What Is the Cost of Bookkeeping Services for Small Businesses?

For many entrepreneurs juggling countless responsibilities, bookkeeping often becomes an overwhelming task that distracts them from what they do best: running their businesses. 

But fear not! doola Bookkeeping, our comprehensive solution, for back-office and finance management can provide peace of mind and keep your financials on track. 

In this blog, we’ll delve into the essential question every small business owner faces: “What is the cost of bookkeeping services?” 

Beyond just numbers, we’ll explore how investing in professional help could ultimately save you time and money while setting the stage for sustainable growth. 

Ready to uncover how much these vital services really cost? Let’s dive in!

Factors Influencing the Cost of Bookkeeping Services

The cost of bookkeeping services can vary significantly depending on several factors.

So first, you must to understand these factors in order to assess and budget for this business expense.

To get a better grasp of what to expect, let’s dive into these factors and explore how they influence the pricing of bookkeeping services.

1. Business Size and Complexity

The size and complexity of a business are one of the primary drivers of bookkeeping costs. A small business with only a handful of transactions per month will require handful of services. 

So, they will likely have lower bookkeeping fees than a medium-sized corporation with multiple departments and high volumes of transactions.

Larger businesses with more extensive financial records and complex transactions tend to pay more for bookkeeping due to the increased workload.

2. Nature and Complexity of Services

The type of services you require play a pivotal role in determining the cost. For example, if you need a dedicated bookkeeper and tax filing assistance, you have to pay up extra.

On the other hand, basic bookkeeping, such as data entry and reconciliation, are generally less expensive than financial analysis, forecasting, and advisory roles.

3. Scope of Services

The frequency at which bookkeeping tasks are needed can also impact the overall cost. So you must evaluate your workload helps match the right frequency and hours to your budget.

Defining the exact scope is key since some businesses may only need quarterly or annual bookkeeping services, while others may require weekly or monthly updates.

4. Types of Services Needed

The types of bookkeeping services required by a business can also affect the cost. Some businesses only need the basics while others require monthly closings, reporting and analyzing financials for insights. 

Basic services such as data entry and bank reconciliation will be less expensive than more complex tasks like financial statement preparation or tax compliance.

5. Software Used

Many bookkeeping services comes with specialized bookkeeping software to automated and streamline financial record-keeping. 

So, you must choose a simple and intuitive bookkeeping software that is easy to learn and navigate, so you won’t end up losing precious time and money by changing software later on.

6. Pricing Structure

Bookkeeping service providers often charge including hourly rates, fixed fees, or a combination of both. 

Hourly rates are suitable for short-term work or freelancers, while fixed fees are often preferred for ongoing, routine bookkeeping tasks. 

However, it’s essential to select a bookkeeping service provider with a flexible pricing structure that aligns with your specific needs.

7. Issues with Previous Records

If you’re switching from one bookkeeper to another or have not organized your financial records for a while, it could increase the cost of bookkeeping. 

The bookkeeper may need to spend more time sorting and organizing your records to catch up before they can begin their usual tasks, which often cost extra. 

How Bookkeeping Can Help Your Small Business

Many small businesses overlook the importance of bookkeeping or consider it as an unnecessary expense and miss out on numerous benefits and help your small business thrive.

One of the primary ways bookkeeping can help your small business is by providing accurate and up-to-date financial information. 

Bookkeepers ensure that all financial transactions are accurately recorded and categorized, allowing you to have a clear understanding of your income, expenses, profits, and losses.

Moreover, maintaining thorough books can also save your business from potential legal consequences. 

A bookkeeper can help ensure that your accounts comply with these laws and regulations, saving you from any penalties or legal issues.

Additionally, keeping updated records also makes it easier for businesses to access funding when needed. 

Since lenders often require detailed financial statements, properly maintained books make this process smooth by providing them with the necessary information they need quickly.

Types of Bookkeeping Services and Their Average Costs 

When it comes to bookkeeping services for small businesses, there are no shortage of options available. 

Each type of service may have its unique benefits and costs, so it’s essential to understand the differences before deciding which one is right for your business. 

Let’s explore the four most common types of bookkeeping services:

1. In-house Bookkeeping

In-house bookkeeping refers to hiring a full-time or part-time employee to handle all of your business’s financial records and transactions. 

This option can be beneficial for businesses with a high volume of transactions or complex financial needs. 

The average cost for in-house bookkeeping can range from $3,000 and $5,000 per month, including salary and benefits

However, the cost can vary depending on the employee’s experience, location, and the type of services needed. 

