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Outsourced Bookkeeping Vs In-House Bookkeeping For Law Firms: A Comprehensive Analysis

According to Business Wire, 80% of businesses report higher efficiency when outsourcing their accounting tasks. On the other hand, in-house bookkeeping offers much more control and oversight.

So which one you should go for—outsourced bookkeeping or in-house solution—as a law firm owner?

This guide will help you make that crucial decision. Are you ready to optimize your law firm’s efficiency without sacrificing control? Let’s explore the options.

Outsourcing Vs Hiring an In-House Bookkeeper: The Basic Difference

While running a law firm, you have to make an important decision: What to go for between in-house bookkeeping and outsourced bookkeeping?

Each route offers distinct advantages and considerations, hinging largely on your firm’s specific needs, budget constraints, and desired level of oversight.

Let’s break it down to the basics. On one hand, in-house bookkeeping means bringing someone on board, either physically within your office premises or virtually, to manage your law firm finances.

This could be a dedicated law firm bookkeeper, whose daily 9-to-5 job is to manage your accounts receivable and payable, ensure compliance, and keep your financial health in check.

On the flip side, what is outsourced bookkeeping? It’s when you delegate the same financial tasks to an external expert or a firm specialized in bookkeeping for law firms.

This option broadens your access to top-tier expertise without the overhead associated with a full-time employee.

The decision essentially boils down to what you’re willing to invest in and the extent of control you wish to maintain over your financial operations.

Both paths have their merits, and it’s about finding the balance that aligns with your firm’s vision and operational dynamics. Now, let’s understand when to outsource and when to hire an in-house bookkeeper.

When to Outsource Bookkeeping Vs When to Hire an in-house bookkeeper?

Deciding between an outsourced bookkeeper and in-house bookkeeping for your law firm is a decision that depends on the scale of your operations and financial turnover.

For the majority of law firms cruising below the $3,000,000 revenue mark, outsourced bookkeeping is a practical choice.

With outsourced experts handling the finances of your firm, you will find a balanced approach without the need for a full-scale, in-house accounting department.

The cost efficiencies and flexibility in managing financial tasks without the overhead of a full-time employee are clear upsides of outsourcing bookkeeping.

However, as your firm crosses past the $5,000,000 to $10,000,000 revenue milestone, the waters start to get a bit choppy, and the decision on whether to continue with an outsourced bookkeeper or switch to in-house bookkeeping demands a closer look.

Here’s why: The cost-benefit scale starts to tilt. The complexity of your practice area and the volume of financial transactions might make it more cost-effective—or even necessary—to have a dedicated accountant or bookkeeping specialist within your firm.

Let’s understand the benefits of hiring an in-house bookkeeper and the benefits of outsourcing bookkeeping in detail.


At first glance, employing an in-house bookkeeper might seem like the straightforward choice for your law firm. However, when you start tallying up the expenses, the reality paints a different picture.

The in-house bookkeeper salary for someone tasked with managing your firm’s finances on a daily 9-to-5 schedule can quickly escalate to the tune of $40,000 to $50,000 annually.

This figure doesn’t even begin to cover the additional overheads like bonuses, retirement contributions, health insurance, training programs, and not to mention, the accounting technology expenses your firm would have to shoulder in full.

It’s enough to make you pause, right?

On the flip side, outsourcing your law firm bookkeeping can be a significantly more cost-effective strategy. According to Forbes, outsourcing bookkeeping tasks can save businesses an average of 21% on operational costs.

Many outsourced bookkeepers and accounting professionals offer fixed-price packages, eliminating the unpredictability of fluctuating costs.

Our big bookkeeping service, for example, operates on a fixed price package, ensuring that you know precisely what your monthly expenditure will be without the added worries of covering health insurance or other ancillary benefits.

This arrangement not only simplifies your financial planning but also allows your law firm to enjoy high-quality bookkeeping services at a fraction of the cost of an in-house equivalent.

But as we discussed earlier, if your law firm’s revenue is above $5,000,000 – $10,000,000, an in-house bookkeeper would be a better option.

Control and Oversight

For many law firm owners and partners, the appeal of having direct oversight over financial operations cannot be overstated.

