Bookkeeping is essentially the process of recording, storing, and retrieval of business transactions for a business.
Depending on the complexity of the process, you will be dealing with such transactions as receipts and invoices for expenses as well as employees’ salaries.
So, how much does it cost to outsource bookkeeping services?
Bookkeeping service costs vary depending on such factors as the required security levels and volume of documents to be processed. If you own a small business, you will need at least 10 hours for bookkeeping tasks every month.
Outsourcing the service will save you time and money as well as keep you on top of your business finances. Throughout this guide, you will get to learn the various bookkeeping options and costs.
- Do You Need Basic Bookkeeping or Full-Service Accounting?
- Outsourced Bookkeeping Cost Factors
- How Qualified is the Bookkeeping Service Provider?
- Do You Need Part-Time, Full-Time, or Freelance Bookkeeping?
- Outsourcing Bookkeeping Services
- Bookkeeper Experience
- Pricing Structure
- Ready to Hire a Bookkeeper For Your Business?
Do You Need Basic Bookkeeping or Full-Service Accounting?
For startups and relatively young businesses, the key concerns include remaining compliant with state and federal regulations, getting paid, and paying bills.
Additionally, small businesses need to record their transactions and ensure that their payroll is accurate.
As the business grows, you will reach a certain threshold whereby you will need accurate financial reports and intelligence.
At this point, you will require the service of professional bookkeepers for your advanced bookkeeping needs.
Additionally, you will also need accrual-based accounting and management or managerial accounting to influence data-driven decisions.
Before you try to ascertain how much this service costs you, you first need to figure out whether you need simple bookkeeping or complex accounting solutions.
This is mainly because the cost will be partially influenced by the complexity of the process. As such, the cost of full-service accounting is much higher. However, most businesses make the leap to see the value and experience an ROI rapidly.
Outsourced Bookkeeping Cost Factors
For small and medium-sized businesses, outsourcing bookkeeping services saves on time and money. Although freelance bookkeeping is a more affordable option for many businesses, the cost varies from one project to another.
So, what exactly are the factors affecting the cost of freelance bookkeeping?
Getting outside help can cost you between $500 to $2,500 per month. As such, it pays to do your research before outsourcing these tasks.
Discussed below are some of the important factors that will affect the much you end up paying in bookkeeping fees:
Basically, the cost of bookkeeping and accounting services varies from one state to another. Based on statistical findings, the industry standard across the country is about $23/hour.
Holding other factors constant, the rate will vary based on your geographical location (Zip code).
On average, bookkeeping fees in Nevada, Montana, North Dakota, Wyoming, and Idaho are about $19.5 per hour. This is relatively lower than the cost charged by freelance bookkeepers in California, with an average rate of $19.93 per hour.
This 46 cents per hour difference may sound negligible, but will ultimately impact the overall bookkeeping cost you have to incur.
As you can see, the cost is much higher in areas that are considered to be rural than it is in metropolitan cities.
This is because the rural areas do not have as many bookkeeping service providers as is the case in bigger cities. Competition tends to drive prices down.
Average Bookkeeping Rates in the Different States
How Qualified is the Bookkeeping Service Provider?
While hiring highly qualified professionals guarantees quality results, it does not come cheap. The more qualified the professional, the more they are likely to charge for their service.
Basically, there are three main types of certifications available for bookkeepers.
The more certifications a provider has, the more qualified they are expected to be at what they do. As such, a provider with two certificates will charge a higher rate than one with just a single certificate.
To become a certified provider, one has to complete one or several of these certification programs:
National Association of Certified Public Bookkeepers (NACPB)
The NACPB certification program is ideal for folks with an associate degree or bachelor’s degree in accounting. The certification exam costs $600 for non-members and $400 for NACPB members.
Once all certification requirements have been met, one will earn the designation of Certified Professional Bookkeeper (CPB).
The provider can then include it in his/her business cards and marketing materials as well as charge the befitting rates.
American Institute of Professional Bookkeepers (AIPB)
The AIPB certification program is ideal for someone who does not have any formal education in bookkeeping. Certification exams and materials are $574 for nonmembers and $479 for AIPB members.
Upon completion of all certification requirements, a provider earns designation as a Certified Bookkeeper (CB). Providers with this certificate only are essentially the most affordable service providers in the industry today.
QuickBooks ProAdvisor Certification
In addition to getting certified through the AIPB or NACPB, providers may also advance their learning to get certified in QuickBooks.
The QuickBooks ProAdvisor certification program is ideal for freelance bookkeepers because it allows them to get certified for free with no strings attached.
Do You Need Part-Time, Full-Time, or Freelance Bookkeeping?
Depending on the size of your business, the complexity of accounting and bookkeeping tasks varies. This will, in turn, determine the type of bookkeeping solution you require.
Just as is the case with many other jobs, you do not expect part-time, full-time, and freelance bookkeeping rates to be the same.
