Understanding the Cost of a Professional Bookkeeper
Hiring a bookkeeper is crucial for businesses of every size. With so much money coming in and out of business, it's important to keep track of transactions, pay bills and employees, invoice customers, and reconcile bank statements. Perhaps most crucially, solid bookkeeping means that it's easy to file your taxes and stay in the good graces of the IRS.
If you've ever wondered, "How much does a bookkeeper cost?" this article is for you.
Diving Deep into Bookkeeping Fees.
Bookkeepers play a vital role in helping a business function. They keep track of business income and expenditure and ensure that your financial records are up to date. When you need to file taxes, perform an audit, or send financial information to an accountant, solid and accurate records are essential.
But how much does bookkeeping cost? The short answer is, “it depends.” There are a lot of factors that determine monthly bookkeeping fees. Here are a few of the most important elements that will affect the price of service:
How big is your business?
The size of your business affects the cost of bookkeeping. A sole proprietor might have very simple requirements that center around ensuring their business expenses turn into tax write-offs and that tax filings are accurate and on time each year.
However, for larger operations, requirements will be more complicated and time-consuming, which will be reflected in the prices.
What certifications does the bookkeeper hold?
Bookkeepers come from a variety of educational backgrounds. Some bookkeepers graduate with a high school diploma and gain experience on the job. Others do degrees and masters in financial subjects to get to where they are. More qualified bookkeepers typically charge higher rates.
How experienced is the bookkeeper?
While qualifications are important, experience is too. A bookkeeper with lots of experience has likely done and seen it all. They’re immersed in the industry and have an encyclopedic knowledge of tax deductibles and other best practices.
What’s more, if they have experience within your niche, bookkeepers can be an invaluable source of advice, best practices, and insights.
How many days of work per month do you need the bookkeeper to work?
Companies come in all shapes and sizes, and requirements vary. Some small businesses only need a bookkeeper for a few days a month, while others couldn’t get by without a part-time or full-time bookkeeper. Understandably, the more time and work that a bookkeeper needs to spend on your business will affect the cost of this service.
What services do you require?
After all that is said and done, the services you require are perhaps the most significant factor that influences bookkeeper costs. Basic bookkeeping services will help you file taxes, take advantage of write-offs, record transactions, and prepare financial statements. However, there are other services that you might need, including:
- Payroll preparation and management
- Inventory management for retail and warehousing businesses
- Accounts receivable and accounts payable to help you invoice customers and ensure your expenses are paid on time and in full
- Quarterly and annual tax preparation
- Financial analysis and reporting at a monthly or quarterly cadence.
Each additional service you add to the overall package will be reflected in the final bookkeeping cost.
The average costs of a bookkeeper
A full-time bookkeeper will cost you around $3,000 to $4,500 per month. However, an outsourced or fractional bookkeeper is a more cost-effective approach, with average fees of somewhere between $500 and $2,500, depending on the services.
How to Select the Right Bookkeeping Service Based on Cost.
Cost is an essential factor when choosing any product or service. But if you run a business, you’ll be more than aware that sometimes the cheapest option can become the most expensive if things are done incorrectly.
So, when you are looking at a bookkeeping service price list, ensure that you are getting value rather than automatically picking the most cost-effective option.
Selecting the best value monthly bookkeeping fee requires a little research. First, you need to consider the services you need. Find and identify bookkeepers that provide these services and look through their price list for bookkeeping services.
Once you’ve identified bookkeepers in a price range you are comfortable with, you can start to evaluate them on other merits to ensure you get all-important value for money.
Some of the things you can look out for are:
Qualifications and experience: Bookkeepers typically have qualifications in finance, accounting, or bookkeeping itself. However, they also need certifications or accreditation. Where possible, double-check these qualifications to weed out bad actors.
Another thing to consider is experience within your specific industry.
Customer service: A good bookkeeper is responsive, easy to deal with, and easy to get hold of. Ideally, you want someone who takes an interest in your business and is prepared to go the extra mile.
Reviews: It’s worth looking at online reviews and testimonials to see what current and former clients have to say.
Consultation: While it’s not critical to a good working relationship, many bookkeepers will offer a consultation so they can explain how they work and what they can do for your business. These meetings can be helpful in figuring out if there is the right bookkeeper for you.
Ultimately, the cost of having a bookkeeper offsets the costs of not having one. A good bookkeeper can save you money by offering advice, highlighting tax deductibles, and ensuring you don’t pay fines. It’s not so much whether you can afford to have a bookkeeper as much as whether you can afford not to.
What factors influence bookkeeping fees?
There are several factors that influence the cost of booking services. However, the main criteria that affect bookkeeper costs are things like the size of your business, the volume of transactions, and the services that your business needs.
How does the cost of bookkeeping vary across services?
The simplest way to answer this question is that some services require more labor, experience, and expertise. Services like detailed accounting and reporting or advice on filing taxes are more complex and time-consuming services, which is naturally reflected in the price.
Is there a standard monthly fee for bookkeeping services?
Standard monthly bookkeeping fees don't exist because each business is unique. However, the average hourly rate for a bookkeeper is somewhere between $11 and $25 per hour, but that can fluctuate depending on the kind of services and expertise you require.