This desire for control often stems from past experiences—some law firms turn towards in-house solutions after facing challenges with outsourced bookkeeping or accounting teams.

Having an in-house team certainly offers direct oversight and a sense of security. This can be particularly reassuring for those who prioritize having a tight grip on their firm’s financial pulse.

The catch, however, lies in the onboarding and integration process. Successfully bringing an accountant or bookkeeper into the fold is no child’s play.

It requires a carefully orchestrated onboarding process, far beyond the capabilities of a standard HR or office management team. A poorly managed onboarding process can lead to frustration, inefficiency, and ultimately, a department that fails to meet your expectations.

Yet, it’s crucial to remember that a negative experience with an outsourced bookkeeper or accounting firm does not inherently mean all outsourced services will fall short.

Often, the root of such issues lies in the decision to opt for the cheapest rather than the best fit for your firm.

The reality is that investing in a reputable outsourced bookkeeping service can attract high-caliber talent. Such professionals bring not only their expertise but also an external perspective that can significantly enhance your firm’s financial oversight and profitability as it grows.

Expertise and Quality

When considering in-house bookkeeping versus outsourced bookkeeping, the depth of expertise available can vary significantly, often making or breaking your firm’s financial health and growth potential.

An in-house accountant or bookkeeper, particularly one who’s onboarded with a salary bracket of $40,000 to $50,000, might not always bring the specialized expertise your law firm needs.

Such positions often attract professionals who, while competent, may not be at the forefront of their field—especially when it comes to the nuanced tax strategies and benefits crucial to law firms.

The world of tax law, much like legal regulations, is in a constant state of flux. Keeping ears to the ground for these changes requires dedication and specialization that the best talents, often found in Big Four firms or specialized outsourced bookkeeping services, are committed to.

Moreover, the scenario where a law firm resorts to hiring a family member as the bookkeeper for convenience or cost-saving reasons presents its own set of challenges.

While seemingly practical, having a non-expert managing the books—a significant other or a relative, perhaps—introduces risks. The primary concern here is accountability.

Without the ability to hold this individual to professional standards due to personal relationships, your law firm’s financial oversight could be compromised.

This lack of professional detachment not only impacts the quality of financial reporting and management but can also become a hindrance to the firm’s capacity to thrive and expand.

Therefore, the argument for outsourced bookkeeping becomes even more compelling.


When weighing the options of outsourced vs in-house bookkeeping for your law firm, another critical aspect to consider is scalability. The ability to adapt to the changing size and needs of your firm is more than just an operational convenience.

If your law firm is in a growth phase, evolving from a partnership of two to four partners, with in-house bookkeeping, scaling up to accommodate this growth involves a significant increase in workload, potentially necessitating the hiring of additional staff.

This not only means additional salaries but also the complexities of managing a larger team.

However, as your firm expands, a capable outsourced accounting and bookkeeping team can seamlessly adjust to handle the increased transaction volume without skipping a beat. They are built to accommodate growth, making them an agile and flexible option for law firms on the rise.

Conversely, if your firm needs to downsize. Perhaps two partners retire, reducing the complexity and volume of financial transactions. In-house bookkeeping teams may suddenly find themselves over-resourced, leading to inefficiencies and unnecessary expenses.

An outsourced bookkeeping solution, however, can again adapt to this change with ease, scaling down its services to match your firm’s current requirements. This flexibility allows for efficient financial management without the burden of excess overhead.

With outsourcing, your law firm gains the ability to grow or shrink its operations without the logistical nightmares of hiring, training, or laying off staff.


Deciding between hiring in-house or opting for outsourced bookkeeping for your law firm boils down to expertise, familiarity with your business, and the ability to provide tailored advice.

Fresh graduates or family members might seem like budget-friendly options, but their lack of law firm-specific knowledge could be a stumbling block in your financial management and growth.

The crux of the matter is that It’s essential to choose a financial team that understands the unique challenges and opportunities and could offer external perspectives and best practice solutions.

Whether it’s customization or comprehensive service you’re after, ensuring your bookkeeper or accountant can align with your firm’s needs is crucial for sustainable growth.

If you are ready to hire a new law firm bookkeeper, it starts with a consult. We’ll share with you how we can help your bottom line grow, and it only takes 30 minutes. Schedule your consult now.