45,000-60,000 in most markets. A full-charge bookkeeper or junior accountant who can also handle financial analysis and reporting runs $55,000-75,000. These are just base salaries for competent professionals, not exceptional talent.

Outsourced accounting for a consulting firm of your size typically quotes at $1,500-2,500 monthly, depending on transaction volume and complexity. That's $18,000-30,000 annually. At first glance, hiring in-house at $55,000 looks almost twice as expensive as outsourcing at $24,000.

But you're comparing apples to oranges. The outsourcing fee is all-in. The salary is just the beginning of in-house costs.

Here's what else you're paying for when you hire someone.

Hidden costs of in-house finance hires add $20,000-40,000 annually

Benefits and employer taxes represent the highest hidden cost that founders consistently underestimate.

Health insurance for a single employee runs $500-900 monthly, depending on your plan, adding $6,000-10,800 annually. If they have family coverage, double it. Employer payroll taxes (Social Security, Medicare, and unemployment) add another 7.65% minimum, plus state-specific taxes. On a $60,000 salary, that's $4,600 in federal payroll taxes alone. If you offer 401(k) matching at a modest 3%, add another $1,800, minimal benefits package total: $10,000-18,000 annually on top of salary.

Software and tools create recurring costs that aren't needed with outsourced solutions. You need QuickBooks Online Plus or Advanced ($70-200/month), payroll software unless you outsource payroll separately ($40-100/month).Bill.com or similar for AP automation if you want efficiency ($50-100/month), reporting or dashboard tools ($30-100/month), and receipt management software ($15-40/month). Annual software costs: $3,000-6,000. With outsourcing, all tools are included in the monthly fee.

Training and continuing education keep your hire competent as regulations and best practices evolve. Accounting rules change. Software updates require learning. QuickBooks certifications expire. Budget $1,500-3,000 annually for courses, conferences, or professional development. Outsourced firms handle this centrally, distributing the cost across many clients.

Management and oversight time represents a high hidden cost in founder hours. Even a good in-house hire needs direction, questions answered, decisions made, and periodic performance review, budget 2-4 hours monthly minimum for management touchpoints. At the founder opportunity cost of $150-200/hour, that's $3,600-9,600 annually in your time. Outsourced providers manage their own staff.

Backup and vacation coverage becomes your problem with in-house hires. When your bookkeeper takes a two-week vacation or gets sick, who handles the work? Either it waits (creating month-end delays), or you pay for temporary coverage. Factor $2,500-5,000 annually for coverage gaps. Outsourced firms have built-in redundancy and never take a vacation from their work.

Hiring and onboarding costs hit hard when you need to replace someone. Recruiting costs $1,500-3,000 (job posts, interview time, background checks). Onboarding and training consume 20-40 hours of combined time as your new hire learns your business, systems, clients, and processes. This happens every time someone leaves, and accounting staff turnover averages 18-24 months. Amortize $3,000-8,000 annually for hiring cycle costs. Outsourced relationships rarely require replacement.

Sum these hidden costs: $10,000-18,000 (benefits)

+ $3,000-6,000 (software)

+ $1,500-3,000 (training)

+ $3,000-8,000 (management)

+ $2,500-5,000 (backup)

+ $3,000-8,000 (hiring)

= $23,000-48,000 in annual costs beyond salary.Total cost comparison shows outsourcing delivers 50-70% cost savings

Let's calculate the real all-in annual cost of each option for a consulting firm at $1-2M revenue.

In-house bookkeeper total cost:

$55,000 (salary)

+ $12,000 (benefits)

+ $4,000 (software)

+ $2,000 (training)

+ $5,000 (management time)

+ $3,500 (backup)

+ $4,000 (hiring amortized)

= $85,500 annually. 

And you get one person with one set of expertise, no backup when they're out, and limited capacity to handle growth or complexity spikes.

Outsourced accounting total cost: $2,000/month × 12 months = $24,000 annually, all-in. This includes multiple team members (bookkeeper, controller, tax preparer), all software and tools, built-in backup and coverage, professional oversight, and scalable capacity.

The savings: $85,500 - $24,000 = $61,500 annually, or 72% cost reduction.

Even if we use lower estimates ($70,000 all-in for in-house vs. $30,000 for higher-end outsourcing), you still save $40,000 annually, a 57% reduction.

That's real money. Enough to hire another consultant, invest in business development, or just improve your profit margin.

What you get for the money matters as much as the cost

Cost comparison isn't just about the number. It's about value received for dollars spent.

With an in-house hire at $85,000 annually, you get one person with finite expertise, typically strong in either bookkeeping or tax or analysis, but rarely all three. When they're on vacation, work stops. When complexity exceeds their knowledge, you're stuck. When your firm grows, you need to hire a second person, essentially doubling your cost.

With outsourced accounting at $24,000 annually, you get a team: a bookkeeper for transaction processing, a controller for review and oversight, a tax preparer for planning and compliance, and often fractional CFO support for strategic questions. When one person is out, others cover seamlessly. When complexity arises, specialized expertise is available. When you grow, the same team scales service without requiring a second $85,000 hire.

The cost per unit of expertise and coverage is dramatically lower with outsourcing.

When does in-house become cheaper?

The crossover point where in-house hiring makes financial sense typically occurs around $3-5M in revenue when you need multiple full-time finance staff anyway.

At that scale, you might need :1. A full-time controller ($85,000-110,000)2. A bookkeeper ($50,000-65,000), 3. And periodic CFO support ($40,000-60,000 fractional). Total in-house cost: $175,000-235,000 annually. Outsourced accounting at that complexity runs $4,000-6,000 monthly ($48,000-72,000 annually), still cheaper, but the gap narrows.

The real driver for bringing finance in-house at scale is control and integration. When you have 50+ employees, complex multi-entity structures, significant compliance requirements, or need a daily financial partnership, in-house can be worth the cost premium. But for consulting firms under $3M revenue, the economic math strongly favors outsourcing.

Hidden benefits beyond cost savings

Outsourcing delivers value that's hard to quantify but very real.

You get expertise diversity that would cost $200,000+ to replicate in-house. Your accounting team includes people who specialize in bookkeeping, tax, financial analysis, and consulting firm operations specifically. Building that expertise internally is prohibitively expensive for mid-sized firms.

You eliminate hiring risk and management burden. Bad hires are costly. Managing people is time-consuming. Outsourcing transfers both risks to the provider.

You gain scalability without reorganization. When you grow from $1.5M to $3M, your outsourced provider scales service smoothly. With in-house, you'd need to hire additional staff, restructure roles, and absorb significant cost increases.

You access better technology and tools without capital investment. Professional accounting firms invest in premium software, integrations, and reporting tools that would be prohibitive for you to license individually.

The real comparison for consulting firms

For consulting firms between $500K and $3M in revenue, outsourcing finance and accounting services delivers 50-70% cost savings compared to the actual all-in cost of in-house hiring, while providing superior breadth of expertise, built-in redundancy, and scalable capacity.

The decision isn't really about cost anyway. It's about where you want to invest your limited resources. Hiring in-house puts $85,000 annually into one person doing back-office work. Outsourcing puts $24,000 into professional finance operations and frees up $60,000 to invest in revenue-generating activities like hiring consultants, business development, or service expansion.

Calculate the full cost, factor in hidden expenses. Then make the decision that actually serves your growth.