If you’re losing confidence in your numbers or can’t say what your margins actually are, chances are you’ve been wondering whether you need professional services to sort out your books.
The earlier you bring in a professional bookkeeper who knows the ins and outs of ecommerce, the less your financials become a headache.
In this article, we’ll show you how much professional bookkeeping services cost depending on your business size and financial complexity, so your books can finally help you succeed, not complicate growth.
Need a bookkeeper who can be your strategic growth partner? Our team at EcomBalance can help you scale faster with reliable monthly bookkeeping and financial analysis. No more guessing what your margins are. Gain confidence in your numbers.
TL;DR – Average Cost of Bookkeeping Services
Professional bookkeeping services typically cost $200 to $2,500 per month. But you may also hire a bookkeeper on an hourly or flat-fee basis for specific projects.
Take a look at this overview of average bookkeeping rates:
- Salaried: $3,000 per month
- Hourly: $23 per hour
- Flat fee: Ranges from $200 to $2,000, depending on the complexity of the project or the services (such as clean-up services and tax prep)
Why Do You Need Bookkeeping for Your Business
Any business, whether large or small, startup or established, experiences cash flow. This is the movement of money in out of your business. If you have noticed this, you’ll also know that you need to know it! If you don’t keep track of how much you are spending and how much you are profiting, you may find yourself in a bit of a bind.
First, if you don’t track your cash flow, you could end up in debt, or applying for a loan that could take you years to pay off.
Second, businesses need to keep their books up to date for tax compliance and to keep up with other regulations.
Lastly, when your business is in an organized financial state, this leads to organized business practices overall. Through bookkeeping, you can track who you owe and who owes you. You can also view the financial health of your business through financial reporting and analysis. From there, you can make decisions on budget, scaling, pricing, etc.
Types of Bookkeeping
There are two main types of bookkeeping services to choose from: basic and full-service.
Let’s explore how these two differ:
Basic Bookkeeping
In a nutshell, bookkeeping is the daily process of maintaining an organized record of your financial transactions. These transactions include your purchases, sales, payments, and receipts.
Let’s go through some basics of basic bookkeeping.
There are two methods of recording entries: single-entry and double-entry bookkeeping.
- Single-entry – You record one entry for every transaction. This is typically best for really small businesses and startups that operate on a cash basis.
- Double-entry – You record transactions using credits and debits. Credits are amounts taken out of an account, and debits are amounts added to an account. These credits and debits must always equal the same amount. This is known as “balancing” your books.
The five types of accounts in bookkeeping are as follows:
- Revenue – What you earn through your business’s services or products.
- Expenses – This is the cost of running your business.
- Assets – These are any resources with monetary value. There are five main asset classes, which are Equity, Cash, Fixed Income, Real Estate, and Derivatives.
- Liabilities – This is anything you owe to another entity. Liabilities can be in the form of debts or loans. In your accounts payable, it shows you any money owed to manufacturers, suppliers, etc.
- Equity – This is simply what remains after subtracting liabilities from assets.
There are also two different bases for recognizing revenue and expenses, namely, cash and accrual accounting.
Cash Accounting – You record each transaction upon receiving or paying in cash.
Accrual Accounting – You record each transaction when you incur an expense or issue an invoice, meaning cash doesn’t have to enter the accounts before you record them.
Full-Service Bookkeeping
Full-service or full-charge bookkeeping involves all of the aforementioned functions, plus additional accounting-related responsibilities. This means that anyone you hire must undergo more certifications and education requirements.
On top of regular bookkeeping duties, full-service bookkeepers also
- Record complex transactions
- Supervise a team of accounting clerks
- Collect information for scheduled audits
- Prepare documents and financial statements for tax compliance and tax returns
- Process payroll and timesheets
- Remitting sales, income, and payroll taxes
Note: Full-service bookkeepers are not a complete replacement for accountants and still need to coordinate with a CPA (Certified Public Accountant).
The type of bookkeeping you’re hiring for will affect how much a bookkeeper will charge. The more comprehensive the service, the higher the cost.
Pros and Cons of DIY Bookkeeping
When people ask the question, “How much are bookkeeping services?” the typical follow-up questions that aren’t far behind are, “Why do I need to pay someone else?” and “Can’t I do that myself?”
Let’s go through some of the advantages and disadvantages of “do-it-yourself” bookkeeping.
