How Much it Costs for a Small Business Bookkeeping

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Of all the financial tasks small business owners must address, bookkeeping might be one of the most consequential and time-consuming. Do your books right, and you'll gain important insights into your finances that will help you make critical, time-sensitive business decisions. Do them wrong, and it might hinder your ability to compete in the marketplace and ultimately lead to closure.

If you've run into issues while doing the books for your business, it might be time to look to professionals for help. A professional bookkeeper will save you time and money, but identifying the right one for your business needs can be a challenge. Use this guide to learn all you need to know about evaluating and hiring the right bookkeeper for your business.

Essential Bookkeeping Tasks

Some bookkeepers are generalists, while others are more specialized. Whichever you choose, ensure they can deliver the following basic bookkeeping tasks.

Payroll

Expense tracking and classification

Account reconciliations

Managing vendors and accounts payable/receivable

Paying bills

How Much Does a Bookkeeper Cost?

When it comes to using a professional bookkeeper, you have the option to hire or outsource. The cost of bookkeeping will differ depending on your needs.

Part-time bookkeeper. Typically, a part-time bookkeeper or freelance bookkeeper will work less than a full-time counterpart and have fewer day-to-day responsibilities, such as focusing mostly on accounts receivable or data entry, that aren't as complex. A part-time bookkeeper could start at an hourly rate of $20 and up.

Full-time bookkeeper. Hiring an in-house bookkeeper can be a great decision if your business has more intricate bookkeeping needs. There are two major drawbacks to bringing on a full-time bookkeeper. They're only one person, so you might have to audit their work from time to time as a precaution to ensure it's correct. They'd also become a full-time employee, with all associated costs, such as healthcare and other benefits that you would need to cover. That's on top of an average salary of $50,000 per year.

Outsourced bookkeeping. Outsourcing involves a qualified external firm handling your business's bookkeeping needs. They might offer different pricing tiers, sometimes as a monthly fee, with a basic plan costing the least and a more fully featured plan costing the most. They might also be able to tailor a plan to your precise needs. An outsourced bookkeeper is usually as qualified as a full-time in-house bookkeeper but is more cost-effective. And they might also have a team backing them up and checking their work to ensure it's error-free. Because outsourced bookkeepers are typically offsite, you lose the immediate access of someone working onsite.

If hiring a bookkeeper isn't currently in your budget, but you have employees, consider using an outsourced payroll service for now.

Bookkeeper Cost Variations

There are cost variations to keep in mind when it comes to selecting the best bookkeeper for your business. For example, location will make an impact if you're interested in hiring a full-time bookkeeper. The salary and benefits required to hire a full-time bookkeeper in Kansas will likely be less than hiring a full-time bookkeeper in New York City.

This is one issue to keep in mind during the evaluation process, but there are other considerations and questions you should be asking. Do specific educational requirements or certifications matter? That might cost more. Are you looking for a generalist or a bookkeeper with a particular focus? That might also cost you.

Regardless of the variations in cost, there are many scenarios where you can get the expertise you require while staying within budget.

Hiring a Bookkeeper vs. Bookkeeping Service

If you feel as though you're in over your head or aren't moving the needle as effectively as you had hoped, perhaps it's time to hire a bookkeeper. But which is best for your business? If you're torn between hiring a full-time in-house bookkeeper and outsourcing to a qualified film, consider the following comparison.

	Outsourced bookkeeper	Full-time bookkeeper
Cost-effective	✔
Specialized team	✔
Onsite		✔
Licensed and certified	✔	✔
Tailored price tier	✔

Bookkeeping vs. Accounting: What’s the Difference?

Accounting and bookkeeping are processes that businesses use to ensure their financial information is accurate and complete. CPAs and bookkeepers both work with financial data and require a basic knowledge of accounting practices. Because of this, you might think they’re the same, but they're not.

Bookkeeping and accounting can be used in conjunction. For example, businesses can use both to generate financial statements. A financial statement serves as the backbone of your business’s financial reporting. These statements, including the income statement, cash flow statement, and balance sheet, are crucial in understanding your business’s performance, liquidity, and overall financial health. Bookkeeping provides the data necessary to create these statements, while accounting ensures their accuracy and completeness.

Often, bookkeepers and accountants work closely with each other. Without properly maintained books, accountants wouldn’t have the data they need to create financial models.

	Accounting	Bookkeeping
Skills	Requires the ability to quickly absorb technical information and analytical thinking.	Requires attention to detail and in-depth financial knowledge to execute the position.
Objective	Analyzing the financial situation of a business in order to make projections and suggestions.	Keeping thorough financial records for businesses by identifying and recording transactions.
Advisory	Advising businesses on their best tax strategies and creating financial projections.	Bookkeepers do not provide advisory for businesses, as their role is recording more than analysis.
Tasks	Analyzing and interpreting financial data to provide advice and support to businesses of all sizes.	Recording and updating financial information in a general ledger.
Certifications	Accountants can become CPAs or Enrolled Agents (EA) when they pass the appropriate exam.	Bookkeepers can become Certified Bookkeepers, but it is often not required.

Why Should You Hire An Expert For Bookkeeping?

Hiring the right bookkeeper to fulfill your business needs can be a decisive advantage over the competition. But you can't just pick anybody to keep accurate records and save your business money. You need small business professionals intimately familiar with your state's and industry's inner workings. You need the full-service bookkeeping experts at 1-800Accountant, America's leading virtual accounting firm for small businesses.

Whether it's bookkeeping, small business tax preparation, or payroll, we have the solution you need at a price that fits your budget so you can get back to building your business. Schedule a quick consultation – usually 30 minutes or less – to learn how we can handle your books.

This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. 1-800Accountant assumes no liability for actions taken in reliance upon the information contained herein.