For example, a part-time bookkeeper might cost around $21–$23 per hour, depending on the job description and location.

2. Freelance Bookkeepers

Freelance bookkeepers are self-employed professionals who offer their services on an as-needed basis. 

They typically work remotely and may charge an hourly or project-based rate.

The average cost for freelance bookkeeping ranges from $30 to $60 per hour.

3. Bookkeeping Firms

Bookkeeping firms are companies that specialize in providing comprehensive financial record-keeping services to businesses of all sizes. 

These firms typically have a team of experienced professionals and offer a wide range of services, such as payroll processing, tax preparation, and budget analysis. 

The average cost for hiring a bookkeeping firm varies depending on the size and complexity of your business’s finances but can range from $800-$5000 per month.

The biggest benefit of hiring doola Bookkeeping is time & cost savings. We take care of every aspect from data entry, to daily reconciliations, to quarterly reports.

Our highly trained staff handles everything while you focus on running your business.

Check out our affordable pricing plans starting from $25 per month for the bookkeeping software.

4. Online Bookkeeping Services

With the rise of technology, online bookkeeping services have become a popular option for small businesses. 

These services use cloud-based software to manage financial records and transactions. 

The average cost for online bookkeeping services ranges from $300-$800 per month, depending on the level of service and support needed.

With doola Bookkeeping offering affordable packages and efficient digital solutions, it may be a great option for small business owners looking to streamline their financial processes. 

How Much Should a Small Business Expect to Pay for Bookkeeping Services

The reality is that there is no fixed price for bookkeeping services, as the cost can vary based on several factors. 

There is not a one-size-fits-all solution, so the price will be unique to each business based on their individual needs and the scope of services being provided.

So first, you must understand the scope of services required to ensure you get an accurate quote and avoid any unexpected costs in the long run.

However, you should expect to pay anywhere from $200 to $800 per month, which is just a rough estimate and can vary widely depending on your specific business needs.

The exact amount may vary depending on whether you choose to hire an in-house bookkeeper, outsource to a professional bookkeeping firm, or use automated software solutions for DIY bookkeeping. 

For example, entry-level pricing plan of doola Bookkeeping focus on automating core services such as transaction processing and basic reporting, which start as low as $25 per month for the bookkeeping software.

We also provide mid-range options that includes additional capabilities, such as dedicated bookkeeper and tax filing assistance.

We also offer a full-service packages, All-in-One Accounting, to handle complex business requirements, such as advanced reporting, forecasting, tax services, and financial analytics, at $2,999 per year.

How to Choose the Right Bookkeeping Service for Your Budget

1. Assess Your Business Needs

Do you have a large volume of financial transactions or require specialized reporting? Are you comfortable using online software, or do you prefer in-person services? 

Knowing what your business requires will help narrow down your options and save you from paying for unnecessary services.

2. Consider Outsourcing vs In-House Services

Many small businesses opt for outsourcing their bookkeeping needs to save costs on hiring in-house staff. However, it’s crucial to weigh both options carefully. 

While outsourcing may seem like a more affordable option at first glance, it may end up costing more if additional services are required or if any errors need correcting.

3. Compare Prices From Different Providers

Shop around and obtain quotes from several bookkeeping service providers before making a decision. 

Keep in mind that cheap does not always mean better, so make sure to compare the prices against the level of service offered by each provider.

4. Look Into Service Packages

Some bookkeeping service providers offer tiered pricing plans with varying levels of support and features. 

Consider which package best fits your business needs and budget while avoiding overpaying for unnecessary services.

5. Ask About Hidden Fees

When obtaining quotes from different providers, inquire about any hidden fees not mentioned upfront. These could include charges for additional reports or unexpected tax preparation costs.

6. Estimate Year-End Tax Filing Costs

Bookkeepers often charge extra fees during tax season when they are required to file taxes on your behalf. Make sure to ask about these costs upfront and factor them into your budget.

Remember that the cheapest option may not always be the best fit, so weigh all factors carefully before making a decision. 

If you want a solution that outperform all competition on all factors,  cost, customer support, expertise, and accuracy of services provided, doola Bookkeeping is the top choice in your budget.

Basic Bookkeeping vs. All-In-One Accounting

Basic bookkeeping and all-in-one accounting involve tracking income and expenses, there are key differences that business owners should be aware of when deciding which approach is best for their company’s needs.

