About

Deciding between hiring a full-time in-house accountant and outsourcing to a specialized firm is a classic dilemma for growing businesses. The sticker price of a salary often deceives managers into thinking in-house is cheaper. However, the True Cost of Employment includes payroll taxes, benefits, office space, hardware, and professional software licenses.

This tool uncovers those hidden multipliers. By aggregating the fully loaded cost of an employee and comparing it against a flat-rate outsourced service fee, businesses can visualize the immediate impact on their bottom line. Use this to build a data-driven business case for your financial strategy.

Formulas

The calculator determines the Fully Loaded Cost of an employee versus the Annualized Vendor Cost.

Cost_internal = Salary × (1 + TaxRate + BenefitsRate) + Overhead

Cost_external = MonthlyFee × 12

ROI = Cost_internal − Cost_externalCost_external × 100%

Reference Data

Cost Category	In-House Accountant	Outsourced Firm	Hidden Multiplier Impact
Base Compensation	Annual Salary	Monthly Retainer × 12	1.0x (Base)
Payroll Taxes (FICA/Unemployment)	~8-12% of Salary	$0 (Vendor pays)	+0.10x
Health & Benefits	~15-25% of Salary	$0 (Vendor pays)	+0.20x
Recruitment & Training	$3k - $10k per hire	Included in fee	Variable
Software (QuickBooks/Xero/ERP)	~$500 - $2,000/yr	Often Included	Fixed Cost
Office Space & Hardware	~$3,000 - $5,000/yr	$0 (Remote)	Fixed Cost
Management Oversight	Hours per month	Minimal (Results-based)	Opportunity Cost
Vacation/Sick Coverage	Paid non-working time	Continuous coverage	Productivity Loss

Frequently Asked Questions

This refers to the ratio of total employment costs to base salary. In most developed economies, an employee costs 1.25x to 1.4x their salary once you factor in taxes, insurance, benefits, and equipment.

While the calculator focuses on quantitative financial ROI, you should qualitatively consider that an outsourced firm provides a team of experts (CPAs, tax specialists) versus a single generalist in-house accountant.

Many accounting firms classify professional software (like Thomson Reuters or QuickBooks Pro) as part of their overhead, spreading the cost across many clients. When you hire in-house, you must purchase the full license for your single user.

Not always. For very large companies with high transaction volumes, the flat fee of outsourcing might eventually exceed the cost of a salaried team. This tool helps identify that crossover point.