What Is the Cost of Hiring a Bookkeeper in the US

Bookkeeping is crucial to help businesses make informed financial decisions, comply with tax obligations, and maintain financial sustainability. It involves systematic recording, organizing, and managing of financial transactions to ensure accurate and up-to-date records. 

While most businesses rely on bookkeeping software for back-office tasks, the expertise of a professional bookkeeper can still be needed to save time, effort, and potentially costly mistakes in managing your own finances.

With doola Bookkeeping, you not only get access to an expert bookkeeper but also automate record-keeping with comprehensive bookkeeping software. 

If you’ve ever considered hiring a bookkeeper, you may have found yourself caught in a whirlwind of questions. “How much should I expect to pay?” and “What services are included in those fees?”

That’s why we’ve put together this comprehensive guide that demystifies bookkeeper fees across America.

Let’s dive into the nitty-gritty of hiring a bookkeeper and uncover what it truly costs — so you can focus on what really matters: growing your business!

Why Is Bookkeeping Crucial for Businesses?

The Internal Revenue Service (IRS) requires all businesses to keep detailed and accurate financial records for at least six years, which is only possible with bookkeeping. Failure to comply may result in penalties or even legal consequences for the business owner.

Apart from being legally mandated, efficient bookkeeping also helps businesses stay organized and track their performance accurately.

Having accurate financial statements gives them confidence in the company’s operations and its ability to generate profits. 

By keeping proper financial records, business owners have access to real-time information on their cash flow, profits, expenses, and overall financial health of the company. This enables them to make sound decisions that will positively impact their bottom line.

Furthermore, bookkeeping allows businesses to stay on top of their tax obligations by ensuring accurate reporting of income and expenses throughout the year instead of scrambling during tax season.

It also minimizes errors or discrepancies that could lead to fines or audits by the IRS.

What Does a Bookkeeper Do?

The role of a bookkeeper is crucial in maintaining financial records and ensuring the smooth operation of a business. They are responsible for accurately recording and organizing all financial transactions, creating reports, and aiding in decision-making. 

1. Recording Financial Transactions

One of the primary responsibilities of a bookkeeper is to record all financial transactions accurately.

This includes tracking income, expenses, and any other monetary transactions that occur within the business.

2. Maintaining Books/Ledger

Bookkeepers are also responsible for maintaining a general ledger, which is essentially a record of all accounts used in the company’s financial transactions.

The general ledger helps businesses keep track of their finances and make informed decisions.

3. Reconciling Accounts

Bookkeepers also reconcile bank statements with internal financial records to ensure accuracy and identify any discrepancies or errors that need to be resolved.

4. Generating Financial Reports

Another important role of a bookkeeper is producing regular financial reports, such as balance sheets, profit and loss statements, cash flow statements, etc., based on accurate data from the recordings and reconciliations mentioned above.

5. Managing Accounts Payable and Receivable

Bookkeepers are responsible for managing accounts payable (money owed by the company) and accounts receivable (money owed to the company).

They keep track of unpaid invoices, ensure timely payments to vendors, and manage overdue payments from clients/customers.

6. Tax Support

In addition to their core financial responsibilities, bookkeepers can also assist in filing tax returns by analyzing taxable income and deductible expenses from financial reports or budget analyses.

Benefits That Outweigh the Costs of Hiring A Bookkeeper

With clear roles and responsibilities established between the bookkeeper and the entrepreneur/business owner, a dedicated bookkeeping solution can prove highly beneficial for businesses of all sizes.

Let’s see how:

1. Reduced Stress Levels

Handling business finances can be overwhelming for entrepreneurs who already have many hats to wear while running their businesses.

Hiring a dedicated bookkeeper can relieve the stress of managing finances and allow business owners to focus on other important tasks.

2. Avoid Costly Errors

Bookkeepers are experienced professionals who have been trained to record and organize financial transactions.

Accounting errors can be costly for a business, so it is crucial to have someone who knows what they are doing to manage your finances.

3. Time-Saving

Outsourcing bookkeeping services frees up valuable time for entrepreneurs, allowing them to focus on growing their business rather than getting bogged down by administrative tasks.

4. Compliance with Regulations

A dedicated bookkeeper ensures that your business is compliant with all accounting regulations and tax requirements, preventing future legal issues.

Types of Bookkeepers and Dedicated Bookkeeping Service Cost

The cost of hiring a bookkeeper in the U.S. will depend on the type of services required and the level of expertise needed.

However, there are several types of bookkeepers that businesses can choose to hire in the United States. 

Each brings something unique to the table, which can impact the cost of their services.

Charges may vary depending on factors such as location, complexity of tasks required, and the bookkeeper’s level of experience.

1) Traditional Bookkeeper

A traditional bookkeeper is someone who handles tasks such as recording transactions and preparing basic financial statements using paper-based systems or spreadsheets. 

The average cost of hiring a traditional bookkeeper in the U.S. ranges from $15 to $30 per hour.

2) Virtual Bookkeeper

Virtual bookkeepers work remotely and use cloud-based accounting software to manage a company’s financial records. 

They offer services such as bank reconciliation, accounts payable/receivable management, and budgeting. 

The average cost of hiring a virtual bookkeeper in the U.S. ranges from $20 to $40 per hour.

3) Certified Public Accountant (CPA)

CPAs are licensed professionals who can provide more specialized services such as tax preparation, financial planning, and audit assistance. 

