Accounting is a function that almost all SMEs manage in-house in their early years — typically handled by an administrator with basic accounting training, or directly by the owner. The problem is that this model has a ceiling: as the company grows, tax obligations multiply, closes are delayed and financial reporting becomes less reliable. Recognising that moment is critical to preventing the accounting function from becoming an operational drag.
Signs That In-House Accounting Has Reached Its Limit
The following situations indicate that the company’s in-house accounting function is no longer sustainable:
Monthly closes are late or unreliable. If the prior month’s financial statements are not available before the 15th of the following month, management is making decisions without up-to-date information. A close of more than two weeks is not operationally useful for management purposes.
The company has received penalties for late filing. A delay in submitting quarterly VAT returns or withholding declarations triggers automatic surcharges that accumulate over time. Receiving more than one AEAT notification for this reason is a clear signal.
The administrative manager spends more than 60% of their time on accounting. When the accounting function absorbs most of the time of a person whose role should encompass other tasks (client liaison, supplier management, support for management), the opportunity cost exceeds the apparent saving from keeping the function in-house.
The financial statements do not enable analysis of profitability by business line. Accounting that only meets formal obligations but does not generate useful management information (margins by project, client analysis, cash flow monitoring) is not delivering the value it could.
The company is growing and taking on new areas of complexity. International transactions, foreign-currency contracts, multiple cost centres, group accounting: these situations require a technical level that is not always available in-house.
The Real Cost of In-House Accounting
As with the CFO, the common mistake is reducing the cost of in-house accounting to the accountant’s salary. The full cost includes:
- Gross salary of the accountant or administrator with accounting responsibilities: between €22,000 and €38,000 depending on experience
- Employer Social Security contributions: approximately 32% of the gross salary
- Accounting software: between €500 and €3,000 per year (licences and updates)
- Ongoing training in tax developments and accounting standards
- Replacement cost during sick leave or holidays (which is typically not covered)
The total cost of a mid-level in-house accountant amounts to between €35,000 and €55,000 per year, before accounting for the cost of errors arising from insufficient specialisation in specific tax and regulatory matters.
Available Outsourcing Models
Full outsourcing. The provider takes over the entire accounting function: document digitalisation, transaction recording, bank reconciliation, monthly closes, filing of declarations and preparation of annual accounts. The company has real-time access to the platform but does not participate in the accounting process.
Partial outsourcing with an internal controller. The company retains an administrative person who digitalises invoices and manages day-to-day treasury operations, while the external provider handles the monthly close, oversight and tax filings. This is the most common model for SMEs with between 15 and 50 employees.
Supervised accounting. The company has an in-house accounting team, but the external provider carries out a monthly review of the quality of the information, declarations and regulatory compliance. This is the most appropriate model where the company wants to maintain the in-house function but needs a quality second opinion.
The Transition: How to Switch Without Losing Information
The main barrier to changing model is the fear of losing continuity of information. With adequate preparation, the transition can be completed within 30 to 60 days:
- Request a full export of the accounting data from the current provider in standard format
- Verify that the annual accounts for the last four financial years are filed and available
- Time the switch to coincide with the start of a new financial year or the close of a quarter
- Maintain access to supporting documentation (invoices, contracts) — preferably in digital format
How BMC Can Help
Our outsourced accounting service covers everything from daily transaction recording to the annual close, with real-time access to the accounting platform and monthly management reporting included. We coordinate the accounting function with tax management services and, if the business requires it, with the outsourced CFO.
If you would like to know how much it would cost to outsource your accounting and what the service would include, contact us for a personalised proposal with no obligation.
Specific Legal Framework
A Spanish company’s accounting is governed by a set of rules that set the minimum standards for quality and integrity of financial information:
- Commercial Code, Arts. 25–33: Obligation to maintain accounting records (Art. 25), mandatory ledgers (Art. 25: journal, inventory and annual accounts ledger), registration in the Commercial Registry (Art. 27), deadlines for filing annual accounts (Art. 279 LSC: six months from the financial year end, with filing in the following month), retention period for records (Art. 30: six years from the last entry).
- Royal Decree 1514/2007 (PGC 2007): General Accounting Plan applicable to all companies not using the SME PGC. Governs accounting principles, valuation criteria and recording standards. Accounts must present a true and fair view (the guiding principle of the PGC).