Basic bookkeeping typically includes tasks such as data entry, creating invoices, reconciling bank statements, and preparing basic financial statements like profit and loss statements or balance sheets.

On the other hand, all-in-one accounting services offer a more comprehensive approach to managing your finances. 

This service includes not only basic bookkeeping tasks but also budgeting, forecasting, tax preparation, and financial analysis. 

It provides a holistic view of your business’s finances and helps identify areas for growth and improvement.

doola Bookkeeping has an All-In-One Accounting plan that includes everything you need to manage your small business’s finances efficiently. 

From a comprehensive bookkeeping software that automate your bank feeds and reconciliation to dedicated bookkeepers and accountants handling your monthly statements and year-end tax preparations, we do it all.

They will also handle filing taxes on schedule to avoid penalties or interest charges.

Plus, our will work closely with you throughout the year to make sure that you are taking advantage of all possible deductions eligible for your small business. 

So, you can have peace of mind knowing that your business’s finances are being taken care of by experts while you focus on growing your business.

Pros and Cons of Outsourcing Bookkeeping for a Small Business

Pros:

✔️ Cost Saving

By hiring an external accounting firm or freelancer, small businesses can avoid the costs associated with hiring a full-time employe, such as salary, benefits, and training expenses.

✔️ Time Efficiency

Outsourcing bookkeeping frees up valuable time for small business owners to focus on core business functions rather than spending hours managing financial records. 

✔️ Expertise

Bookkeeping firms or freelancers specialize in providing accounting services and have extensive knowledge and experience in their field. 

Outsourcing allows small businesses to benefit from this expertise without having to invest in costly training or software.

✔️ Scalability

With outsourced bookkeeping services, you have the flexibility to scale up or down depending on your business requirements without having to worry about additional costs or recruitment processes.

Cons:

⚠️ Lack of Control

When you outsource your bookkeeping tasks, you are giving up control over how your financial records are managed and maintained. 

This can be unsettling for some business owners who prefer to have complete control over all aspects of their operations.

⚠️ Communication Challenges

Working with an external provider means that there may be communication challenges due to lack of customer support channels and dedicated account managers. 

This could delay feedback or result in misunderstandings, which may impact the accuracy of your financial records.

⚠️ Unfamiliarity with Business Processes

Outsourced providers may not be familiar with specific details about your business operations, which could result in errors when managing your accounts. 

So, you need a partner that takes time to understand your business processes, challenges, and expectations to mitigate any potential risks.

Get Your Small Business Finances Straight with doola Bookkeeping

Managing finances can give nightmares to any business owner who may not have the expertise or resources to handle it effectively. 

This is where doola Bookkeeping comes in – as a comprehensive bookkeeping solution designed specifically for small businesses.

Our team of experienced bookkeepers has extensive knowledge in accounting and finance, making us well-equipped to assist small businesses in getting their finances straight.

With the services we offer, you can rest assured that your financial management needs will be taken care of without breaking the bank. 

Whether you need assistance with setting up bookkeeping system to automate mundane tasks or want ongoing expert support for your complex operations – we have got you covered.

Book a demo with us today to learn more about how we can help you get your finances straight.

FAQs

What is the difference between bookkeeping and accounting, and does it affect the cost?

The cost of bookkeeping services is usually lower than the cost of accounting services due to the difference in complexity and expertise required.

However, some small business owners may hire a bookkeeper who can also provide basic accounting services at a slightly higher cost.

Are online bookkeeping services cheaper than hiring an in-house bookkeeper?

Online bookkeeping services may be more cost-effective for businesses on a tight budget.

However, in-house bookkeepers may offer personalized services and better communication with the business owner, which can sometimes justify the higher cost.

Is it possible to hire a part-time bookkeeper, and how much would that cost?

Yes, it is possible to hire a part-time bookkeeper. The cost would typically be lower than hiring a full-time bookkeeper, but the hourly rate may be higher.

The total cost would depend on the number of hours worked and the experience of the bookkeeper.

Do bookkeeping fees vary depending on the industry?

Yes, bookkeeping fees may vary depending on the industry.

Some industries may have more complex financial processes and require specialized knowledge from the bookkeeper, which can affect the cost of bookkeeping services.

Can bookkeeping fees be deducted as a business expense for tax purposes?

Yes, bookkeeping fees can be deducted as a business expense for tax purposes.

However, it is important to consult with a tax professional to determine if the bookkeeping fees are eligible for deduction in your specific situation.