A guide for new companies deciding between hiring an accounting firm or managing their accounts in-house. Learn the pros and cons of each approach and choose the best option for your business.
Accounting: A Key Aspect of Business Management
Accounting is a fundamental part of running a business, whether it’s a small startup or a large corporation. Proper and accurate accounting allows business owners to monitor financial status and make well-informed budgeting decisions.
If you're starting a business, you may be wondering whether to hire an external accounting firm or manage accounting in-house with a dedicated employee. This article will provide insights to help you make an informed decision. For those ready to outsource, METI Accounting offers licensed CPA accounting and audit services, ensuring compliance and professionalism. Contact us for expert advice anytime.
What Are the Key Accounting Records for Companies?
Accounting for companies involves managing essential records, often referred to by accountants as the "5 Journals." These journals are:
Sales Journal
This journal records credit sales transactions, documenting all sales on credit made by the business.
Purchase Journal
This journal is used to record credit purchases of goods, detailing all purchases on credit.
Cash Receipts Journal
This journal records all cash inflows, including cash, bank transfers, and deposits. It also captures income from sales or the disposal of non-inventory assets. The cash receipts journal is always used alongside the cash payments journal.
Cash Payments Journal
This journal documents all outgoing cash transactions, including payments made in cash, bank transfers, or for purchases such as office supplies or goods. It complements the cash receipts journal.
General Journal
This journal logs miscellaneous transactions not covered in the sales, purchases, cash receipts, or payments journals. Examples include asset entries, liability entries, and month-end adjustments.
In addition to maintaining these journals, businesses must prepare tax filings and financial statements, including semi-annual and annual reports.
When Should You Start Accounting for Your Company?
By law, companies in Thailand are required to maintain accounting records from the date they are registered as a legal entity. Under the Accounting Act, B.E. 2543, Section 9 mandates companies to maintain accounts, and Section 10 requires financial statements to be closed within the first 12 months, and subsequently, every 12 months thereafter. Failure to comply can result in legal penalties.
Once you understand the legal requirement to maintain accounting records, the next step is to decide who will handle your accounting—whether to outsource it to an accounting firm or manage it in-house. This decision depends on several factors, including the size of your business, the complexity of transactions, and the level of accounting expertise required.
What Types of Businesses Should Outsource Accounting?
The size of your business plays a significant role in determining whether to hire an accounting firm or an in-house accountant.
Small Businesses
Small businesses with annual revenue not exceeding 1.8 million THB often have simpler structures and fewer transactions. These businesses might consider managing accounting independently. However, if you lack expertise in accounting or find the process overwhelming, outsourcing to an accounting firm can be a practical solution.
Many accounting firms offer affordable services starting as low as 7,000 THB per month, which can be more cost-effective than hiring a full-time accountant with a monthly salary in the tens of thousands. This is particularly beneficial for small businesses preparing to scale efficiently.
Medium to Large Businesses
For medium and large businesses with annual revenue exceeding 1.8 million THB, registering for VAT is mandatory. These businesses typically have increased transaction volumes and more complex tax filings, making in-house accounting staff or outsourced accounting services essential.
Medium to large businesses often benefit from the expertise of professional accounting firms to ensure compliance and efficiency.
In-House Accounting vs. Outsourcing: What’s the Difference?
When managing company accounting, business owners generally have two options: outsourcing to an accounting firm or hiring in-house staff. Here are the pros and cons of each:
Outsourcing to an Accounting Firm
Advantages:
Expertise and Professionalism: Accounting firms employ trained professionals with extensive experience in accounting and tax compliance across various industries
Time Efficiency: Outsourcing allows business owners to focus on core operations without the need to master accounting skills or hire and train staff
Reduced Risk of Errors: Professionals ensure compliance with tax laws, minimizing the risk of audits or fines
Continuity: Outsourcing provides consistent service without interruptions caused by employee turnover
Disadvantages:
Limited Flexibility: While in-house staff can address issues immediately, outsourcing requires reviewing documents before submission, which may delay corrections
In-House Accounting with Full-Time Staff
Advantages:
Direct Control: Business owners have full oversight of accounting activities and financial reports, with immediate access to staff for clarifications
Multi-tasking Capability: In-house staff can be assigned additional tasks beyond accounting, offering versatility to the business
Disadvantages:
Higher Costs: Hiring full-time accountants incurs additional expenses, such as salaries, benefits, accounting software, and training
Limited Expertise: In-house accountants may lack advanced knowledge in tax planning or complex reporting, unlike specialized accounting firms
Training Requirements: Time and resources are needed to upskill employees, potentially leading to inefficiencies during the learning period
Risk of Errors: Less experienced staff may make costly mistakes, affecting the company's financial health and compliance
How Much Does It Cost to Outsource Accounting?
The cost of outsourcing accounting services varies based on factors such as company size, the volume of transactions, and the complexity of required services (e.g., tax filings or advisory)
Typically, accounting firms charge monthly or annual fees, with prices starting around 7,000 THB per month for small businesses and increasing for larger or more complex businesses
Conclusion: Should You Outsource Accounting or Manage It In-House?
The decision between outsourcing and in-house accounting depends on factors such as company size, resources, and the complexity of accounting tasks. Small businesses with limited resources may find outsourcing to be more cost-effective, while larger businesses may benefit from having dedicated in-house staff.
At METI Accounting, we provide accounting services with licensed CPAs, ensuring compliance and professionalism. Whether you choose to outsource or need advice, our experienced team is here to help. Contact us today for consultations and preliminary cost estimates.
