You aim to hire the best of the best to work for your company, but as you grow, you want to make sure the people you’ve onboarded are still the right ones for the job. Your next biggest concern is likely taxes and how they are connected to payroll and accounting.
Should you do your own taxes, or is it time to outsource the work? It’s important to understand the pros and cons of both in-house and outside tax preparation before making a decision. Here are some considerations for each scenario.
Allowing an Employee to Manage Your Taxes
- If your accounting needs are specialized, keeping your tax prep in-house and under the same person is efficient and effective. This way, if there is any confusion about how payroll taxes were held or why financial adjustments were done throughout the year, your employee will already be in the know.
- A staff member is always available to you when they’re on the clock. If you have questions about something, they’re accessible immediately and also have easy access to the data in question.
- Hiring your own tax professional as an accountant means you’re allowed to customize the duties they provide for you, rather than paying for the one-size-fits-all option that most accounting firms will offer.
- If this is the first time you’ve hired a full-time accountant who will handle taxes (and everything else) it may be difficult to determine who is the best candidate.
- Hiring a full-time staff member may cost more money in the long haul. Not only will you be paying an annual salary, but you’ll have to consider the other costs of having an employee on board, such as benefits, office space, payroll taxes and more.
- Should you do your own taxes by hiring a tax-specific accountant? Well, if you already have an accountant handling all of your other finance needs on staff, the one who does tax-specific duties may end up with free time on their hands.
Hiring a Third Party for Taxes
- Outsourcing your taxes means you’re getting specialized talent to work on your company’s tax needs. The accountants you’ll be working with know precisely what small-to-medium businesses need to stay compliant. Juggling invoices, payroll taxes, IRS updates and regulation changes is a lot for one person, but an outsourced company can do it seamlessly.
- You can be completely hands-off with your company’s tax needs, and simply review everything to ensure it lives up to your standards.
- Any firm you hire will come with great testimonials and likely even current clients who would be happy to get on the phone with you and act as a referral.
- An outsourced company may not be as available as you’d like them to be. Have a question? You’ll probably need to schedule time for a call or wait for a response on the most recent email you sent.
- You need to keep (and share) records of everything related to taxes. The company you hire can only work with what’s provided to them, so it’s up to you to be organized and detailed with what you share with them.
- Third parties have other clients, too. This means their focus isn’t completely on your business. That doesn’t mean they won’t do a good job, just that they also have to do good work for everyone else, too.
Consider Hiring Both
If you’re leaning toward having an in-house employee take care of all the accounting—including payroll and taxes—it’s not a bad idea to also have an outside firm audit the accounting one to two times a year. By taking this approach, you’ll get the individualized attention of a dedicated employee as well as the keen eye of an accounting firm to double-check all of the work done throughout the year.
Deciding whether to outsource or keep your tax team in-house is a choice that varies from company to company. Weighing the pros and cons will help you make the decision that’s best for your business.