Managing a business is a tedious task, especially handling the accounting function. It is essential to ensure the business books are in order and up-to-date, to manage the business properly. Properly managed financial books help in tax saving and making timely business decisions. It is where bookkeeping is required to keep track of a business’s financial transactions. Bookkeeping can be managed by an in-house bookkeeper or outsourcing bookkeeping services provider. Let us see how much it costs to manage a business’s financial books in the USA.
Bookkeeping and its importance
The task of tracking and recording financial transactions is called bookkeeping. It is a crucial task that helps in the preparation of financial statements and reports. Therefore, accuracy and punctuality are crucial factors for this activity.
No matter what type of business it is, cash flow is required to keep the business afloat. Any financial mismanagement can hamper the growth and productivity of a business. Proper bookkeeping ensures timely and accurate preparation of financial statements and reports. It also ensures proper tax filing and compliance with the relevant laws and regulations.
What are the types of bookkeeping?
Before deciding whether to hire a bookkeeper or rely on a bookkeeping services provider, a business must determine its requirements. The level of financial services required differs based on industry, size of the business, number of employees, etc. A business can go for basic bookkeeping or full-service bookkeeping. Both have different rates and ranges of activities involved.
- Basic bookkeeping:
It is best to start with basic bookkeeping for a new business as it is best to get the books in order from the beginning. Basic bookkeeping services involve-
- Compliance with the state and government regulations
- Accounts payable and accounts receivable management
- Recording transactions and maintaining proper filing
- Basic payroll processing
- Full-service bookkeeping:
Businesses operating for a long time are more growth-driven and have more transactions and employees. Full-service bookkeeping involves managing the finances through basic bookkeeping, helping improve the business’s efficiency by optimizing the financial strategy and finding ways to increase profit. Full-service bookkeeping service includes-
- A dedicated individual or team for accounting and bookkeeping
- Maintaining financial statements and reports
- Regular reporting to help analyze the business’s financial status and future growth opportunities
- Management of bank and other related accounts
- Financial audit
- Tax planning and consulting
Once a business decides what type of bookkeeping it needs, it is time to decide how to get the right bookkeeper or bookkeeping services provider and how much it will cost.
How much does a bookkeeper charge?
The accounting and bookkeeping can be managed by getting an individual or team of in-house bookkeepers or outsourcing it to a bookkeeping services provider. The amount charged by a bookkeeper varies based on industry, size of the business, and the financial services required. The charges also differ based on the experience of the bookkeeper. Let us see approximately does a business has to spend on bookkeeping.
- In-house bookkeeping:
A business can get the bookkeeping done in-house by hiring an individual or a team of bookkeepers. In-house bookkeepers are hired on a salary basis, which ranges from approximately $35000 to $55000 per annum. In this case, there are some additional overheads as well. An in-house bookkeeper is an employee of the company and gets some additional benefits in addition to the salary. The additional financial benefits to an employee include health insurance, paid leaves, etc. The business also needs to provide the employee with a computer and other equipment, training, pay for the accounting software, and spend on expanding office space.
- Outsourced bookkeeping services:
Outsourcing the bookkeeping function might initially seem expensive, but it is very cost-effective for the business in the long run. It saves time and additional overheads and provides expert services without causing much hassle for the business. Generally, outsourcing service providers use their computers and accounting software. The cost of outsourcing differs based on the size of the business and the scope of bookkeeping assigned. Outsourcing service providers charge on an hourly basis, monthly basis, or as per the amount of work. The average cost of outsourcing bookkeeping services ranges between $500 to $2500 per month.
Outsourcing can be domestic or offshore. Domestic outsourcing means the service provider is from the same country and can work on-site or off-site. On the other hand, offshore outsourcing means that the business outsources the task to a service provider in another country. Both types of outsourcing reduce the workload and help focus on the core activities. However, offshore is the best option if cost-saving is as important for the business as outsourcing the accounting and bookkeeping tasks. Offshoring the bookkeeping process to countries like India, the Philippines, Poland, etc., saves more money than outsourcing to a domestic service provider. Outsourcing the bookkeeping to India will help cut the costs to approximately 40%.
Before choosing an in-house bookkeeper or an outsourcing service provider, a business must consider important factors that affect the benefits. The factors include the market reputation of the bookkeeper, tools and software used by them, qualifications and expertise of the bookkeeper, turn-around time, strong communication channel, etc. Consider these factors and the price charged while deciding whether to get an in-house bookkeeper or outsource and who will be the right choice to manage the books as per business requirements.
Bookkeeping is the basic and crucial part of the accounting function of a business. The absence of proper bookkeeping can cause numerous problems like the inability to strategize and make decisions, cash flow issues, missed tax deadlines, risk of internal fraud, etc. So, it is important to have proper bookkeeping, and it is crucial to consider the cost and expertise of the bookkeeper or outsourcing service provider before hiring one. Compare the price charged with the market standards and charges of other bookkeepers with similar expertise in the same field. Also, always conduct a proper background check regarding qualifications, experience, and commendations from their previous and current clients.