Originally Posted by djagusch
What happens to company 2 when all the paid off equipment is worn out? Do they either:
Raise rates to cover new costs?
Take money out of their already lower net?
Remember when they lower their rate do to equipment being paid off they are not putting money aside for replacement due to the lower rate.
Doing payroll in house should cost the owner money also either paid to himself or a employee. Doing it yourself and lowering your rate due to it doesn't cost money says your time isn't worth anything. Paying an account reduces the risk of doing something incorrect and also gives you more time to sell or improve biz systems.
It was a very quick, very rough example just to give some insight, but you are correct, the only thing constant are variables when it comes to expenses, employees, etc... As far as doing payroll in house, years ago this did not make much sense but with the software that exists today, it does not make sense to overpay an accountant who is just plugging your numbers into similar software themselves. Payroll entry is a much less painful process (and considerably less time) that it was just a few years ago.