Due to their advanced qualifications, CPAs typically charge higher rates than traditional or virtual bookkeepers, with an average hourly rate ranging from $150 to $250.

4) Outsourced Accounting Firm

Businesses can also choose to outsource their accounting needs to a third-party firm that has a team of accountants and bookkeepers with varying levels of expertise. 

They work together to handle all aspects of a company’s finances, from bookkeeping to year-end accounting and tax filing. 

The average cost for outsourcing accounting services in the U.S. ranges from $500-$5,000 per month.

Before hiring a bookkeeper, it is crucial to clearly define your business’s needs and budget to determine which type of bookkeeper would be the most suitable for your company.

It is also recommended to compare quotes from different bookkeepers or firms to ensure you are getting value for money.

Hourly Rates vs. Fixed Rates: Bookkeeper Rates in the US

Whether you are a small business owner or managing a large corporation, understanding the different fee structures available is also crucial in making an informed decision about your bookkeeping needs.

Hourly Rates

As the name suggests, hourly rates involve paying your bookkeeper for the actual time they spend working on your accounts. This means that if they work 10 hours in a week, you will pay for 10 hours’ worth of work.

One big advantage of hourly rates is that it provides flexibility for both parties. You only pay for the time spent on your accounts, which can be beneficial if you have varying levels of activity throughout different seasons or months.

On the other hand, hourly rates may also lead to unpredictable costs as there is no guarantee of how much time will be needed to complete tasks each month. 

Fixed Rates

In contrast, fixed rates entail agreeing upon a set amount with your bookkeeper for specific services over a designated period.

For example, you might agree on $1000 per month for monthly financial statement preparation and bank reconciliation services.

The primary advantage of fixed-rate pricing is knowing exactly how much you’ll be spending each month on bookkeeping.

Additionally, if your workload increases unexpectedly, there won’t be any additional costs involved, as everything was agreed upon beforehand.

However, if you have a new addition to your bookkeeping and accounting requirements, your fixed-rate agreement could become more expensive than an hourly rate structure.

Which Should You Choose?

A fixed-rate structure can provide predictability and ease of budgeting for businesses with consistent monthly expenses and straightforward accounting requirements. 

Meanwhile, businesses with varying activity levels or more complex bookkeeping needs may benefit from the flexibility of an hourly rate model.

It is also worth mentioning that some bookkeepers offer a combination of both pricing models to accommodate their clients’ different needs. 

For example, you can agree upon a fixed amount for basic bookkeeping services but decide to pay by the hour for tasks that need to be done once in a while.

Therefore, it’s always recommended to discuss your options with potential bookkeepers before making a decision.

Additional Costs and Hidden Fees to Consider

When considering hiring a bookkeeper, it is important to keep in mind that there may be additional costs and hidden fees beyond the initial payment for their services.

For example, you may need to get specialized software or tools necessary for accurate bookkeeping. 

While some bookkeepers may already have access to these tools, others may charge an additional fee to cover the cost of purchasing them. Examples of these tools include accounting software, payroll management systems like Gusto, and cloud storage services.

Depending on the type of tasks that your bookkeeper will handle, there may also be fees associated with outsourcing certain functions, such as tax preparation or audit assistance.

It’s important to discuss these potential costs upfront so that you are not caught off guard later.

It is also crucial to be aware of any hidden fees that may not be explicitly stated in a contract or initial pricing discussion.

For example, if you need help with budget planning or financial forecasting, this could come at an extra cost.

To avoid surprises down the road, ask about all possible charges before agreeing to hire a particular bookkeeper.

These could include travel expenses, overtime charges for work done during peak periods such as tax season, or fees for catching up on your bookkeeping.

By discussing these thoroughly with your bookkeeper and having a clear understanding of what is included in their pricing structure, you can ensure that there are no surprises or unexpected expenses along the way.

Best Alternatives to Hiring a Dedicated Bookkeeper

While hiring a dedicated bookkeeper can certainly provide many benefits, it is also important to consider alternative options that may better suit your needs and budget. Ultimately, the best alternative will depend on your business’s specific needs and budget constraints. 

• Consider combining DIY bookkeeping software with dedicated bookkeeping services for a cost-effective and efficient approach.

• Use specialised software, like doola Bookkeeping, to automate back-office tasks and manage your books without hiring extra staff.

• Access professional bookkeeping services at a lower cost while keeping control of your finances. You can delegate tasks to experts or get occasional help as needed.

• doola offers flexible pricing with a flat fee based on your business needs, so you only pay for what you use — no commitment to recurring expenses like payroll management.

While some argue that having an in-house employee provides better benefits, this argument does not hold much weight as you consider the long-term benefits and savings you will get with doola.

Keep Your Books Ready for Anything with doola

With doola Bookkeeping, you get everything needed to streamline your back-office operations and manage financial transactions in one box.

Our bookkeepers impart their expertise to keep your books ready for everything while automating mundane tasks for your convenience.

Our team ensures that every transaction is categorized correctly according to its respective account — making it easier for you to keep track of your finances. This involves comparing your bank statements with your recorded transactions to identify any discrepancies. 

By doing so regularly, we ensure that all your accounts are balanced correctly, giving you peace of mind knowing that your financial records are error-free. 

Plus, you get to keep your books up-to-date with all tax regulations and laws — ensuring that all deductions are accounted for accurately when preparing tax returns.

Book a demo today to get top-quality services at competitive prices for all your bookkeeping needs.