Bookkeeper Costs: A Simple Way to Gauge Hourly Rates
Most small business owners or entrepreneurs think of cost as being the hourly rate that a bookkeeper charges. While this is important, that is a number that the bookkeeper primarily drives. How does that work?
Well, you can undoubtedly find one who charges, say $25 to $50 an hour, if they are a one-person practice. In a small practice like that, overhead often doesn’t cost much. Some bookkeepers can charge $75 to $125 per hour or more, especially if they do tax returns or practice in a setting where they hire bookkeeping staff. See, in a small one-owner bookkeeping business, they may not contribute to a 401(k) or run payroll. However, a larger company will very likely be doing so to attract talent.
From an operational point of view, a one-person bookkeeping business can leave you without a bookkeeper. If the person becomes ill or is otherwise unavailable, your books can get behind or be inaccurate. A larger bookkeeping business can have backup staff in place to ensure your books never get too far behind.
Here are some other considerations:
Example 1: Your processes are highly repeatable, and the bookkeeper can set up bank rules to accurately code more than 90% of transactions. In this way, if it takes a bookkeeper a couple of hours to work on your books, that could be either $100 with a $50 per hour bookkeeper, or it would be $200 with a $100 per hour bookkeeper.
Example 2: The number of transactions can impact the amount paid to a bookkeeper. For instance, we have seen some businesses with fewer than 50 transactions a month and others with thousands. If they are highly repeatable, then either business can be highly efficient.
Example 3: A bookkeeper handling Accounts Payable or Accounts Receivable can significantly increase the time spent on an account. Some businesses can charge their payables on a credit card. For example, many companies have Zoom accounts, which are often billed to a credit card. However, some businesses have new vendors that pop up regularly, and the vendors and invoices need to be set up for payment. That requires extra time.
Example 4: If you have an enormous cleanup task, this effort can significantly increase costs. Some businesses find a new bookkeeper because their books have gotten behind for several months, they have had issues with previous bookkeepers keeping the accounts clean, or the person responsible for the books did not know how to handle certain situations.
While a bookkeeper has specialized knowledge, the best way a business owner can reduce the cost of is to engage them in process design. The more efficient you can make processes, the cheaper the services are – and then, it is a matter of their expertise and effectiveness in the world of accounting.
When you interview a bookkeeper, ask these questions (or modify for yourself):
- How many people are employed in your company?
- What happens if you go on vacation? Or if you are sick and not available to assist me?
- How much do you help me establish efficient processes? How do we balance your fees with efficiency?
As a small business owner, be sure to pay attention to the processes that impact your financial picture. If you do, you can reduce your bookkeeping costs!
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In addition, one great resource for checking bookkeeping rates in your area is Intuit (developer of QuickBooks). Click here. This hasn’t been updated in a few years, but it will give you an idea for your region.
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