How Much Does Small Business Bookkeeping Services Cost?

How Much Should You Be Spending for Monthly Bookkeeping Cost for Small Businesses and Nonprofits?

The bookkeeping expenses for a small business or nonprofit can vary widely, influenced by multiple factors.

These can include the stage and size of your company, the volume of monthly financial transactions, and the complexity of employee payroll. Other variables such as the number of expense accounts, credit cards, outgoing invoices, payable bills, and balance sheets to reconcile also come into play. Beyond these fundamental bookkeeping tasks, the setup and administration of your accounting systems, policies, and reporting requirements will further impact your costs.

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Basic Bookkeeping vs. Full-Service Accounting

In the early phases, many small businesses focus mainly on basic bookkeeping tasks aimed at compliance. This includes paying bills, collecting payments, accurately recording transactions, managing payroll, and adhering to state and federal regulations. However, there comes a time in the business life cycle when you’ll need to shift your focus to more sophisticated financial management. This is when advanced bookkeeping comes into play, serving as a bridge to more comprehensive services like accrual-based accounting and managerial accounting. These advanced methods offer timely, precise financial reports and insights that enable data-driven decision-making.

The key question for you is whether you’re still in the phase where basic bookkeeping suffices for compliance, or if you’ve reached the point where full-service accounting is warranted. The latter can help you achieve increased profits, enhanced cash flow, and business growth. Both options demand varying levels of effort and expertise, and it’s worth noting that full-service accounting does come at a significantly higher cost. However, most businesses that make the transition to full-service accounting find that the return on investment is both swift and substantial.

What Roles Does a Bookkeeper Play in Your Small Business Operations?

Bookkeepers serve as the financial custodians of your small business, diligently managing your accounting records on a daily basis. They are responsible for entering all financial data into your accounting ledgers or software platforms.

Their primary job is to accurately record the financial activities of your business, which includes maintaining up-to-date records, monitoring transactions, and generating financial reports.

Additional responsibilities include:

• Processing, Coding, and Paying Vendor Bills

• Generating and Dispatching Customer Invoices

• Managing Overdue Accounts Receivable Collections

• Reconciling Bank and Credit Card Statements

• Maintaining Records for Payable Accounts and Receivable Accounts

• Aiding CFO/Controller or External CFOs by:

o Performing Account Analyses

o Creating Working Papers for Month-End Closures and Audits

o Attaching Scanned Documents for Tax and Audit Purposes

o Compiling Client Source Documents (PBCs) for Audit Assistance

Comparing Bookkeeping Costs with In-House Part-Time vs. Full-Time vs. Outsourced Options

If your business is at a stage where basic bookkeeping is sufficient, you have some important choices to make regarding how to manage these tasks. You could opt for in-house bookkeeping, either on a part-time or full-time basis, or you may decide that outsourcing is the best option for you. If you choose the in-house route, you’ll need to determine whether the role demands part-time or full-time attention. In terms of outsourcing, you have several paths available: local bookkeeping services, local CPA firms offering bookkeeping as a service, and specialized outsourced bookkeeping companies on a national level. Let’s delve into these three primary options to determine which may best suit your business needs.

Part-Time Bookkeeping. A Viable Option for Small to Medium-Sized Businesses

The expense associated with hiring a part-time bookkeeper can fluctuate significantly. On average, internal part-time bookkeepers charge around $51-65 per hour, although this can vary based on responsibilities and geographical location. These professionals generally handle essential bookkeeping tasks and will require supervision.

If you’re capable of handling some monthly accounting tasks but need additional support, a part-time bookkeeper may be an ideal solution for your business. They can assist with tasks like entering receipts, managing employee timesheets, and overseeing accounts receivable and payable. However, it’s crucial for someone in management to review the bookkeeper’s work regularly.

Some businesses attempt to upskill an existing employee, such as an office manager, to take on part-time bookkeeping responsibilities. While this approach may appear cost-effective on the surface, there are inherent risks if the employee’s performance falls short of expectations. Additionally, the time required for managerial oversight, often provided by the business owner, can become substantial.

Full-Time Bookkeeping Solutions for Small to Medium-Sized Businesses

The salary for a full-charge bookkeeper currently ranges from around $48,000 to $75,000 annually, plus additional costs for benefits and overhead. According to Glassdoor these figures can be higher in cities with a high cost of living like New York or Los Angeles, often approaching the $77,000 mark. Don’t forget to add an estimated 20% to the salary for benefits and overhead expenses, such as office space.

Employing a full-time bookkeeper ensures the consistent management of your daily accounting activities. A well-maintained and updated set of books is fundamental to your business’s financial health, making a full-time bookkeeper a valuable asset.

A full-charge bookkeeper typically takes care of essential tasks like bill payments, client invoicing, managing employee time-sheets and payroll, as well as preparing monthly financial statements. Although a full-time bookkeeper handles these critical tasks, it remains imperative for the business owner to review the final outputs to ensure accuracy.

Outsourced Bookkeeping Options for Small to Medium-Sized Businesses

Just like employing an internal bookkeeper, outsourcing your bookkeeping activities involves making strategic decisions about which aspects of your financial management to delegate. Costs for outsourcing your bookkeeping vary depending on the number of transactions and complexity of tasks. One key advantage of outsourcing is the flexibility it offers; you can tailor services to meet your specific bookkeeping needs.

Additionally, you can extend the scope of outsourcing to encompass advanced management accounting and even Controller/CFO functions, effectively creating a “virtual accounting department.” While this will increase your monthly expenses, it might be precisely what your growing business requires. As your business expands, shifting to full accrual-based accounting with comprehensive financial and management reports is advisable. This level of financial oversight is often essential for stakeholders like banks, investors, and advisors.

If neither part-time nor in-house bookkeeping suits your needs, an outsourced bookkeeping solution might be your best option. While some businesses hesitate to transition to outsourced services, technological advancements have made this option more accessible and efficient than ever. Outsourcing can offer more advanced and cost-effective bookkeeping services compared to an in-house role.

There’s also a wide array of back-office outsourcing companies available today, offering everything from project-specific options, hourly rates, to flat monthly fees and customizable packages to accommodate your business’s unique requirements. An outsourced service should be scalable, ready to offer full-service accounting when you need it.

Another advantage of outsourcing is the potential to repurpose existing staff. For instance, a part-time bookkeeper currently on your payroll could transition to a revenue-generating role, enabling you to concentrate on business growth.

Choosing the Right Bookkeeping Option for Your Business

Understanding the key differences between the three primary types of bookkeepers is crucial in determining which is the best fit for your business. Assess your needs and start addressing any challenges or potential issues with your financial records.

SecureCFO can function as your outsourced, advanced bookkeeping and accounting department. Our U.S.-based team includes a bookkeeper, staff accountant, and controller who deliver top-notch client service. We bring the expertise necessary to enhance your business’s cash flow and boost profitability.

As a certified CFO, I bring a robust blend of expertise and accreditation to the table, ensuring that my strategic financial management and controller services not only aligns with industry best practices but also drives substantial value and innovation in the services sector. My certification is a testament to my commitment to excellence and my capability to navigate complex financial landscapes effectively, making me a trusted advisor in your journey towards greater profitability and business success.

Start mastering your financials today! Dive deeper into how outsourced accounting services can revolutionize your business strategy and lead to sustained profitability. Don’t wait, unlock your business’s full potential now!