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+1-802-778-9005Are you thinking about hiring a bookkeeper to manage your company’s financial records? This raises a new question itself, how much bookkeeping services cost, and what kind of bookkeeping can you afford?
There is no straightforward answer to the question about the bookkeeping service costs. The internet is flooded with varieties of information about the costs plus it is very unclear what might apply to a particular situation appropriately and about the ways to approach a bookkeeper (which are too many and this often creates a lot of complexities).
So before exploring the ideal cost of bookkeeping services for small business owners, let’s understand the basics and importance of bookkeeping.
In bookkeeping, the track of the transactions are kept, on a daily basis, and information concerning an enterprise. It secures that the documentation of the discrete financial transactions is error-free, up-to-date, and all-inclusive. The accuracy is, therefore, essential to the process.
Substantially, bookkeeping means documenting the transactions related to the business’s monetary part in a well-assembled way. It is indispensable for the firm, but it is useful for individuals and non-profit organizations as well.
The person accountable for bookkeeping for a venture would document all transactions that are related to one another, including:
Initially, in small businesses, the owners tend to look after all the transactions such as invoices to send, bills to pay and payrolls, etc. themselves.
Still, once their business crosses the threshold period, the transactions grow as well. It is hectic to deal with alone. Now the owner needs to manage the tasks in a timelier manner to keep up with the quality. Now, this is the point where bookkeepers come into the play.
A bookkeeper has the following jobs:
A certified bookkeeper ensures quality results but not for cheap; bookkeeping services costs are directly proportional to the bookkeeper’s qualification.
There are three certifications; the more certificates a provider holds, the more qualified he is and expected to be better at what he is expected to do.
Therefore, a provider who holds two certifications will charge higher bookkeeping services costs than a provider who owns just one of them.
The NACPB is ideal for someone who holds an associate degree or a bachelor’s degree in accounting. This particular certification exam cost is $400 for NACPB members and $600 for NACPB non-members.
This certification is ideal for those folks who do not hold any formal education qualification in bookkeeping. AIPB certification exam and materials cost $479 for the members and $574 for the nonmembers.
Furthermore, a provider can enhance his learning and qualification with the QuickBooks ProAdvisor Certificate to get certified by the AIBP or NACPB.
This is ideal for the freelance bookkeeping service providers as it allows them to get free certification with no strings attached.
First of all, you have to decide how you would like to do your bookkeeping. If you wish to do it in the house or want to outsource it? Want a part-timer or a full-timer? What rates can you afford?
If you want to outsource, your available options like nearby bookkeeping services, nearby CPA firms that are providing bookkeeping services and professional persons, national outsourced bookkeeping ventures.
Cost of Bookkeeping Services:
The cost of bookkeeping services usually depends on a variety of variables like company size, amount of monthly transactions conducted, methods of payroll processing, number of invoices being sent out and the number of ledgers to reconcile. Plus, it also relies upon the policies and procedures of both, the hiring business and the hired service.
It is also essential to note that bookkeeping service charges may vary from one place to another. For instance, the bookkeeping services for small businesses in the United States will charge very differently than their counterparts in other countries. However, none of them will go below the minimum or exceed the maximum standard rates.
To begin with, a business owner needs to determine whether they need a bookkeeper on a daily, weekly or a monthly basis. Once decided, now it needs to be confirmed that the bookkeeper is employed on a part-time or a full-time basis.
– If a business is recruiting a part-time bookkeeper, the monthly cost would fall in the range of between $400 and $800 per month excluding the benefits.
A part-time bookkeeper is usually recommended if the business can largely perform the major bookkeeping functions on its own and only requires help from outside to do the routine work like filing papers and managing documents.
– However, if the business decides to employ a full-time bookkeeper, the monthly cost would be somewhere around $3,000 to $4,500 without any benefits.
Hiring a full-time bookkeeper is recommended when the business has already created a stable customer base and has been operating for at least three to five years. This will ensure that the benefits a business derives from recruiting more staff are more consequential than the costs it incurs by hiring them.
