Hiring an in-house accountant can be a crucial decision for any business, but it is also a decision that comes with significant costs. Understanding the comprehensive costs of hiring an in-house accountant is essential for businesses to make an informed decision on whether hiring an in-house accountant is the best solution for their accounting needs. In this article, I will highlight and explain in detail the comprehensive costs of hiring an in-house accountant.
Salary and Benefits:
The most obvious cost associated with hiring an in-house accountant is the salary and benefits. An in-house accountant’s salary varies depending on experience, education, and location. The average salary for an in-house accountant in Nigeria is around N2.4m upward per year. However, this amount can vary significantly depending on the location, with salaries in larger cities being higher. In addition to the salary, there are also benefits such as health insurance, retirement plans, and vacation time that employers must consider. The cost of benefits can add up to 30-40% of the employee’s salary, making the overall cost of hiring an in-house accountant even higher.
Recruitment and Training Costs:
Recruiting and training an in-house accountant can also be a significant cost. Employers may have to advertise the position on job boards, pay for a recruiter, and spend time reviewing resumes and conducting interviews. Once the accountant is hired, the employer must also provide training to ensure they are up to speed with the company’s accounting practices and procedures. This training can take weeks or even months and can be a significant cost to the company.
Overhead Costs:
There are also overhead costs associated with hiring an in-house accountant. Employers must provide office space, a computer, and other necessary equipment for the in-house accountant to perform their duties. These costs can add up, especially if the company does not have any available office space and must rent or purchase additional space.
Software and Technology Costs:
In-house accountants require access to accounting software and technology to perform their duties. Employers must pay for licenses for accounting software, such as QuickBooks or Sage 50, which can cost up to several hundred dollars per year per user. The employer must also provide the necessary hardware and ensure that it is up-to-date and compatible with the accounting software.
Compliance and Regulatory Costs:
Accountants must ensure that the company’s financial statements and accounting practices comply with applicable laws and regulations. In-house accountants are responsible for monitoring and adhering to regulations such as the IFRS and Generally Accepted Accounting Principles (GAAP). Employers must provide resources to ensure the accountant is up to date with current regulations and laws, which may require additional training or the hiring of a consultant.
Risk of Turnover:
There is always a risk of turnover when hiring employees, including in-house accountants. If the in-house accountant leaves the company, the employer must go through the recruitment and training process again, which can be a significant cost to the company. In addition, if the accountant leaves without providing proper documentation or transitioning their work, the company may incur additional costs to fix any mistakes or errors made by the accountant.
Limited Scope of Services:
Finally, hiring an in-house accountant can provide a limited scope of services compared to outsourcing accounting services. In-house accountants may not have the breadth of knowledge or experience that an outsourced accounting firm may have, which can limit the company’s ability to take advantage of new accounting techniques and technologies.
In conclusion, while hiring an in-house accountant can provide benefits such as increased control and management of the accounting function, it also comes with significant costs. Employers must consider the salary and benefits, recruitment and training costs, overhead costs, software and technology costs, the need for the accountant to ensure that the company complies with regulatory requirements (Which may require additional training), risk of turnover, and the limited scope of services compared to outsourcing accounting services.
Except a company is financially robust to bear the costs of hiring an in-house accountant, outsourcing the accounting function may be a better option.