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Article by Bryanston Accountant Tamryn Dicks

Entrepreneurs start a business because of a passion. You have a skill and you grasp the opportunity to turn your passion into a source of income. Only accounting professionals start their own business because they are good at accounting – but it doesn’t take long for entrepreneurs to learn that, whether they are good at it or not, the accounting needs to be done.

Most small businesses can run for quite a long time with the owner handling their own basic bookkeeping. As long as the income and expenses are recorded correctly, the paperwork is filed and SARS is happy, you are doing just fine. There will, however, come a time for every business owner when they just can’t keep doing it all themselves. Either the admin is taking your focus away from your core business, or your core business – and what you actually love– is causing you to fall behind on your admin.

Acknowledging the need for help is one thing, but knowing what kind you need or where to find it is another! Do you hire a PA and get her to do the same sort of record-keeping that you were doing for yourself? Do you employ a bookkeeper? Or do you outsource to an accounting firm? Trusting someone else with the sensitive financial information of your business is a huge step, and not a decision to be taken lightly! To aid you in your decision, here are a few pros and cons of outsourcing your work:

The negatives of outsourcing:

  • Distance & accessibility. If you outsource, the chances are your bookkeeper or accountant will work off-site or only come in once a week, this means your access to information is limited. This can be overcome with modern technology, but not all accountant’s use modern tech!
  • Loss of control. When you hand your company’s accounting over to someone else, the first thing you will experience is a huge sense of relief. But soon after, you may feel out of touch with your company’s finances because someone else is recording it for you.
  • Communication. You will not be your accountant’s only client – there will be times that they are busy with someone else. Most of the time this is not a problem, but if you are in a panic situation and need information urgently, it can feel like the end of the world.
  • Cost. Hour-for-hour hiring an outsourced firm costs you more than having an employee.

The positives of outsourcing:

  • No labour-law hassles. Hiring the wrong person for the job and then trying to fire them afterwards can turn ugly on you. Firing an accounting firm is a piece of cake!
  • No HR issues. No need to worry about PAYE, UIF, overtime or leave pay. You pay your agreed upon rate per hour and the admin ends.
  • Reduced overheads. An accounting firm has their own software, their own hardware, their own furniture and everything else an employee requires to complete their work. You don’t need to buy new equipment, extra stationery or even extra tea and coffee!
  • No Training required. An accountant or bookkeeper who is registered with a professional body is required to maintain their CPD status – if you outsource you can be assured that your bookkeeper is keeping up to date with the latest legislation without you ever having to pay for training.
  • Cost. Hour-for-hour a firm will cost you more – but – if you outsource you will end up paying for far fewer hours than you would have to pay an employee for. Most small businesses’ bookkeeping needs can be completed in 10-15 hours per month. You would need to pay an employee for a minimum of 80 hours per month. Your overall cost therefore drops if you outsource.

The above indicates that outsourcing is the better bet for a small business owner, but you might want to reconsider that decision if you find any of the following applies to you:

  • You contact your outsourced accountant more than twice a week with queries
  • The hours you pay for exceed, or are beginning to exceed, 55 hours per month
  • Your business requires full time stock-control

Chances are, if one or all of these are applicable you will be far better off hiring an in-house accountant who can focus on your business. When choosing an accountant, outsourced or not, bear the following in mind:

  • What skill level do you need? Don’t pay for skills you don’t actually need – if your income is less than R1M a year, don’t pay for a VAT expert. If you don’t require auditing, then paying for a Chartered Accountant is unnecessary.
  • Ask people you trust for referrals and check their references. You unfortunately cannot take anyone at face value. This person is going to look after the most sensitive part of your paperwork. They need to be honest, moral and reliable.
  • Can you understand them? Do they only talk accounting-geek? Or do they make an effort to help you understand what is happening with your accounts and why? Do they help you manage and understand your money? Or just take your money and send you tax returns?
  • Do they understand business? This may seem a weird point to put here, but unfortunately there are a lot of very clever accountants out there who are absolutely brilliant at accounting and know absolutely nothing about running a business. To get the best advice, you need someone who can do both!
  • How do they talk about their team? An accountant who thinks they are a super-fantastic one-man-show should be avoided. No-one knows everything. It is the mix of personalities, skills and education that make it worth your while to outsource to a firm. This doesn’t mean that you can’t outsource to a single bookkeeper – but get one who knows their weaknesses and who networks with other professionals so that they have backup when they don’t know the answer to a question!

Remember, you can also attempt a mixed approach - employ a bookkeeper but get an outsourced accountant in once a month to look over things – or outsource the bookkeeping to an individual and the year-end accounting to an established firm.

Spend time on your choice and trust your instincts! Every business is unique, and it is up to the person who cares about it most to work out what it needs to thrive, and no-one will ever care for your business like you do.

Tamryn Dicks is a SAIBA Business Accountant and a SAIT Tax Practitioner. Her company, Pharsyde Accounting, specialises in helping small businesses grow into big businesses. She is passionate about her subject to the point that she tends to give away advice for free – so if you have something worrying you, send an email to!