In-house accountant or accounting firm: which is better value for a business in Latvia?
An accountant’s salary is only part of what accounting costs a business.
The essentials in 30 seconds
- Compare the full cost of accounting, not just a salary with a monthly service fee.
- For a small workload, outsourcing can reduce costs and organisational tasks.
- An in-house accountant may be more convenient when the business needs ongoing accounting support.
- Check the VID licence, insurance, service scope and arrangements for cover.
With an in-house accountant, the business pays more than a salary and employment taxes. There is a computer, a workspace, accounting software and training to consider. It also needs to plan for holidays and sick leave, and know who will keep the accounts running if the employee leaves or suddenly becomes unavailable.
With outsourced accounting, the accounting firm organises its specialists’ work. The scope of the service and arrangements for cover should be set out in the contract.
For small and medium-sized businesses, the question is therefore often not just “How much does an accountant cost?” but “Is it worth maintaining our own accounting function when we could pay for a professionally organised service?”
What employing an accountant really involves
Suppose a small company does not need a full-time accountant. It has relatively few documents, a handful of employees and no complex daily accounting requirements.
Even then, an employee needs the right tools and support. The business must allow for:
- salary and employer costs;
- a computer and workspace;
- accounting software;
- professional training;
- holidays and sick leave;
- cover during absences;
- recruiting a replacement if the accountant leaves.
There is another consideration. In a small business, accounting often revolves around one person. They know where the documents are, which returns have been filed, what needs doing tomorrow and which issues are still open with the State Revenue Service (VID).
When everything runs smoothly, this may not be a problem. But if that person suddenly becomes unavailable, the company’s deadlines still apply.
What a business gets from outsourced accounting
When a business outsources its accounting, it buys an accounting service rather than one employee’s working time.
There is no need to provide a workstation or buy a computer for the external accountant. Check the contract to establish whether software and holiday cover are included in the service fee.
Training specialists, organising their work and arranging internal cover are the accounting firm’s responsibility.
For the client, this can mean lower fixed costs and fewer organisational tasks.
The model is particularly suitable for businesses that simply do not need an accountant for eight hours a day.
One accountant or a team
There is another important difference.
Even an excellent accountant cannot specialise equally deeply in every area. Day-to-day accounting, payroll, VAT, international transactions and unusual tax issues call for different expertise.
Within an accounting firm, a complex question can be referred to a specialist with stronger knowledge of that particular area.
Employing several specialists would be too expensive for a small business. Outsourcing can provide access to different areas of expertise within a single accounting firm.
Licensing and professional liability insurance
In Latvia, an outsourced accountant is more than someone a company has chosen to hand its documents to.
Providing outsourced accounting services requires a licence from VID. The provider can be checked in the public register.
An outsourced accountant must also have professional civil liability insurance.
This matters to the client: the relationship is with a professional service provider subject to specific legal requirements, rather than simply someone who “knows how to do the accounts”.
Insurance does not, of course, mean automatic compensation for every mistake. It does provide an additional layer of protection that a business should expect from a professional provider.
When is an in-house accountant the better option?
Outsourcing is not right for every business.
If a company has a high daily volume of documents, warehousing, production, many employees, complex internal reporting and a manager who needs an accountant’s input almost constantly, an in-house specialist may be more convenient.
Larger businesses also often use a hybrid model: their own accounting team handles part of the work, while external specialists advise on particular tax or complex issues.
But if a business is small and there is simply not enough accounting work to fill a working day, it makes sense to calculate the cost of outsourcing before creating another position.
What to compare before making a decision
Do not compare only an accountant’s salary with an accounting firm’s fee.
Compare the two models in full.
For an in-house accountant, include salary, employer taxes, workspace, computer, software, training and cover.
Ask the accounting firm what its monthly fee includes: day-to-day accounting, payroll, VAT, annual accounts, advice and additional work.
Always check the licence and professional liability insurance, and find out who will work with your business.
Outsourced accounting from NBC.LV
NBC.LV provides accounting services to businesses in Latvia.
We start with the business itself, not an attractive headline price: how many documents it has, whether it has employees and VAT obligations, which countries it trades with and which transactions need accounting support.
We can then determine the scope of work and the service fee.
For a small company, this often provides comprehensive accounting support without the cost of maintaining a separate workstation, equipment, software and an employee of its own.
Do you actually need an in-house accountant? Sometimes the answer becomes clear as soon as you start counting the full cost of accounting rather than just one salary.
Which model suits your business?
Tell NBC.LV about your company’s documents, employees and transactions. We will define the scope of accounting support and prepare a proposal you can compare with the cost of employing your own specialist.
Official sources
FAQ
How can I check whether an accounting firm has a valid licence?
Search VID’s public register of licensed outsourced accountants using the provider’s registration number. Check the actual licence status: it may be valid, suspended or revoked. A statement on the firm’s website is not enough.
What should I check in an outsourced accountant’s liability insurance?
Check the policy’s validity period, the insured provider, the liability limit, covered risks and exclusions. Professional civil liability insurance is mandatory for outsourced accountants, but a policy does not mean automatic compensation for every error.
Are annual accounts included in the monthly outsourcing fee?
Check the proposal and contract. Ask for annual accounts, payroll, VAT returns, advice, software and additional work to be listed separately. Compare quotes for the same transaction volume and number of employees, including any additional charges.
Can I employ an in-house accountant on a part-time basis?
Yes. An employer and employee can agree on part-time hours. This is another option for a business with a small workload. When comparing it with outsourcing, include not only pay for the agreed hours but also work tools, holidays, cover and employer costs.
How can I switch from an in-house accountant to outsourcing without losing data?
Agree a handover date and a list of documents, accounting records, balances, submitted returns and outstanding issues. Assign responsibility for upcoming deadlines and arrange the necessary EDS authorisations and data access. Deal with the employee’s employment arrangements separately. Outsourcing does not remove the manager’s responsibility for organising the company’s accounting.