– Bookkeeping services can always be outsourced at a nominal price which generally falls in the range of $500 to $2,500 per month for basic bookkeeping tasks. Outsourcing bookkeeping is a good option when you could use a hand hiring a bookkeeper for keeping track of a part of your financial management.
Many new businesses or startups start out doing basic bookkeeping by themselves. This can often be a cost-effective decision. However, as you start spending more time growing your business, you’ll tire of performing the bookkeeping tasks.
Bookkeeping prices for small businesses vary based on factors such as the size of the business, the complexity of its financial transactions, the level of expertise required, and the frequency of services needed. Typically, small businesses may pay anywhere from $2000 to $10,000 per month for bookkeeping services, depending on whether they choose to hire an in-house bookkeeper, outsource to a professional bookkeeping firm, or use automated software solutions.
Once you’re ready for a professional bookkeeper, you need to find an option that best fits your needs. You can hire part time bookkeeper, full time bookkeeper, or outsourced bookkeeping services.
Part time bookkeepers do smaller tasks like record the financial transactions of an organization, keep tabs on timesheets and take care of day-to-day functions such as recording sales and invoices, paying bills and processing payroll.
If you can manage your job and some of the accounting each month but need a little extra help, a part-time bookkeeper might be a good fit for your business. From inputting receipts to tracking employee timesheets, accounts receivable and accounts payable, a bookkeeper can do all these tasks cost-effectively.
Often businesses try to train an office manager or other employee with capacity to become the part time bookkeeper. While this can work and is often the least expensive option on paper, there are risks associated if the part time employee’s or office manager’s output does not measure up to standards.
The cost can be from a $20 hourly rate for basic services. Hourly rates for internal, part-time average around $21-23/hour depending on job description, location and duration. They typically are performing basic bookkeeping duties and will need to be supervised and managed.
Full-time bookkeepers keep track of all day-to-day operations, financial reporting, cash flow, tax filing, credit card accounts, customer invoices, monthly transactions, and much more. They usually earn from $35,000 to $55,000 per year, plus an additional 20% for benefits and overhead.
According to Glassdoor, current listings in high cost of living cities like New York or L.A. show the salaries creeping towards $70K. Also, you need to add around 20% on top of salary for benefits and overhead including the office space.
They will keep your books in order and ensure your business has the financial strength required to operate. For medium to large-size business owners, full-charge bookkeepers can also manage payroll and sustainably keep your booking system stable. As a business owner, you can expect a full charge bookkeeper to run operations associated with paying bills, billing clients, managing time-sheets and payroll, and processing financial statements at month end.
Outsourcing bookkeeping is a good option when you hire a bookkeeper for keeping track of a part of your financial management. It gives you the ability to customize the services you receive to your bookkeeping needs. On average, outsourced bookkeeping services cost anywhere between $500 to $2,500 per month, depending on the number of transactions and complexity of services required.
Outsourcing can provide advanced and less costly bookkeeping service than a typical in-house bookkeeper. Today there are many different kinds of back office outsourcing companies, ranging from project-only outsourcing, hourly rates, flat recurring monthly service fees, and a la carte packages to fit each business’s unique needs.
Outsourced bookkeeping is that you might be able to change the role of an existing employee e.g. the part time bookkeeper, and move them to a revenue generating role instead of an expense.
Many small businesses in the early stages are primarily concerned with compliance – paying bills, getting paid, recording transactions, ensuring payroll accuracy, and following state and federal regulations.
At some point, your business will cross a threshold and you’ll begin to place more emphasis on the need for timely, accurate financial reports and intelligence. This is when you’ll need more advanced bookkeeping, accrual-based accounting, and management or managerial accounting to help you make effective data-driven decisions.
So your first consideration is whether you just need compliance – basic bookkeeping – or if you’re ready to graduate to full-service accounting that will help you drive increased profits, improved cash flow and growth. They require very different levels of effort and expertise and as you can imagine, the cost for full service accounting is much higher than basic bookkeeping.
Bookkeepers are commonly responsible for recording journal entries, day-to-day financial transactions and conducting bank reconciliations. A bookkeeper must be able to shift focus easily and catch tiny, hidden mistakes in a budget or invoice. Bookkeepers line up all the small pieces of a company’s financial records, and accountants view and arrange those pieces.
