In-house or outsourced bookkeeping?
Updated
Every growing business reaches the point where the owner can no longer do the books at the kitchen table. The next decision is whether to hire someone or send the work out — and the honest answer depends on things most comparisons never mention.
Short answer: Outsourcing usually costs less until the work reaches roughly half a full-time role, and it never goes on holiday or resigns. An in-house bookkeeper wins when the work is constant, needs daily presence, or is entangled with operations — inventory counts, job costing, or a counter that takes cash. For the outsourced side of the comparison, published fees show where monthly bookkeeping starts.
The right answer depends on volume, and on who reviews the work afterwards. An email enquiry is usually enough to tell.
| In-house bookkeeper | Outsourced | |
|---|---|---|
| Cost behaviour | Fixed — paid whether busy or quiet | Variable — scales with volume |
| Employment obligations | Yours: payroll, CPP, EI, vacation, coverage | None |
| Availability | In the building, during their hours | Not on site; responsive within agreed terms |
| If they leave | Knowledge and continuity leave with them | Continuity sits with the firm |
| Review of the work | Usually none until year-end | Built into the engagement |
| Best suited to | Continuous work, inventory, daily cash, job costing | Periodic work, service businesses, growing firms |
| Typical trigger to switch | Work reaches roughly half a full-time role | Owner’s own time becomes the bottleneck |
On this page
In-house or outsourced bookkeeping: what you are comparing
The comparison is not “a person” against “a firm”. It is a fixed cost you manage against a variable cost you buy, and those behave differently when the business changes shape.
An in-house bookkeeper is capacity you own. You pay for it whether the month is busy or quiet, you carry the employment obligations, and you get someone who is in the building and knows your customers by name.
Outsourced bookkeeping is rented capacity. It scales with volume, not the calendar, accrues no vacation, and keeps the knowledge in a firm rather than one person’s head — the difference between a resignation being an inconvenience and a crisis.
The costs people forget on each side
In-house, the salary is the visible number but rarely the whole one. Add the employer’s CPP and EI, vacation pay, benefits, workers’ compensation, software licences, a desk and computer, and your time recruiting, training and reviewing. If the hire does not work out, you also carry that cost until it is resolved.
On the outsourced side the fee is the visible number, and the forgotten cost is coordination. Someone still has to get the paperwork out of the business and to the firm, answer questions, and approve things. Outsourcing does not remove the work of running the business; it removes the work of recording it.
The other forgotten cost is review. An in-house bookkeeper usually has nobody checking their work until year-end, which is when errors are most expensive to find. A firm has that review built in, and that is a real part of what the fee buys.
What changes at which size
Under roughly ten employees, most businesses lack enough bookkeeping to occupy a person. Hiring buys idle capacity, and the bookkeeper usually absorbs reception, ordering and scheduling — perhaps what you wanted, but no longer a bookkeeping decision.
Between ten and thirty, it depends far more on the shape of the work than the size of the business. A business with inventory, job costing or daily cash handling generates bookkeeping continuously and benefits from someone present. A service business with a few dozen invoices a month does not.
Beyond thirty employees, payroll alone usually justifies internal staff — yet many such businesses still outsource the periodic, specialized year-end and statements. Most use both.
The questions that actually decide it
Is the work continuous or periodic? Continuous work — daily receipts, weekly payroll, constant inventory movement — favours someone present. Periodic work favours a firm.
Does the work need to be in the building? If someone has to physically count stock, handle a till or chase paperwork off a shop floor, that is an argument for in-house that no amount of software resolves.
What happens if that person leaves? This is the question owners skip and regret. If your books live in one employee’s head and they resign in February, you find out in April what that was worth.
Who reviews the work? If the answer is nobody, the choice has been made on cost while ignoring risk.
The arrangement most owner-managed businesses land on
For most owner-managed businesses the answer is both. Day-to-day capture stays in-house — often with an existing administrator — and reconciliation, payroll, GST/HST and year-end go to a firm.
The comparison changes again if what you are missing is oversight rather than capacity, in which case the answer is a controller rather than another bookkeeper.
That keeps the fast-moving part where it happens and the technical part where it is reviewed, and it avoids paying for a full role before there is a full role’s worth of work.
It also scales cleanly. As the business grows, more of the day-to-day moves inside and the firm’s role narrows to the specialized work — which is the same arrangement, just at a different ratio.
Questions people ask
Is outsourcing always cheaper?
No. It is usually cheaper until the volume of work approaches half a full-time role, after which the comparison narrows. Past that point the decision is driven more by whether the work needs someone present than by cost.
Can I do both?
Yes, and most owner-managed businesses eventually do. Day-to-day capture stays inside the business while reconciliation, payroll, GST/HST and the year-end go to a firm. That is usually the arrangement that survives growth best.
What if my bookkeeper is also my office administrator?
That is extremely common and works well at smaller sizes, with one caution: the same person recording money and handling money removes a natural check. Where that is the arrangement, someone else should be reviewing the bank reconciliation.
How do I know when I have outgrown doing it myself?
The usual signal is not volume, it is timing. When the books are consistently a month or more behind, or when you cannot say within a few thousand dollars what the business has earned this year, the work has already outgrown the arrangement.
Does outsourcing mean losing visibility of my numbers?
It should mean the opposite. A properly run engagement produces monthly reporting on a schedule, which is more visibility than most businesses get from an in-house arrangement where nothing is formally reported until year-end.
General information, not tax advice. This compares two operating models in general terms and cannot account for your circumstances. Speak to a CPA before acting — send an enquiry.
The comparison only works with a real number on the outsourced side — the fee estimate tool supplies it from our published fees.
A common trigger for outsourcing is discovering how far behind the in-house books have drifted. Catching up is a separate, one-time job.