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Bookkeeping Costs For Small Businesses Explained

by Cynthia
Bookkeeping Costs For Small Businesses

Regardless of the size of your business – you need the services of a professional bookkeeper. But if you run a multinational corporation that processes transactions worth millions of dollars every month, you might need the services of an accountant in addition to that of a bookkeeper. This means that the services of a bookkeeper look similar to that of an accountant, but they differ.

Aside from understanding the similarities and differences in the services of a bookkeeper and an accountant for informed-decision purposes, you should also understand the advantages of outsourcing your bookkeeping needs over hiring an in-house employee. And one of the first places to start is to understand bookkeeping costs for small businesses. Before considering the costs of bookkeeping services, let’s consider the duties of a bookkeeper.

The Basic Duties Of A Professional Bookkeeper

Here are some of the duties of a professional bookkeeper:

  • Record and reconcile financial transactions in a systematic manner
  • Create and issue payment invoices
  • Process, record, and pay bills/payroll on due dates
  • Track sales taxes and file returns
  • Make business finance comply with state and federal regulations

The complexity of this role depends on the size of the business, the number of financial transactions, and the nature of business dealings.

In addition to the above, an accountant would use the data prepared by the bookkeeper to further analyze financial statements for policy purposes, plan tax and business advisory, as well as adjust inventory and tax estimates among other functions. It is also important to know that an accountant plays a great role in small businesses.

Outsourcing Bookkeeping Services vs. Hiring An Employee

According to finance and accounting experts, it is far more cost-effective and professionally efficient to outsource your booking and accounting services to a freelancer or third-party company than hire a company employee. While you pay an employee a full salary, you pay an external firm for stipulated financial tasks and as needed.

You are also at liberty to obtain various service quotes from different firms or individuals before a bookkeeper. The only challenge is hiring the most efficient and most affordable finance specialist, and this is where you might rely on outsourcing platforms, business referrals, and core service differentials. But whether you hire a regular employee or outsource your bookkeeping services to an external company, let’s consider the costs of bookkeeping for small businesses.

Costs Of Bookkeeping For Small Businesses

There are largely two traditional ways to cost bookkeeping services: billed hourly and monthly salary. The actual bill per hour or monthly salary will depend on the complexity of the tasks at hand and how long it takes to complete them efficiently. But you can expect to pay the following depending on the size of your business:

  • Startup business – $20-$40 per hour – and $200-$400 per month
  • Small business – $30-$50 per hour – and $400-$700 per month
  • Medium business – $50-$90 per hour – and $700-$2,000 per month
  • Large business – $100-$160 per hour – and $2,000-$5,000 per month

A CPA or licensed accountant will likely charge more since their work is more detailed and comprehensive than that of a regular bookkeeper.

Cost Factors For Bookkeeping For Small Businesses

Most professional accounting firms use a fixed pricing model that lists out all the services they will provide for each package. A potential client will analyze the list of offerings in each package and their corresponding price list and then choose the package that suits their needs best.

To this end, some of the bookkeeping and most advanced accounting services in the package for each category of business include:

  • Accounting system setup
  • Payroll system setup and support
  • Accounting and bookkeeping
  • Staff training and company support
  • Bookkeeping and accounting software subscription costs
  • End-of-the-year financial statements
  • Sales tax filing and corporate tax returns
  • Compliance with state/federal regulations

Whether you hire a certified freelancer or outsource to an accredited accounting firm, running a business costs money; and bookkeeping/accounting services help you manage the monetary aspects of your business to eliminate financial loss, embezzlements, and government scrutiny, and business collapse among others.

In some cases, a trusted bookkeeper may even be empowered to sign checks for small amounts ranging from $200-$500 for small business expenses so that business owners can focus on more important things. And the benefits of outsourcing to a freelancer/external company include not having to pay for personnel training, not paying medical and social security benefits, advanced security solutions to protect financial data and integrated technology solutions for remote access to accounting data.

Photo by Anna Tarazevich

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