How much does a bookkeeper cost?

There are many aspects of being a business owner that drive success. 

Sales, production, and employee retention are all extremely important. And while it may not be the most glamorous topic, bookkeeping also plays a part.

But who wants the task of sifting through receipts and organizing statements when there’s a whole slew of business operations to attend to? It may be time for you to make the executive decision of hiring a bookkeeper to take the reins.

And now that you know the answer to the question “How much does a bookkeeper cost?” you may wonder what exactly a bookkeeper does and the different types of bookkeeping services you can pay for.

To learn more about the cost of bookkeeping, follow this small business guide.

What does a bookkeeper do?

A bookkeeper is responsible for recording transactions and keeping track of a business’s finances. Some common responsibilities of a bookkeeper include:

• Posting journal entries
• Assisting with payroll
• Reconciling bank accounts
• Reviewing the general ledger
• Paying client’s bills

On top of this, it is also a bookkeeper’s job to keep everything organized. That way, when it is time to file your small business taxes, you can easily access all the data you need. 

Additionally, a bookkeeper may work with an accountant, who is responsible for more advanced tasks such as assessing the health of a business or generating financial statements.

Types of bookkeeping: Basic vs. full-service accounting

There are two main types of bookkeeping to be aware of when deciding what type of bookkeeper to hire. These include basic and full-service bookkeeping, where the decision largely depends on your business goals and needs.

Basic bookkeeping

Basic bookkeeping is exactly what you would expect it to be: the basics. This includes things like payroll, employment taxes, and tracking expenses.

• Time and service: While the length of time basic bookkeeping requires can vary based on the size and complexity of your business, it generally requires less time than full-service bookkeeping. Bookkeepers are often only required to maintain records and manage financial transactions.
• Average bookkeeper cost differences: Due to the additional education and experience required to be a full-service accountant, the average cost of a bookkeeper is lower than a full-service accountant.

Full-service bookkeeping (and accounting)

Full-service bookkeeping is everything you’d find in basic bookkeeping with additional accounting services and financial statement analysis.

• Time and service: Accounting requires a much higher level of time and service simply because accountants are responsible for managing the books as well as interpreting and analyzing the financial statements to report a holistic view of the company’s financial health.
• Average cost differences: Due to extensive education and certification requirements, the average salary for an accountant will exceed that of a bookkeeper. 

Whether you opt for basic bookkeeping or full-service bookkeeping and accounting, either option can help you be better prepared come tax season.

Costs for bookkeepers vs. accountants vs. CPAs

Accountants maintain a wide range of skill sets, including managing spending and budgets, taxes, and analysis of financial statements. To be exceptional at these tasks, accountants must complete years of training and earn special certifications, which their salaries reflect. Depending on the type of accountant, years of experience, and certifications, you could be paying a pretty penny.

For example, a Certified Public Accountant (CPA) is paid more than a traditional accountant due to having to meet higher education and licensing requirements depending on their state.

On the other hand, bookkeepers are the more affordable option. They require the least amount of education and focus on recording transactions, whereas an accountant or CPA spends their time analyzing financial data and generating financial statements.

While these exact figures can change over time, the cost comparisons of covering your bookkeeping and accounting needs can vary greatly depending on the type of individual you hire.

Signs you’re ready to hire a bookkeeper

As with any new hire, you’ll need a careful assessment to warrant bringing in additional hands to help run your small business. Below are some signs to help point you toward the right choice: 

• Significant growth: If your business is booming, it also means your records are growing and likely getting left in the dust when it comes to updates. Hiring a bookkeeper could help keep you on track during this business growth phase.
• Mistakes in the books: Finding mistakes in the books are common, but if they’re not caught early, they can easily sneak up on you and cause major malfunctions during reconciliation. Having someone dedicated to catching and correcting accounting errors could make all the difference.
• Time constraints: Time is arguably the most precious element we have, and as a small business owner, it is a fleeting resource. Calling on a bookkeeper to take on the task of record management could give you back countless hours that are desperately needed to run your business effectively.

If any of these warning signs resonate with you, it may be time to hire a bookkeeper. But before you do, let’s look at some questions you should ask yourself before making the decision.

4 questions to ask yourself before hiring a bookkeeper

As you’ve seen, there are several solutions to this bookkeeping dilemma, but they also come with additional questions you should keep in mind before making a decision. To help you on this decision-making journey, we’ve gathered four questions to ask yourself before hiring a bookkeeper.

1. How will your business size factor in?

There is no magic number to know when you’re ready to take on a bookkeeper for additional support. Instead, it’s more of a holistic view of time, resources, and the ability to become more efficient that will make or break your decision. Do you need help managing your books? If the answer is yes, then size shouldn’t be your deciding factor.

However, be aware that business size does affect a bookkeeper’s workload and may lead to you paying more or even for a second bookkeeper to alleviate some of that burden.

2. Which tasks do you need help with? 

Bookkeepers have a wide variety of skills, so one of the factors you need to consider is what you need them for. If it’s basic client billing and documentation, a good solution may be accounting software that can assist you if you still want to play a more hands-on role.

But if it’s more complex, like building out your financial outlook, you might be better off with hiring an accountant.

3. Is contracted services or in-house better?

Depending on how much work you have and how long you need services, a contracted worker might be a better option. For example, if you’re in a sector that finds business heavier in the fourth quarter than any other time of the year (we’re talking to you, holiday bloggers), contracting may be more cost-effective than keeping someone in-house year-round.

Bringing someone on as an in-house full-time employee requires extra costs on your end, such as benefits and health care, whereas contractors are not entitled to these perks. You may not know how long you’ll need someone, but comparing the monthly bookkeeping cost of a contractor versus an in-house employee is the best way to see this angle side by side. 

4. Does location matter?

Where you live could cost you more. Bookkeeper salaries vary state by state (see our chart below), and depending on where you live, you could be paying a large difference in one place versus another. A better option would be to use a service like QuickBooks Live virtual bookkeeping, where your bookkeeper costs would not be affected by where you live but rather how much your business expenses are per month.

Bookkeeper salary and hourly cost by state

As great as it is to talk about potential bookkeeping costs and get estimates, we know that seeing an actual average for your state can yield excellent value for you as a business owner. Please see the chart below with data pulled directly from the US Bureau of Labor Statistics 2022 data to learn more about the average salary and hourly rate for bookkeeping.

Streamline your accounting and save time

Now that you know the answer to the question “How much does a bookkeeper cost?,” it’s time to decide if hiring a bookkeeper is the best route for your business. You may also consider using online bookkeeping services and accounting software to save time and money, all while meeting your bookkeeping needs.