Employee vs. Independent Contractor Bookkeepers?
If you are someone who can spot a good accountant from a bad, has the desire to manage the HR component of having employees, like paying worker’s comp insurance, and don’t mind not being able to fire someone without worry about a lawsuit then an employee might be the best option.
Employees are dedicated to the company (meaning – not working for any other company), but also have that dreaded employee mindset. Most entrepreneurs we work with need people to think like them, act like them, and understand what it is to have your own business, even if it is a consulting service. Employees are limited in what they know. If they don’t know something, there isn’t anyone else on the “team” to ask. If the company outgrows them, there is no place for them to contribute and the hiring and knowledge transfer has to start over from scratch.
It makes sense for companies of a certain size to have accountants on staff, but for most entrepreneurs, it is too limiting to what they need and they simply can’t afford to make the wrong choice, usually can’t pay the employee desired benefits, and don’t have an HR team that can manage the hiring process.
Business owners should not be saddled with this time consuming process. In terms of risk management, accountants that are comfortable in their stable, steady position (where no one else really understands what they are doing) are in a place of trust and have a higher opportunity to commit fraud. It happens and there are ways to mitigate the risk of it happening to you.
My vote is stick with a part-time independent contractor until your business grows enough to warrant the additional fixed cost and salary burden. Usually around $1m of revenue, it makes sense to hire and pay an accountant $30-40k/yr. Rule of thumb accounting services run ~ 2-3% of gross revenues.