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Let’s get real. A bookkeeper can make or break your business. They’re invaluable at managing finances, keeping track of general ledgers, understanding income balances, and much more. While these roles are pivotal for running a successful business, we understand that a top-notch bookkeeper poses additional expense, and you might be asking yourself, “How much does a bookkeeper cost?” We’ve got answers to this and many more questions regarding bookkeeping services.
What is a Bookkeeper?
As you might expect, a bookkeeper is a professional (usually with a degree and experience) responsible for maintaining accurate records of a company’s financial transactions. Their tasks include recording income and expenses, managing accounts payable and receivable, reconciling bank statements, and preparing financial reports. Bookkeepers ensure that financial data is accurate and up-to-date, providing a clear picture of a company’s financial health. A person working in the role of bookkeeper will perform tasks such as:
Key Responsibilities of a Bookkeeper
- Recording financial transactions
- Reconciling accounts
- Managing invoices and receipts
- Preparing financial statements
- Handling payroll
- Assisting with tax preparation
Bookkeeper Experience and Qualifications
Not all bookkeepers are created equal. That’s why it’s a good idea to assess the qualifications and experience of a person in this position. Here is some background on what you should be looking for in terms of bookkeeping experience.
Experience
Whether you’re looking for a bookkeeper position or you’re a manager looking to hire one – clearly experience will be at the forefront of your search. Obviously, bookkeepers with more experience often command higher salaries because they have strong expertise and ability to handle complex financial tasks. Experienced bookkeepers can identify discrepancies quickly, ensure compliance with regulations, and provide valuable insights into financial management.
Qualifications
Common qualifications for bookkeepers may include:
- Certification: Many bookkeepers obtain certifications such as Certified Bookkeeper (CB) or Certified Public Bookkeeper (CPB).
- Education: A degree (associate or bachelor’s) in accounting, finance, or a related field is often preferred.
- Software Proficiency: Proficiency in bookkeeping software like QuickBooks, Xero, or Sage is essential.
- Continuing Education: Staying updated with the latest industry standards and regulations is crucial for maintaining accuracy and compliance.
Bookkeeping Fee Structures
If you’re asking yourself, “How much does bookkeeping cost?” – that depends on various factors. As you can imagine, fees depend on the complexity of the work, experience, and the size of the business. Here are some common fee structures to help you budget the expenses:
Hourly Rate
Many bookkeepers charge an hourly rate. This averages around $25 to $100 per hour. This all depends on things like their education, work experience, and the tasks they are expected to perform on the job, in addition to standard accounting functions.
Monthly Retainer
Some bookkeepers offer a monthly retainer fee, providing a set number of hours or specific services each month. This can range from $200 to $2,500 per month.
Flat Fee
For specific tasks or projects, bookkeepers might charge a flat fee. This is common for services like tax preparation or financial report generation.
Percentage of Revenue
In some cases, bookkeepers may charge a percentage of the company’s revenue, typically ranging from 1% to 3%. This fee structure aligns the bookkeeper’s compensation with the business’s financial success.
How Much Does a Bookkeeper Cost Per Month?
If you’re wondering how much does a bookkeeper cost per month, you’ll have to consider variables like the fee structure and the scope of work. On average, small businesses might spend between $300 and $1,000 per month on bookkeeping services. However, this can increase for larger businesses or those with more complex financial needs.
Outsourcing vs In-House Bookkeeping
When considering bookkeeping options, businesses can choose between outsourcing bookkeeping services or hiring an in-house bookkeeper. Each option has its benefits and deterrents – especially regarding cost.
Outsourcing Bookkeeping
Benefits:
- Cost-Effective: Outsourcing can be more affordable, as businesses only pay for the services they need without additional costs like benefits or office space.
- Expertise: Access to a team of experienced bookkeepers with diverse skills.
- Scalability: Easy to scale services up or down based on business needs.
Drawbacks:
- Less Control: Limited direct oversight compared to an in-house bookkeeper.
- Communication: Potential challenges in communication and coordination.
In-House Bookkeeping
Benefits:
- Direct Control: More oversight and direct communication with the bookkeeper.
- Immediate Availability: On-site bookkeepers can address issues promptly.
Drawbacks:
- Higher Cost: Hiring an in-house bookkeeper includes salary, benefits, and additional overhead costs.
- Limited Expertise: An in-house bookkeeper may not have the same breadth of knowledge as a team of outsourced professionals.
How Much Does a Bookkeeper Cost for a Small Business?
For small businesses, the decision between outsourcing and in-house bookkeeping often comes down to cost and specific needs. Outsourcing is typically more cost-effective, with costs ranging from $300 to $1,000 per month. But how much does a bookkeeper cost for a small business if you don’t outsource? An in-house bookkeeper might cost $3,000 to $5,000 per month, including salary and benefits – but that’s a ballpark estimate.
Frequently Asked Questions About Bookkeeping Costs
Is a bookkeeper cheaper than an accountant?
Yes. Bookkeepers are generally cheaper than accountants. Bookkeepers handle day-to-day financial transactions and record-keeping, whereas accountants provide more specialized services such as tax preparation, financial analysis, and strategic planning, which typically come at a higher cost.
Is it worth having a bookkeeper?
Yes. Definitely. While understanding how much does a bookkeeper cost is important for budgetary concerns, the cost of a bookkeeper is worth every cent. Accurate financial records, up-to-date receivables and payables, and balancing ledgers are all essential tasks you need that a bookkeeper can provide for your business. With this kind of information, you’re more able to make informed business decisions, maintain compliance with financial regulations, and save time that can be better spent on other business activities.
How much should I charge a small business for bookkeeping?
The amount charged for bookkeeping services for a small business can vary based on the complexity and volume of the work. On average, you should charge between $300 and $1,000 per month, considering factors like the number of transactions, the level of service required, and the bookkeeper’s experience and qualifications.
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Matt Garrett is the Founder and Chief Executive Officer of TGG. He is a regular speaker across the country on behalf of Vistage educating business owners on the need for sound financial practices, and is Vice President of the Board of Directors of FINACA. Under Matt’s leadership, TGG has received the following recognition: INC. 5000 top companies in the U.S. five years in a row; one of “San Diego’s Fastest Growing Companies” the past four years; and is among San Diego’s “Best Places to Work.”