- Royal Decree 1515/2007 (PGC Pymes): Simplified version of the PGC for companies meeting at least two of the three thresholds under Art. 258 LSC: assets ≤€4M, turnover ≤€8M, employees ≤50.
- Ley 27/2014 (LIS), Art. 10: The Corporation Tax base is determined from the accounting profit, with the adjustments established by the law. Incorrect or incomplete accounting directly causes errors in the Corporation Tax return. Art. 10.3 LIS cross-references the General Accounting Plan.
- Ley 37/1992 (LIVA), Art. 164.1.d): Obligation to maintain a register of issued invoices, a register of received invoices, and a register of capital assets and certain intra-Community transactions. Companies subject to the SII (Immediate Information Supply) system must submit these registers to the AEAT within four working days.
- Ley 22/2015 de Auditoría de Cuentas, Art. 263 LSC: Companies that exceed two of three thresholds (assets >€2.85M, turnover >€5.7M, employees >50) for two consecutive years are required to have their annual accounts audited. Outsourced accounting must be prepared to respond to auditor requests.
Penalties for Accounting Non-Compliance
| Non-compliance | Rule | Penalty |
|---|---|---|
| Failure to file accounts at the Commercial Registry | Art. 283 LSC | Registral closure; fine of €1,200–€60,000 (LSC Art. 283.1) |
| Failure to maintain accounts in accordance with the PGC | Commercial Code Art. 25 | Tax offence (Art. 200 LGT): up to €150 per ledger |
| Incomplete accounting in Corporation Tax | LIS Art. 142 (review) | Provisional assessment + penalty of 50–150% |
| Failure to retain records for 6 years | Commercial Code Art. 30 | Inability to produce evidence in an inspection |
Practical Example: Cost Comparison — In-House vs Outsourced Accounting
Scenario: Professional services firm with 18 employees, €1.4M turnover, 120 invoices/month. In-house accountant with a gross salary of €28,000.
| Item | In-house accounting | Outsourced accounting (BMC) |
|---|---|---|
| Employment cost (salary + Social Security 32%) | €36,960/year | €0 |
| Accounting software (annual licence) | €1,800/year | Included |
| Training (courses, updates) | €600/year | Included |
| Cover for holidays/sick leave | ~€3,500/year | €0 |
| Filing of CT, VAT and withholding returns | Included in working hours | Included |
| Preparation of annual accounts | Included | Included |
| Monthly management reports | Not available | Included |
| Total annual cost | ~€42,860 | ~€5,400 |
| Difference | — | Saving: ~€37,460/year |
With the saving from outsourcing, the company could fund an outsourced CFO service (available from ~€4,800/year) and still save more than €30,000 per year.
Common Mistakes BMC Corrects
- Calculating the cost of in-house accounting only as the accountant’s gross salary. The full cost includes Social Security (32%), software, training, holiday and sick leave cover, and the owner’s time spent overseeing the function. An accountant on a gross salary of €28,000 has a real cost of more than €42,000 per year.
- Not requesting a data export when changing provider. Accounting files belong to the company. On terminating a relationship with an accounting firm, you are entitled to receive the files in standard format, the accounting records in PDF and all filed declarations. If the provider refuses, the company can enforce this contractually.
- Not verifying that outsourced accounting also generates management information. Accounting that only meets formal obligations (declarations, records) but does not produce monthly management reports (cash position, margins, budget variances) is only half the job.
- Switching provider mid-year without a transition plan. Changing provider in the middle of a financial year requires migrating partially recorded information, with risks of periodisation errors, duplications or data loss. Changing at the start of the financial year or after the close of a quarter is always preferable.
- Not formalising contractually the scope of the service and delivery deadlines. A vague contract that says “monthly accounting” without specifying the close deadline, report format and filing obligations does not allow for a claim if the service does not meet expectations.
Next Steps
- Calculate the true total cost of your current in-house accounting (salary + Social Security + software + training + cover costs) to compare with the cost of outsourcing
- Check whether the current monthly closes are available before the 15th of the following month; if not, this is a clear signal that a change is needed
- Ask the current provider what format they will deliver the data in if you decide to switch (XML or CSV export compatible with standard software)
- Define the appropriate outsourcing model: full, partial with an internal controller, or supervised
- Plan the transition to coincide with the start of a financial year or quarter to minimise the risk of information loss
- Verify whether the company exceeds the mandatory audit thresholds and whether outsourced accounting is prepared to respond to auditor requests
