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Cost of Bookkeeping Services for Small Business


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If you just started up your business, there are a few essential questions that you will need answers to in order to move forward successfully. Keeping accurate books is one of the fundamental requirements for operating a business and it is also one of the hardest and most complex aspects of business ownership. It can be of tremendous assistance to you in ensuring the sustained expansion of your company if you are familiar with the various bookkeeping service options and their associated expenses. In this article, we will discuss about the average cost of bookkeeping services for small business.

Evaluating your company’s needs should be your first order of business. In the early phases of almost any small business, a basic degree of bookkeeping is crucial. The majority of your attention at this stage of starting your business will be focused on tasks that are easier to do, such keeping track of transactions and paying bills.

As your company expands, you will need to place a greater emphasis on providing detailed financial reports and adhering to all applicable local, state, and federal rules. In order to do this, a more focused effort and the direct monitoring of a competent professional are required. You will need the assistance of an experienced accountant to assist you in putting together the financial knowledge that will assist you in making sensible decisions regarding your firm.

“To lighten your workload and make things simpler for you to handle, you can outsource small business accounting activities including taxes, payroll, bookkeeping, preparing VAT returns, creating financial reports, and other financial tasks.”

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Before trying to acquire a full-time team to keep your books, you should first decide the kind of obligations you need to have taken care of. A full-time accountant is superior to a basic bookkeeper because the former requires less supervision and offers more comprehensive expertise.

Investing in a great accountant is a move that will positively impact your return on investment (ROI) when growing your business because they can help you increase your company’s profitability by providing insights gained through financial analysis and reporting. You may anticipate that the salary requirements for an experienced accountant will be higher than average.

What Are The Responsibilities of a Bookkeeper?

A bookkeeper for a small business should be familiar with a few fundamental duties. They are responsible for maintaining your financial books, which includes keeping track of both your expenses and your income.

Their primary responsibility is to keep a record of all financial transactions and to compile the relevant information into a general financial report. This report is then provided to company owners so that they can use it to guide their financial decision-making in order to increase a company’s profitability and growth.

Bookkeepers are frequently tasked with a variety of other, less significant responsibilities throughout the workday. These are the following:

  • Journal and data entry
  • Bills payment
  • Inventory management
  • Invoicing
  • Bank statements reconciliation
  • Maintenance of accounts payable and accounts receivable
  • Preparation and organization of key financial documents
  • Collection of past-due payments
  • Payroll processing

Salaries of Bookkeeper and Cost of Outsourcing

It is common practice for newly established companies to handle their own bookkeeping in the beginning stages of their operations, as this is a more cost-effective choice. However, at some point in the future, your company will require more of your time, and you will need to outsource the task of keeping the books to someone else.

The cost of bookkeeping services for small business is highly variable and is determined by a variety of factors, including the following:

  • Experience level of the bookkeeper
  • Type of service (part-time or full-time employee, or an outsourced accounting service)
  • Amount of work involved (required number of hours per day/month)
  • Type of responsibilities involved
  • Company’s ability to support the service

Depending on the amount of work that needs to be done, you have the option of hiring either a full-time bookkeeper or a part-time bookkeeper.  A company that does not conduct a large volume of transactions and is short on cash may hire a part-time bookkeeper. On the other hand, an established business that conducts hundreds or even thousands of transactions each day may need to hire a full-time bookkeeper to keep up with the volume of work.

According to a study, the typical hourly wage of a bookkeeper in the United States is between $14 and $17, which translates to a monthly income of between $2,400 to $3,000. Bookkeepers make an annual compensation that ranges anywhere from $37,000 to $47,000 on average. In addition to the hourly rates, it is possible that state and federal legislation will compel you to pay for the employee’s perks such as health insurance and vacation time. If this occurs, you will be required to pay for all of the employee’s compensation. When you factor in all of these benefits, the annual cost of employing an in-house bookkeeper becomes much more expensive.

