Business owners often ask whether they need to hire a full-time accounting department, or if they can get by with fractional accounting services. The truth is that many businesses start with fractional accounting and grow into a combination of full-time and fractional support.
Let’s start with some definitions:
Full-time accounting involves having an in-house, salaried accounting team dedicated to your business.
Fractional accounting services, on the other hand, give you access to experienced accountants on an as-needed basis. This means you get flexible, cost-effective accounting expertise – often ideal for startups or growing businesses.
Whether your business needs full-time or fractional accounting support, you won’t be compromising on expertise or experience.
Ready to learn more about which option is right for your business? Keep on reading!
Understanding the Roles of Accounting Professionals
Whether fractional or full-time, several key roles will make up your finance team throughout your business’s lifecycle.
These professionals work together to keep your finances running smoothly, and manage things like:
- Bookkeepers: Day-to-day transactions and bank reconciliations, bank accounts, and financial reporting.
- Controllers: Key performance indicators, internal controls, accounting principle compliance, and cash flow management.
- CFOs: Financial data interpretation, financial planning and management, and consultation through major events like mergers or public offerings.
- Tax CPAs: Financial reporting, tax filings, tax credits and deductions, and representation with tax authorities.
We’ll focus on bookkeepers, controllers, and CFOs in this article, since you will need to decide whether to hire these accounting professionals full-time or fractionally. As for tax CPAs, it’s much more common to outsource, unless you’ve got someone with tax CPA experience on your in-house accounting team.
Factors to Consider
When choosing between full-time and fractional accounting, consider these 2 key factors:
1. Company size and growth trajectory.
In other words, how big is your business and where is it headed?
Fractional accounting services are a good first step for most startups and small businesses because they give you access to all of the accounting roles (bookkeeping, tax, controller, CFO) on an as-needed basis.
As your business grows and becomes more complex, though, full-time roles might become necessary.
You can think about fractional vs. full-time services in terms of time spent. If one of these roles is clocking 25 to 30 hours a week, you’ll want to start thinking about hiring internally. Makes sense, right? Between 30 to 40 hours per week is a full-time role.
You can also look at time spent from a priority standpoint. If you need someone on-call to complete financial tasks immediately, you’ll want to think about a full-time hire. For example, if you need invoices turned around same-day, consider bringing someone in-house.
Also, this doesn’t mean you’ll need to let go of all fractional services completely when you need full-time support. Most businesses actually will have both in-house and fractional services to complement each other, until they reach a point where every role is a full-time job.
At Acuity, for example, our business model is both customizable and scale-as-you-grow. Our ideal scenario is for our clients to outgrow us – that means we did something right!
A common path for our clients is to start off with a fractional bookkeeper and a controller. As they grow, it makes sense for them to bring the bookkeeper in-house and keep a fractional controller on board. Eventually, they need to bring the controller in-house too, but they add an outsourced CFO into the mix.
Other clients may choose to outsource just one role – CFO, controller, or bookkeeper – while hiring the rest in-house.
The beauty of fractional services is that you can customize your accounting team to fit your business, adjust as you grow, and only pay for what you need.
2. Budget and cost considerations.
The ‘what’s your budget?’ question is arguably one of the most important things to consider here.
Full-time staff means fixed salaries and benefits, which might be too much for a startup’s budget. Fractional accountants are more like an à la carte menu — you only pay for what you need. This allows you to get help in all areas of accounting without breaking the bank.
But when does it make sense to make the switch to full-time staff? Just like you would look at time spent, you should look at money spent – and the two go hand-in-hand! So, let’s talk cost.
Here are the average yearly salaries for bookkeepers, controllers, and CFOs:
- Bookkeeper: $70,000
- Controller: $140,000
- CFO: $210,000
Now, here are a few examples comparing this cost to our fractional accounting rates:
- If you’re using our fractional bookkeeping services and a couple of add-ons at a rate of $2,000 per month, that’s $24,000 per year.
- If you’re using our fractional controller services at 20 hours per week, that’s $140,400 per year.
- If you’re using our fractional CFO services at 15 hours per week, that’s $214,500 per year.
Using these numbers, you want to evaluate when each fractional role is cost inefficient. However, it’s important to keep in mind some hidden costs.
Fractional services save you costs in other areas that aren’t just direct compensation. You won’t use internal resources to pay for health insurance, retirement plans, hiring or training, retention and replacing people when they leave. These are all costs that the firm you hire takes on.
Benefits of Full-Time Accounting Staff vs. Fractional Accounting Teams
What’s the main benefit to hiring full-time accounting staff? Their availability! Because it’s their main gig, full-time accountants are constantly present in your business and can be more responsive to immediate needs. Well, that’s their job after all!
But if you’re scaling, working with the right fractional accountant will still give you a responsive and expert partner, without the full-time price tag.
And fractional accountants allow you to scale up or down based on your business’s needs. Whether you need to start small with weekly bookkeeping or scale up your services, fractional is a good choice for startups or businesses in a growth phase. Plus, during busier periods, you can increase their hours, and during slower times, you can reduce them.
Finding the Right Fit
Full-time and fractional accounting services each can play an important role in your business. Exactly how or in what combination depends on your business needs and lifecycle stage. Also, remember to consider each distinct accounting role – what they can help you with, how much time you need their help, and how much it will cost.
Still, deciding whether full-time vs. fractional accounting support is right for you can be challenging, especially when your business is constantly changing.
That’s why we offer a free consultation for business owners exploring fractional accounting services! Our team will take time to understand your unique business and its financial goals to see if we’re the right fit for you. And if we’re not the right fit? We’ll help steer you toward professionals who can help.
Find out whether fractional or full-time
is the best fit for your business.
Frequently Asked Questions
It’s called ‘fractional’ accounting because you’re only using a ‘fraction’ or part of a full accounting team’s services. Instead of hiring an entire accounting department, you only pay for the services your business needs.
That all depends on the type and frequency of services that you need!
But here’s a sneak peek of our pricing breakdown:
- Bookkeeping packages start at $449 per month.
- Controller services start at $135 per hour.
- Tax services start at $250 per month.
- CFO services start at $275 per hour.
At Acuity, ‘fractional’ and ‘outsourced’ accounting services are two sides of the same coin, both describing our accounting solutions.
‘Outsourced’ accounting services simply means that your accounting functions are handled by an external team rather than an employee(s) within your company. And ‘fractional’ accounting services mean you can select and pay for the fraction of services that you need, rather than hiring a full-time employee.
It’s all about flexible, cost-effective financial support for your business.