A good rule of thumb is to hold off on outsourcing your bookkeeping until your company reaches about two million in annual revenue.
From my experience, this seems to be the threshold where hiring help makes sense, and it can be either in-house or out-house.
In your search for a bookkeeper, I would also recommend you don’t have them do administrative work. This isn’t their strong suit. Unless you have elementary accounting, I recommend hiring an admin to do the bookkeeping, but not the other way around.
These are two very different skill sets, and those that are bookkeepers first usually don’t have any interest in administrative tasks.
The Big 3
The main three tasks include payables, receivables, and bank reconciliation. If your bookkeeping needs are fundamental, I recommend an admin person who can handle these.
However, there is an advantage to working with someone whose primary focus is bookkeeping. With this, there’s a certain level of proficiency and expertise.
If your company generates at least two million in revenue annually, I expect to pay at least $500/month for services.
This is assuming you’re working with someone based in the US and a solopreneur.
How Services Are Priced
Bookkeeping services are typically priced based on transaction volume. This considers how many items must be entered into your accounting software monthly.
This could be $2 per item plus $50 to reconcile each bank account and credit card.
Accounts Payable and Accounts Receivable
Both are similarly priced in the same manner as reviewing the number of transactions per month and may cost about $12 per item.
The reasoning behind this is the steps to complete when issuing customer invoices and entering bills.
With receivables, there are also recording payments, deposits, and collections processes that must be done each month.
As for payables, bills must be reviewed and approved, and payments processed to vendors.
If you were to bring someone in and they performed ALL of the steps involved, you might be looking at $1,000 per month to handle the basic.
FAQs
Q1: What are bookkeeping services? A1: Bookkeeping services involve the recording, organizing, and managing financial transactions and data for businesses. These services typically include maintaining general ledgers, reconciling accounts, tracking income and expenses, and preparing financial statements.
Q2: Why should I hire bookkeeping services? A2: Hiring bookkeeping services can offer several benefits to your business. It ensures accurate financial records, allows you to focus on core business activities, helps make informed financial decisions, simplifies tax preparation, and ensures compliance with financial regulations.
Q3: How much should I budget for bookkeeping services? A3: The cost of bookkeeping services can vary depending on various factors, such as the complexity of your business, the volume of transactions, the level of expertise required, and the location of the service provider. However, as a general guideline, small businesses can expect to budget anywhere from $200 to $1,000 monthly for bookkeeping services.
Q4: What factors affect the cost of bookkeeping services? A4: The cost of bookkeeping services can be influenced by factors such as the size and complexity of your business, the number of monthly transactions, the need for specialized expertise (such as industry-specific knowledge or tax expertise), the frequency of financial reporting, and whether an individual freelancer or a professional bookkeeping firm provides the services.
Q5: What services are typically included in bookkeeping packages? A5: The services included in bookkeeping packages can vary depending on the service provider. However, common services often include bank and credit card reconciliations, accounts payable and accounts receivable management, financial statement preparation, payroll processing, tax filing support, and general economic analysis.