How Much Does Bookkeeping Cost?
Because of the complex nature of bookkeeping, 21% of small and medium business (SMB) owners admit to a lack of confidence in their bookkeeping skills. Yet, 64% of business owners handle their own bookkeeping – an alarming paradox.
Lack of knowledge in this area will lead to payroll problems, failure to track cash flows, obscured company financial records, etc.
But news flash: you don’t have to do it all on your own. The solution? Hire a bookkeeper to manage your records and finances. As experts in remote staffing, we can help you find one without breaking the bank.
We’ve done it for over 250 companies worldwide. We're ready to do the same for you!
Before diving into the search for your perfect candidate, take a moment to read through this page. You'll gain a better understanding of what to expect from the role. The costs, the services included, and factors to consider before hiring one.
What is Bookkeeping?
Do you think accounting and bookkeeping are the same? They are not. Both deal with financial records, making it easy to confuse the two. But to be clear, accounting is the process of keeping track of all financial transactions of a business.
Bookkeeping, on the other hand, is an integral part of the accounting process. It documents a business’s financial transactions, making bookkeepers responsible for keeping track of finances and ensuring they are accurate and current. It includes bills, invoices, purchase orders, receipts, etc.
Examples of bookkeeping tasks are:
- Maintaining and updating financial records
- Reconciling accounts and preparing accurate financial reports
- Reviewing invoices and other financial documents
Types of Bookkeeping
There are two types of bookkeeping you need to keep in mind as an SMB owner. These are:
Single-Entry Bookkeeping
Single-entry bookkeeping is the simplest type of bookkeeping where transactions are recorded in a single column. This type of bookkeeping is ideal for small businesses with a low volume of transactions.
Single-entry bookkeeping is easy to learn and manage but not as accurate as double-entry bookkeeping.
Double-Entry Bookkeeping
Double-entry bookkeeping is the most common type of bookkeeping businesses use. It involves recording each transaction in two columns, one for the debit and one for the credit.
For double-entry bookkeeping, these documents are required:
- Journal entries
- General ledgers
- Inventory
- Cashbooks
- Accounts payable and receivable
- Loans
- Payroll
This type of bookkeeping is more accurate than single-entry. It provides a more detailed view of the business's financial health.
Before deciding what type of bookkeeping to go with, review your business needs and the complexity of your financial transactions.
Bookkeeping Costs: Local Hire vs. Remote Hire
Every business owner knows that bookkeeping is essential to your business operations. Consider handing the task to a professional to minimize any potential errors.
Explore the following options:
Local Hire
Hiring a local full-time bookkeeper has advantages. You can meet with them in person, and they can get to know your business better. However, it's essential to consider the costs of hiring a local bookkeeper.
The average cost of hiring a local bookkeeper for a small business is around $42,000 per year. The average hourly rate is around $17.10. This cost can vary depending on your bookkeeping needs and your business location.
In addition to salary, you'll also need to factor in other costs such as benefits, taxes, and office space. You may need to provide them with equipment such as a computer, software, and supplies. These costs can add up quickly, making it expensive to hire a local bookkeeper.
Remote Hire
Hiring a remote bookkeeper is becoming more popular, and for good reason. It can be more cost-effective than hiring locally.
For instance, by hiring through a trusted remote staffing company like MultiplyMii, you can tap the top 5% of Filipino talent while saving 80% on labor costs.
Remote staffing can also lessen your operational costs since you won’t have to provide them with office space or equipment, ultimately saving you money. You also have access to a larger talent pool since you're not limited to hiring someone who lives in your area.
There are also some downsides to hiring a remote bookkeeper. Communication can be challenging, and you may not be able to meet with them in person. However, these are things that you can resolve with the help of remote staff management tools!
6 Factors That Define The Cost Of Bookkeeping Services
Understanding the following factors that affect bookkeeping costs can help you decide where and when to consider hiring a bookkeeper.
Size
The size of your business is one of the most significant factors that define the cost of bookkeeping services.
Generally, the larger your business, the more complex your bookkeeping needs, and the more you can expect to pay for bookkeeping services. A small business with only a few monthly transactions will likely pay less than a larger business with hundreds of monthly transactions.
Location
The cost of living and the average wage rates in your area can affect the cost of bookkeeping services.
For example, bookkeeping services in New York City may be more expensive than in a smaller town in the Midwest. But hiring a remote bookkeeper from the Philippines, where the cost of living is significantly lower, will allow you to save on costs.
Certifications
The certifications and qualifications of the bookkeeper can also affect the cost of bookkeeping services. A bookkeeper with higher qualifications, such as a Certified Public Accountant (CPA), may charge more for their services than a bookkeeper without certifications.
Experience
The experience of the bookkeeper can also impact the cost of bookkeeping services. Bookkeepers with more experience may charge more for their services as they have more knowledge and expertise.
Type of Services
The type of bookkeeping services you need can also affect the cost. Basic bookkeeping services, such as data entry and bank account reconciliation, are generally less expensive than more complex services, such as financial analysis and tax preparation.
Frequency of Service
The frequency of bookkeeping services you require can also impact the cost. Daily or weekly bookkeeping services will generally cost more than monthly or annual services.
What to Look For in a Bookkeeper
Choosing the right bookkeeper is crucial for the financial health of your business. Here are some key qualities and factors (aside from qualification and experience) to consider when looking for one:
Attention to Detail
Bookkeeping requires a high level of accuracy and attention to detail. Look for someone who is meticulous in recording and organizing financial data to avoid errors that could lead to financial discrepancies.
Knowledge of Accounting Software
Proficiency in accounting software is essential. Ensure the bookkeeper is familiar with your business's software, whether it's QuickBooks, Xero, or another platform.
Organizational Skills
Organizational skills are crucial for a bookkeeper. They should be able to manage and maintain orderly financial records, making it easier to track transactions and generate accurate reports.
Communication Skills
Clear communication is essential, especially when discussing financial matters or reports. A good bookkeeper should be able to explain financial information in a way understandable to those without a financial background.
Understanding of Tax Regulations
Tax laws and regulations can be complex and are subject to change. A knowledgeable bookkeeper should understand tax laws relevant to your business and stay updated on financial reporting changes.
Trustworthiness and Confidentiality
Since a bookkeeper has access to sensitive financial information, trust is paramount. Ensure the candidate has a reputation for honesty, integrity, and confidentiality.
Problem-Solving Skills
Financial issues can arise, and a good bookkeeper should be able to identify and resolve problems promptly. Problem-solving skills are crucial for addressing discrepancies and ensuring accurate financial reporting.
References and Reviews
Ask for references from past clients or employers and check online reviews if available. Feedback from others who have worked with the bookkeeper can provide insights into their reliability and professionalism.
Cost-Effective
Consider the cost of the bookkeeper's services in relation to your budget. While finding someone with the right skills is important, the cost should also be reasonable and justifiable for the services provided.
Add a Skilled Bookkeeper to Your Growing Business
Looking to enhance the financial backbone of your growing business?
Consider the invaluable contribution of a skilled bookkeeper! Adding this crucial role to your team ensures meticulous financial management and streamlined operations.
At MultiplyMii, a remote staffing company powered by Filipino talent, we bring over a decade of experience helping businesses like yours find and integrate ideal candidates seamlessly.
Make a strategic move for your business growth and efficiency – add a skilled bookkeeper today with our proven expertise in remote staffing.