On average, you should expect to pay between $400 and $800 per month + benefits for part-time bookkeeping services. For full-time bookkeeping, you will be up paying between $3,000 and $4,500 per month.
Outsourced services, on the other hand, are priced between $500 and $2,500 a month.
So, how exactly do these three influence the cost of bookkeeping?
On average, full-time bookkeepers will charge you between $35,000 to $55,000 per year plus benefits and overhead costs, depending on your location.
In larger cities, the cost of living may drive this cost to upwards of 70,000 per annum. You will also need to factor in the overhead, benefits, and office space costs, which will account for about 20 percent of the total cost.
While this is the case, a full-time bookkeeper handles the day-to-day accounting functions for your office. Keeping your books in order and up-to-date is the foundation of the financial strength of your business.
Hiring a full-time bookkeeper in this situation could be the right answer for you.
You also expect your full charge bookkeeper to run operations associated with paying bills, billing clients, managing time-sheets and payroll, and processing financial statements at month-end.
As an owner of the business, you will still need to look over the end results to guarantee accuracy.
Part-Time Bookkeeping Cost
How much will it cost you to hire a part-time bookkeeper for a small to medium-sized business? On average, hourly rates for part-time bookkeepers are about $20 per hour.
This rate is often affected by your location and job description. In such an agreement, the bookkeeper with be performing basic bookkeeping duties and will need to be supervised and managed.
If you can manage your job and some of the accounting each month but need a little extra help, this option will be best suited.
Part-time providers will be carrying out such tasks as inputting receipts and tracking employee timesheets, accounts receivable, and accounts payable.
When hiring a part-time bookkeeper, management still needs to have someone reviewing the work of the bookkeeper.
Outsourcing Bookkeeping Services
Just as with hiring an internal bookkeeper and defining their specific roles, you need to decide which pieces of your financial management make sense to outsource.
This is particularly the case for the bookkeeping tasks. The average price of outsourcing your bookkeeping needs ranges from $500 to $2,500 per month.
This rate is often determined by the number of transactions as well as the complexity of services required.
A key benefit of outsourcing is that it allows you to customize the services you receive to your specific bookkeeping needs. You will also be in a better position to outsource more advanced management accounting and controller.
However, this comprehensive accounting solution may also inflate your monthly bookkeeping costs significantly.
If the business is moving into a growth stage, you need to consider graduating to full accrual-based accounting, including financial and management reports.
How experienced is your preferred bookkeeper? The more experienced bookkeepers are more likely to be thorough with their work, but will also charge higher rates.
Basically, having a degree and/or bookkeeper certification equips these professionals with the required skill sets.
However, the period they have been practicing this knowledge determines how good they are. The more experience a professional is at actual bookkeeping work, the more confident they will be in your skills which will translate into higher billable rates.
Different bookkeepers in the industry structure their prices differently. For an affordable rate, it is advisable to shop around for a provider that is ready to tailor the pricing around your needs.
In this regard, these are the pricing options you will come across in the industry:
This pay-for-what-you-use system is currently popular for small company owners. With this option, you will be charged an amount that is comparatively lower than what you would have to pay with monthly payments.
The downside of this option is that you have no guarantee that the hours charged were actually spent on each task. The average standard rate for hourly bookkeeping is between $20 and $50 an hour.
You may decide to ask around or even read online reviews to choose a reputable provider.
Fixed Fee Pricing
In this case, a fixed monthly fee is charged for a full bookkeeping service. In this case, you will not be required to pay for every phone call, fax, or email that is exchanged.
This type of service suits companies that prefer a fixed amount for easier budgeting every month. If you only require a minimal amount of bookkeeping, you may want to try a more flexible approach.
A combination of the above-mentioned systems is also available. In this regard, you will be charged a set monthly fee of $100 to $150 per month as well as $30 to $40 per hour spent on your books.
The most common situation, in which you will be required to pay project fees, is when you need an accountant to sort out a complicated problem for you.
Another would be if your record-keeping has fallen behind and you need extra hands on deck.
Another attractive option would be to get in contact with a freelance bookkeeper and come to an arrangement with them.
Basically, bookkeeping service providers offer just enough support to help you get your bookkeeping systems up and running.
Once your volume of work starts to grow you will have to approach a more advanced outfit that can handle the increase.
Ready to Hire a Bookkeeper For Your Business?
Most business owners can attest that the need for professional bookkeeping is inevitable for a growing business, such as a commercial cleaning business.
Whenever you feel like hiring one, you will have several options, including full-time, part-time and freelancers.
All the options come to attract different pricing rates to suit different business requirements.
Additionally, the cost of bookkeeping is also dependent on several other factors like qualification and experience of the provider as well as your location
Bookkeeping services usually have a variety of payment plans to choose from. To save yourself money, it pays to know which one suits your needs.
Regardless of your specific business size and needs, this guide will help you get a fair deal as far as bookkeeping service costs are concerned.