A business without bookkeeping is chaos. If you believe that you can save money by not hiring a bookkeeper, you won’t. A bookkeeper will save money, but we will get back to that momentarily.
A third of small businesses spend between $1,000 to $5,000 for accounting services annually. Yet, 40% of small business owners report that taxes and bookkeeping place a strain on business operations.
How much does a bookkeeper cost? Between the potential for human error, missed payments, and more, you could also ask: how can you handle the business’s finances without one?
For the money you will spend, it is well worth the investment, and here is why.
What Is a Bookkeeper?
A bookkeeping clerk takes responsibility for all, or some, of a company’s accounts. Companies also refer to this as the general ledger. They provide up-to-date, accurate financial information for the business.
A bookkeeper records all transactions. They post debits (or costs) and credits (or income). They must give financial statements to managers and supervisors, along with other reports.
Bookkeepers differ from accountants in that they focus on everyday tasks. An accountant will work on overarching financial guidance. Both bookkeepers and accountants share a common goal, which is to help the company thrive financially.
Types of Bookkeepers
There are a few different bookkeepers. You must find one that is right for you.
In-House Staff Bookkeeper
If you are a medium-sized company, then an in-house bookkeeper is ideal for tracking day-to-day tasks. You will need to pay this person a salary and benefits if you hire a full-time employee. That is an additional consideration.
A freelancer is a good choice if you need a bookkeeper merging accounts annually. They typically charge hourly for their services, and the amount they charge depends on their experience.
A large enterprise business may choose an agency to handle its financial tasks. However, small to mid-sized businesses may go this route as well. The cost will vary depending on the type of service you choose.
If you outsource, you will have another company that will onboard and train a team dedicated to you. They will cover the expenses that are needed for the bookkeeping work. This includes items like computers, accounting software, office space, etc.
How Much Does a Bookkeeper Cost?
There are many variables involved to figure out the monthly cost of a bookkeeper, including the type of bookkeeper you choose based on the options that we just mentioned. Some additional factors for you to consider are as follows:
- Your company size and lifecycle
- Number of employees
- How you process payroll
- Number of monthly transactions
- Number of expense accounts
- Credit cards
- Invoices to send
- Bills to pay
- Number of balance sheets for reconciling
Besides these activities, your policies, procedures, accounting system, and needs for reporting are all factors too in determining the cost.
For an independent bookkeeper (not from an agency), it can be as low as $10 per hour, but this would be for more basic data entry. For a senior bookkeeper, it can be as much as $75 per hour, which would include some accounting experience. An accountant could charge $150 per hour or more for their work.
Salary.com reports that the median annual salary of a bookkeeper is $45,567 in the United States. Outsourcing your bookkeeping needs could range from $500 to $2,500 per month. Although with Klean Books, we have packages starting at $200 per month.
The thing about paying bookkeeper costs is that it can save you money in the long run. Bookkeepers reduce errors with financials, and they are more knowledgeable about finances.
You won’t miss a scheduled payment because you have someone dedicated to making the payment on bills for you. Plus, they know the due dates for tax obligations.
Bookkeepers have a pulse on accounts receivable, so they can track down late payments that are owed to your company.
What Makes a Good Bookkeeper?
When choosing a bookkeeper, the individual or company must be able to prove to you they have a track record of success. They should have experience in your industry. It is nice if they have a certification, but typically no certification is required for this role.
Today, we do most bookkeeping online. However, you should have face-to-face meetings from time to time, even virtually.
You will want your bookkeeper to show accountability, so a regular cadence of bookkeeping reviews is helpful. Project management software can help with the coordination of efforts, too.
A good bookkeeper is thorough and has attention to detail. They can work well with others. This individual will have excellent administration and customer service skills.
The best bookkeeper takes initiative, is flexible, and is open to change. They possess impeccable math knowledge and show superb verbal communication skills.
Benefits of a Bookkeeper
Bookkeepers offer tons of benefits. The role of a bookkeeper is about saving companies time on unnecessary manual financial tasks. If you are not a professional at bookkeeping, these tasks are extremely tedious and can get left behind with other important duties, like sales and lead generation.
Plus, at tax time, you may scramble to pull together all the documents and spreadsheets you have so that you can file on time. When you are wasting time on things that are not your specialty, it pulls you away from more progressive tasks you could be doing.
Bookkeepers are professionals who keep track and pay invoices. When a bill is late or goes unpaid, this hurts cash flow. Further, your business goals can be affected.
When you hire a bookkeeper, they will monitor invoices and put processes in place so that you pay them on time. If it is late, they can schedule reminders accordingly and make a phone call. They may even issue a late fee penalty for you if you wish.
Not only that, but your payments to vendors may also be late, even forgotten. The bookkeeper will keep track so that you do not miss your financial obligations to others.
Identify Issues With Cash Flow
A bookkeeper handles day-to-day record keeping of receipts, invoices, and other transactions. They know your income and your expenses. Also, they have a good handle on your spending habits.
This kind of attention to detail with your accounts will benefit you so that you can quickly understand business performance. If a cash flow issue should arise, you will know about it before it becomes too big of a challenge to overcome.
A Smoother Tax Season
When you hire a bookkeeper, it makes sense to hire a tax specialist. If you choose a bookkeeper from an agency, the same firm can offer you a tax specialist too. The bookkeeper and tax specialist can work in sync to make sure that your accounting records and return filings are up to date as needed.
You can get a year-end financial statement from them. This gives a clear picture of the financial health of your organization. It will also let you know in advance what your obligation is for annual taxes.
It helps to know in advance if you can lower your tax bill or make modifications. Another significant benefit is that you have paperwork in order. This makes preparing complete and accurate tax returns much simpler.
Ready for Audits
While unlikely, you could get audited by the IRS. It helps for a smoother process if you have accurate and up-to-date records. The sooner you complete an audit and get back to the business at hand, the better it is (and less painful) for everyone involved.
Benefits of Outsourcing a Bookkeeper
Outsourcing bookkeepers has many benefits, including varying fee structures. You can look for something that is right for you, like hourly rates or a flat monthly fee.
If your business is growing rapidly, outsourcing a bookkeeper can help you scale better. You can always add on a new service as your company changes, and you can do this quickly without having to post a job, interview, background checks, onboard, train, and everything else that can take time.
If you currently have an existing employee who does part-time bookkeeping for you, by outsourcing the responsibilities, you can have this individual change their focus. Perhaps you can give this person tasks that are revenue-generating for the company instead.
Save Time, Money, and Energy With Klean Books
You may ask the question, “How much does a bookkeeper cost?” However, we can tell you that our team of experts will save you time and energy. So, the question instead should be, “How much can I save with a bookkeeper?”
At Klean Books, we maintain your books, taxes, and payroll. We dedicate our business to understanding your business. We will give you on-time, accurate reports so you have time to better focus your efforts.
Worry about growing your business, not bookkeeping! Contact Klean Books today and let us help you.