Accountants work with numbers and financial details all day long. They have various tasks to do including tax return preparation, conducting routine reviews of various financial statements, and performing account analysis. Plus, conducting routine audits to ensure that statements and books are following ethical and industry standards.
| Bookkeeper | Accountant |
| Recording journal entries | Preparing and filing corporate tax returns |
| Conducting bank reconciliations | Reviewing financial statements |
| Determining errors in budgets and invoices account analysis | Performing account analysis |
| Recording daily/monthly transactions | Conducting routine audits |
Below we’ve discussed three different methods to price your bookkeeping services.
Hourly billing is the traditional and most straightforward way bookkeepers charge; you set your rate per hour based on your fixed costs and desired profit margin. However the hourly rate is becoming outdated with the dominance of technology. Tech makes once time-consuming work quick, and in many cases, effortless.
This means that regardless of a service’s value to your clients, you’re capping your pricing based on how long it takes to deliver that service. Bookkeepers, especially new businesses (the ones who don’t have to make the sometimes messy transition to another pricing model), should avoid hourly billing for that reason.
A strong alternative to hourly billing is fixed-rate (or flat-fee). It means you set a fee for each service you offer and provide clients with a ‘menu’ of sorts, with corresponding prices. You will have separate prices for preparing balance statements, documenting transactions, and processing payroll.
For example, you might process a certain number of transactions for one cost, but going over that incurs a different fee. This ties into client size and is a good way to stay transparent while correctly charging larger clients. Fixed-fee pricing allows you to increase profit as you increase efficiency—the more efficiently you can work, the greater the profit margin.
Value-based pricing means pricing your services upfront based on the perceived value they have to your clients. You can take into account the client, the job type, your experience, along with many other factors to give a fair quote.
If you don’t already have a relationship with your client, usually these quotes follow a discovery meeting to find out all the client details, including their goals, what they’re looking for in a bookkeeper, their high-level business information, etc. And just because you’re providing them a quote prior to starting the work, prospective clients won’t be surprised by any hidden costs.
The cost of bookkeeping services depends upon what industry you are in, the company’s size or location, your turnover, number of workers, how your payroll process is done, outstanding bills, and number of other transactions. Here’s a list of different factors that affect the cost of bookkeeping services.
The geographical location of your bookkeeper plays a massive role in how expensive the service will be. Self-employed bookkeepers can charge clients $35 or more per hour. However, the rates can vary dramatically depending on the state. From state-to-state in the US, there are significant differences. For example, in Massachusetts, in-house bookkeepers earn 20% more than the national average, whereas in Kentucky, they earn 22% less than the national average.
You want to hire a bookkeeper with the requisite qualifications. Freelance bookkeepers often come from different backgrounds, but this doesn’t mean they necessarily offer lower prices for their services. That’s why it’s important to consider a person who has at least a bachelor’s degree.
Bookkeepers can get 3 types of certifications: the American Institute of Professional Bookkeepers (AIPB), the Nation Association of Certified Bookkeepers (NACPB), and QuickBooks ProAdvisor certification.
The type and number of certifications a bookkeeper has can impact the actual cost of their service. You’ll find that bookkeepers who have completed all 3 programs have a much higher average hourly wage.
Having the proper education and experience is crucial, but it’s not the most important factor in determining the price of the service. The more experienced the bookkeeper, the more confident they are with their skills. As a result, they come with a higher monthly cost for business owners.
As a bookkeeper, you can and should leverage your experience to increase your profit. If you’ve been working in the industry for 10 years, for example, you’ll have the client base, referrals, references, and body of work to quote a higher rate.
Ideally, prioritize the experience factor when hiring a bookkeeper. Go for professionals who have already worked with similar businesses. It’s also important to make sure they have experience in accounting software you use.
Larger clients take more of your time and with time being the ultimate resource, it’s important to charge clients proportionally to the amount of time you’re dedicating to their services
Grouping your clients can help you with fixed-fee billing amounts:
Once you’ve grouped your clients into size categories, you can develop fixed-fee billing that fits how much time you’re spending on their account and this will ultimately affect your bookkeeping rates.
