A good accountant may come at a high cost, but as business owners often quickly discover, the return on investment is far greater—especially when they bring that accountant in-house. Beyond managing your business's taxes, a good accountant closes the monthly books, generates monthly financial statements and drives weekly and monthly financial management.

Unfortunately, many business owners ignore their financials until tax time, which puts them at a significant deficit in achieving strong financial performance. This is why when the question of in-house accounting versus outsourcing comes up for firms of a certain size, in-house accounting always wins.

Financial management benefits

An in-house accountant helps companies prepare quarterly and annual tax reports, set tax strategies to minimize taxes and comply with tax laws in the run-up to tax season. But what about benefits beyond that period? Here are just a few advantages to maintaining an in-house accountant long-term:

• They can prepare financial statements for you to review and see how your firm is performing month-to-month and year-over-year.
• They can generate accounts receivable and payable reports for you to see what customers are neglecting payments so you can correct the issue at 45 days instead of 120 days.
• They can monitor your working capital—bank accounts, credit cards, receivables, payables and supplier credit—to help you manage your cash flow.

Although outsourced accountants may prepare and present monthly financial statements, they rarely look at weekly cash flow and bank account balances. They may also not know about any big purchases that are upcoming, such as a quarterly insurance payment or new-hire signing bonus.

When in-house, your accountant not only sees the numbers in the system, but interacts with you as the owner or with the management team daily. As such, they're privy to much more of what's going on in your business on a day-to-day basis and can provide you with insights and recommendations accordingly.

Legal and corporate benefits

Most businesses with more than $1 million in revenue organize as a corporation or limited liability company, LLC for short, to shield the owners from liability. However, many business owners then freely commingle personal funds with business funds, using business funds to directly pay for personal transactions or adding funds when there's a shortage, without tracking these additions.

All of these are huge infractions that could cause a judge to "pierce the corporate veil." This "piercing" occurs when a judge, often at the request of a litigant, reviews the company's financial records, including bank accounts. If it appears the business owner repeatedly used the business as a personal extension, the judge may negate the liability shield provided by the LLC or corporation and allow the business and its assets to be treated the same as the owner.

Having a knowledgeable accountant on staff can keep you and your business on the proverbial straight and narrow. For example, the accountant will ensure that you only use the company business card to pay for eligible business expenses, submit correct receipts for them and then receive the proper reimbursement. Furthermore, they'll properly document any shortages for which you inject cash as an increase in shareholder's equity or as a shareholder's loan.

Operational benefits

Having timely financial data aids significantly in decision-making, particularly if you have an in-house accountant to help collect and interpret it. Such data helps answer questions such as:

• How much did marketing spend on its campaign? What was the associated increase in sales in the following months?
• Is the company overall, or each segment of it, adhering to the budget? If not, what are the deviations, and what's causing those?
• How does gross margin by service or service category look? If it's low, what steps can the managers of those service areas take to change it?

If you only have a tax accountant review your financial results 12 to 18 months after they occurred, you may have absolutely no current information to help you manage your finances from day to day. But, if you have an in-house accountant who's diligently and accurately generating these statements and pointing out changes to the team, management can act on them in a timely manner, heading off potential trouble and positively impacting the business.

All of this shows that when it comes to in-house accounting versus outsourcing, an in-house accountant isn't a splurge but a route to savings on all levels.