How much does it cost to hire a bookkeeper? Full time vs Outsourced?
Bookkeeping tasks may seem minor, often dismissed as simple chores like inputting receipts or tracking employee timesheets. However, many small businesses make the mistake of assigning these tasks to an existing employee or office manager, overlooking the long-term implications. While this approach may appear cost-effective initially, the expenses associated with DIY bookkeeping can accumulate significantly.
Cost of Errors
An untrained individual managing bookkeeping is prone to errors, which can lead to costly repercussions in both time and resources. Professional bookkeepers possess established processes aimed at promoting accuracy and efficiency, minimizing the likelihood of mistakes. Although no one is entirely immune to errors, a skilled bookkeeper will generally provide a more reliable solution.
Opportunity Costs
DIY bookkeeping can divert valuable time away from essential growth activities. If business owners spend their days buried in financial records instead of focusing on innovation, strategy, and scaling their business, they could be missing out on important opportunities. It may be time to consider hiring a bookkeeper to free up this critical time.
Financial Costs
Professional bookkeepers not only ensure that your books are up to date but also bring a wealth of knowledge about tax deductions and write-offs that can help lower overall business costs. Their expertise can enhance profitability while ensuring compliance with financial regulations, ultimately saving you money in the long run.
How Much Does It Cost to Hire A Bookkeeper?
According to recent reports, the median salary for a full-time bookkeeper is around $42,488 annually. This figure does not account for the additional expenses associated with recruiting or benefits, which can further increase the total cost. Additionally, the average hourly rate for a bookkeeper in the U.S. is approximately $20.
However, small businesses can mitigate these operating costs by opting for a fractional or outsourced bookkeeper. For a seasoned and qualified bookkeeping professional charging between $50 and $70 per hour, the total expense for 10 to 20 hours of service per month amounts to considerably less than hiring a full-time employee. This model also circumvents the risk of having an underutilized full-time hire when the workload does not justify maintaining a permanent position.
In conclusion, while handling bookkeeping internally might seem cost-efficient at first, the potential pitfalls associated with errors, opportunity costs, and missed financial advantages highlight the value of hiring a professional. Investing in skilled bookkeeping services could prove to be one of the best decisions for scaling and sustaining your business.
What to Factor in the Cost of a Bookkeeper
When considering hiring a bookkeeper, it's essential to evaluate various factors that influence their fees. Here are the key elements to keep in mind:
Geographic Location: The cost of bookkeeping services can vary significantly depending on the region. Areas with higher living costs, such as New York, will generally have higher rates compared to regions like Mississippi, where the cost of living is lower.
Level of Education: Bookkeepers with formal education, such as a degree in accounting or finance, often command higher rates than those without. Their knowledge and skills typically allow them to provide more comprehensive services.
Certifications: Specialized certifications can enhance a bookkeeper's credentials and increase their earning potential. Certifications from recognized organizations like the American Institute of Professional Bookkeepers (AIPB) or the National Association of Certified Public Bookkeepers (NACPB) signal higher expertise and reliability.
Years of Experience: More experienced bookkeepers typically charge higher fees due to their extensive knowledge and proven track record. In contrast, those new to the field may offer lower rates as they build their client base.
Frequency of Service: The charge may also depend on how frequently you require bookkeeping services. Regular engagements often lead to discounted rates compared to sporadic assistance. Bookkeepers value long-term relationships and may adjust their fees to accommodate ongoing clients.
Understanding these factors can help you evaluate the potential costs associated with hiring a bookkeeper and ensure you select one that aligns with your business needs.
The Cost Benefits of Outsourcing a Bookkeeper
Outsourcing bookkeeping services has become an increasingly popular choice for small businesses. By leveraging the expertise of professional bookkeepers, small business owners can manage their finances more effectively while focusing on core operations. Here are some compelling cost benefits of outsourcing bookkeeping:
1. Flexibility and Scalability
Outsourced bookkeeping services allow small businesses to pay only for what they need. This flexibility means you can adjust the level of support as your business grows or changes. You aren't locked into a full-time person whose time may not always be fully utilized.
2. Access to Expertise
When you hire an outsourced bookkeeper, you gain access to a broader skill set that might not be available in-house. You can select professionals with specific expertise that aligns with your business needs, often sourcing talent from a wider geographical area to find the best fit.
3. Cost Savings
Staffing a full-time bookkeeper involves more than just salary; you'll also incur costs for benefits, training, and onboarding. Outsourcing eliminates these expenses, allowing you to use your budget more efficiently.
4. Immediate Implementation
One significant advantage of outsourcing is the speed at which a freelancer can begin working. Unlike bringing a new employee onboard, outsourced bookkeepers typically come equipped with the necessary skills and experience to start immediately, reducing downtime.
5. Increased Focus on Revenue Generation
By outsourcing your bookkeeping tasks, you can free up yourself and your employees to concentrate on revenue-generating activities. This shift can lead to increased sales, customer engagement, and overall business growth that may outweigh the costs of hiring a bookkeeper.
6. Enhanced Financial Reporting
Outsourced bookkeepers can provide timely financial reports, such as cash flow statements and balance sheets, that help you make informed decisions. Access to regular, clear financial data can lead to smarter, quicker business decisions.
7. Mitigated Risk of Errors
Professional bookkeepers help reduce the risk of mistakes that can come from a lack of experience or oversight in financial management. This increased accuracy can also help you avoid costly penalties during tax filing.
By choosing to outsource your bookkeeping, small businesses can gain a strategic advantage while keeping costs manageable and ensuring financial operations are handled professionally.