Accounting services at a higher level are often carried out by a Controller or CFO, and the average cost of accounting services for small businesses can range anywhere from $100 to $400 per hour. This is a wide range, but it is typically explained by the quality of services offered, the number of years of expertise the provider has, and the local market. For example, the cost of services in major cities like New York may be significantly higher than the cost of services in smaller markets.

Many businesses have chosen to outsource their bookkeeping services to an external agency as a result of the costs associated with doing bookkeeping tasks in-house. The rates begin at roughly $400 per month on average and go higher depending on the number of services required and the level of intricacy involved. These fees are significantly lower than those of in-house bookkeepers.

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Cost of Bookkeeping Services for Small Business

Due to the intense rivalry in the industry, the cost of bookkeeping services for small business can differ significantly from one another. To get the most affordable pricing, it is in your best advantage to shop around for a service provider who is open to modifying the rates in accordance with your unique needs. In this regard, the many pricing options that are available to you in the industry are as follows:

Hourly fees

This concept, in which you only pay for the resources you actually use, is currently quite popular among owners of small businesses. If you choose this payment method, you will be responsible for paying an amount that is significantly less than what you would have to pay if you choose to make monthly installments instead.

The disadvantage of going with this choice is that there is no assurance that the allotted amount of time was spent working on each individual assignment. Bookkeeping services are often billed on an hourly basis at a charge that ranges between $20 and $50 per hour.

Fixed fee pricing

In this scenario, the whole cost of the bookkeeping service is billed on a monthly basis at a predetermined rate. In this scenario, you won’t be obliged to pay for each and every phone call, fax, or email that is transmitted between the two of you.

This kind of service is ideal for businesses that prefer to pay a set sum each month because it makes budgeting much simpler. If you simply need a minimal amount of bookkeeping, you could find that a more flexible method better suits your needs.

There is also the option of using a mixture of the systems described above. Regarding this matter, you will be charged a flat monthly cost that ranges from $100 to $150 each month, in addition to $30 to $40 per hour for the time spent working on your books.

Should you hire an accountant for your small business?

The answer is “Yes” in most cases. If you hire the appropriate accountant, they will not only provide genuine value to your company, but they will also often pay for themselves through the cost reductions they uncover or the suggestions they assist you put into action that can lead to increased productivity and profitability.

The other important advantage of employing an accountant is that it enables a business owner to concentrate on running their company instead of worrying about their financial matters. If you don’t hire an accountant for your business, you might believe you’re cutting costs, but the reality is that you’re probably doing more harm than good to the company in the long term. There is a penalty in terms of lost opportunities connected with taking the route of doing things oneself. Performing your own bookkeeping may not be the most efficient use of your time, even if you are equipped with the necessary skillset.

You should also keep in mind that it is not necessary to employ an accountant on a full-time basis in order to reap the benefits of this strategy. The use of an outsourced accounting firm by businesses frequently serves as a more financially prudent alternative to the employment of an accountant full time. Your time will be freed up, allowing you to concentrate on expanding your company, if you hire a reliable accounting outsourcing service. This service will help you acquire better and more timely information, while keeping the cost of bookkeeping services for small business at a reasonable level. There is a rationale behind why outsourcing has attained such widespread acceptance among companies of both small and medium size.

Which bookkeeping option is best?

Any small business owner is in charge of determining when it is suitable to hire someone to take over bookkeeping duties. If you run a regular business, the majority of your financial duties can be outsourced until you have more than 30 employees or your annual revenue hits $50,000. It might be necessary to hire full-time accounting services if your business has expanded beyond this point. These services will make sure that your accountant is kept busy and that your business runs well.

Achieving a degree of financial calm that enables them to sleep at night should be the top priority for anyone running a small business. Your business will thrive and continue to produce profits while limiting any potential losses if you choose a platform for your company’s bookkeeping that ensures your operations run properly. While your business is still in its infancy, trust your instincts and don’t be afraid to experiment with some innovative accounting outsourcing programs.

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