How Much Does Bookkeeping Cost?
Bookkeeping services are necessary for businesses of all sizes. Whether you decide to outsource your bookkeeping or do it with an in house bookkeeper, you should be aware of the costs involved. As a small business owner, you want to make well-informed decisions about financing your bookkeeping expenses, and you want to do it correctly.
In this article, we’ll cover:
Factors That Affect Bookkeeping Rates
What Do Bookkeepers Do?
Small business bookkeepers have a few simple responsibilities. They keep your financial books in order by tracking the revenue and expenditure This is achieved by performing data entry in accounting software.
In a nutshell, a bookkeeper records your financial transactions and collects information to create general financial reports. Business owners can then use those financial reports to make better-informed financial decisions to boost the growth and profitability of a company.
Bookkeepers also perform smaller tasks on a daily or weekly basis. These tasks can include, but aren’t limited to:
- Paying bills
- Data entry
- Inventory management
- Collecting due payments
- Reconciling bank accounts and credit cards
- Keeping client and vendor lists
- Organizing and preparing important financial documents
Basic Bookkeeping Costs
Many new businesses 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.
Part time bookkeepers will charge between $400 and $800 per month for basic bookkeeping, excluding the benefits. For full time services, expect to pay from $3,000 to $4,500 per month without the benefits. For outsourced bookkeeping, the price is from $500 to $2,500 per month for basic bookkeeping tasks.
The best approach to bookkeeping is to translate the work of keeping your financial records and books in order into dollars. If the cost is similar to that of an actual bookkeeper for performing the same tasks, then it may be better just to pay someone to do the job. As a result, you can focus on growing your brand.
Once you’re ready for a professional bookkeeper, you should find an option that best fits your needs. You can go for part time bookkeeper, full time bookkeeper, or outsourced bookkeeping services.
Part Time Bookkeeping Cost
Part time bookkeepers do smaller tasks. They input receipts, keep tabs on timesheets, and similar. Companies often train their office managers or existing staff to cover the part time bookkeeping responsibilities.
On paper, a part time bookkeeper may look like an attractive option. However, any error or oversight that may appear on the sheet is fully at your business’s expense.
Many companies are attracted by the lower costs associated with part time bookkeepers. They typically charge more per hour compared to full time bookkeepers. Still, the total fee per month is less.
Hourly rates for bookkeeping part time depend on the daily responsibilities, location, and duration.
The cost can be from a $20 hourly rate for basic services. Ideally, hire part time bookkeepers when you can do some of the accounting yourself, and could use extra help for employee timesheets, accounts payable, and accounts receivable tracking. Even if you hire a part time bookkeeper, your management would still have to review their work.
Full Time Bookkeeping Cost
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.
Full time bookkeepers earn from $35,000 to $55,000 per year. This doesn’t include the benefits that can cost up to 20% of their salary.
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.
The sole disadvantage of hiring full time bookkeepers, much like with any other full time employee, is the high associated cost. If you’re running a middle to large business and there’s no other way to sustainably keep your booking system stable, then consider hiring a bookkeeper full time.
Outsourced Bookkeeping Cost
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. Average monthly fees for this type of activity include from $500 to $2,500. One of the main benefits of such an approach is that you can customize the services you want the bookkeeper to provide.
Small businesses are most often prone to outsourcing their bookkeeping to third parties. The main benefit of outsourcing, of course, is the cost.
For example, the process is similar to hiring an in-house bookkeeper but you don’t have to add overhead costs for employees on the payroll.
You also get the benefit of a higher expertise level compared to training your office manager for bookkeeping.
How FreshBooks Can Help
FreshBooks is an invoicing and accounting software for small businesses. Business owners who wish to automate their financial tasks can use some of the latest tools on the market.
Whether you’re a self-employed professional, a business with employees, a business with contractors, or a freelancer, you can benefit from FreshBooks’ services.
Here’s an overview of FreshBooks features you should know about:
- Professional invoicing system and templates with different payment options, automated late payment reminders, and more.
- Advanced system for tracking business expenses and making sure you never miss them. Includes snapping receipts in all forms and importing them from bank accounts.
- Time-tracking features for teams working together on multiple projects at the same time.
- Project management tools for collaborating with clients and keeping everyone up to date.
- Automated payment features for checkout links, credit cards, and others.
- Creating financial reports and dashboards, viewing payments, profitability, and bank account information, and even leading complex financial systems.
- Reminders to file taxes on time, sort out employee benefits, tools for recording transactions, and much more.
- Mobile version for accessing important information or inputting receipts on the go.
Many businesses rely on FreshBooks because of their flexible, trustworthy, and versatile system. You can use FreshBooks if you have your own bookkeeping service, or have trained an existing employee to handle it, or have an outsourced accounting company doing the job for you.
Factors That Affect Bookkeeping Rates
Different factors affect the cost of bookkeeping services. Here’s an overview of the most important considerations.
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 drastically depending on the state.
If you hire self-employed bookkeepers from another country, you can also experience major cost differences. For example, a freelance bookkeeper located in India or other low-cost countries can charge less for their services compared to an independent bookkeeper in Europe or Canada.
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.
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.
Type of Services Provided
A bookkeeper can offer a range of services. The number of tasks you assign to them directly impacts the price of each bookkeeping service.
Different industries also require different services, which can affect the overall cost.
The accounting software used can impact the price of the service. Maybe the freelancer is experienced in a single software and charges a lower rate for it. You can also find experts in numerous accounting software that charge more.
Although not a crucial factor, it’s important to ensure the bookkeeper has experience working with software that you find convenient.
Hiring a bookkeeper isn’t always the easiest of tasks. You must understand what bookkeeping services you need and whether it’s best to hire a professional bookkeeper full time, part time, or outsource the service.
The overall cost depends on various factors, the most important being experience, education, and certifications.
Hopefully, you now have a better idea of what bookkeeping services you can afford and which services come with a lower or higher bookkeeper cost. Consider investing in simple software like FreshBooks for additional help in handling your finances without breaking the bank.
Frequently Asked Questions
Should I hire a bookkeeper or do it myself?
The answer to this question depends on many factors. You can calculate the time spent on bookkeeping tasks and translate that into dollars. If you spend too much time on bookkeeping, it’s easier to hire a bookkeeper to keep track of your financial records, financial statements, and other elements.
What is a full charge bookkeeper?
A full charge bookkeeper takes care of the usual bookkeeping service but also handles some accounting duties. Think of this bookkeeping service as a mix between traditional accounting and bookkeeping.
How do I do simple bookkeeping for my small business?
The best way to do bookkeeping for small businesses is to come up with a framework, choose the method that works best for your business type, and keep track of all the details.