Pros
Here’s why DIY bookkeeping may look like the better option for business owners:
Best in the Beginning
DIY bookkeeping is definitely the best option when you are first starting out and are able to manage the stream of orders, sales, and expenses. Not only does it give you an understanding of how it is done, but it also helps you get a better idea of how your business operates. This can also help you understand the work that bookkeepers do and can help you find a good fit for your business if you do decide on working with one in the future.
Cost-effective
One of the most obvious benefits of DIY bookkeeping is that you don’t have to pay someone else to do it. Bookkeeping services, though some are more affordable than others (more on that later), still have a cost.
Stay in Control and Keep Data Private
Some businesses are hesitant to hire someone else to view sensitive data because they want to keep business records, such as worker and customer data, secure. Of course, reputable bookkeeping services do comply with data privacy laws. Most bookkeeping software also has safeguards in place. However, you are still giving outside access to your financial data, which is something not everyone is comfortable with.
Cons
Eventually, however, DIY bookkeeping has more cons than pros:
Learning Curve
While maintaining your own books is a skill that can come in handy, you do need to learn how to do it properly. This is not only for the sake of organization, but also for legality. Taxes are notoriously tedious and confusing, and the laws are subject to change from time to time. Not only that, but if you were to use accounting and bookkeeping software like QuickBooks, Xero, or Wave, you would have to learn how to use those tools as well.
Time-consuming
Learning how to properly balance your books can take weeks. Then, you will need to set aside time every week to update your records. If you’re a startup, you know that a lot of work goes into getting a business set up. This additional time spent on accounting takes away from the other moving parts of your business. Every part needs attending to, and more work usually means taking away from your allocated rest time or time to spend with your family.
Not Sustainable at Scale
When your business starts gaining momentum and customers start pouring in, it can be difficult to keep all your financials in order. This gets worse when you factor in trying to coordinate with suppliers, providing customer support services, or working on product development. You need to decide if spending hours on your books is the best thing for your business.
Potential for Error
Some bookkeeping services have more than one bookkeeper to double-check to see that records are accurate. If you don’t have someone else who knows what they are doing and can double-check your methods (like a qualified accountant), an error could slip past you. This could lead to a fine or an audit. If your attention is split between different business operations, you’re more likely to miss a few important details.
Common Bookkeeping Pricing Models
Now that we understand the different kinds of bookkeeping services, let’s explore pricing options that firms offer and which ones suit your business best.
The most common bookkeeping pricing models include hourly, fixed fees, tiered, and value-based pricing.
Let’s weigh in on each:
- Hourly rates: Best for businesses that prefer to pay only for time used, such as startups with fluctuating needs or those that haven’t yet determined which services they need each month. In the long term, however, hourly pricing can be more expensive and less efficient.
- Fixed monthly fees: You pay a fixed amount every month for a pre-determined set of services. This is best for businesses that know which services they need and have a fixed monthly budget set aside.
- Tiered pricing: This is a subscription-based model in which businesses choose a bookkeeping package that matches their needs and budget. To get the most out of this model, choose a package that contains only the services you can fully utilize every month. Upgrade only when the need for a more comprehensive service arises.
- Value-based pricing: Some bookkeeping firms charge based on the value of their service in relation to your business, instead of time spent. The amount you pay, then, is directly related to expected outcomes (such as saving money on taxes).
How Much Does Bookkeeping Cost?
In the U.S., salaries for bookkeepers vary depending on a number of factors. These include the scope of the work, size of the business, level of experience, skill, and education. The state in which the business is located can also affect how much you should expect to pay. If you live in places with notably higher costs of living, like New York and Los Angeles, you can expect higher salaries, even if you hire online.
Salaried Bookkeepers
According to Indeed.com, the salary for a basic bookkeeper ranges from $2,150 – $4,318 per month or $556-$1,116 per week. That’s an average of $3,047 per month and $787 per week.
For full-service bookkeepers, monthly salaries range from $3,002-$5,840, with an average of $4,187. This means weekly salaries range from $776-$1,509 with an average of $1,082.
Hourly Bookkeepers
For a basic bookkeeper in the U.S., hourly rates range from $14.89-$29.91, with an average of $21.10. For a full-service bookkeeper, hourly rates range from $17.03-$33.14, with an average of $23.76.
Flat Fees
Bookkeepers may also charge a fixed or flat fee, ranging from $200 to $2,000, depending on the specific bookkeeping service you need.
There typically is no fixed rate that applies to all businesses, as bookkeepers charge based on the number of transactions, accounts, and marketplaces you’re selling on.
In-House vs. Outsourced Bookkeeping Cost Comparison
But what if you’re trying to decide between hiring an in-house bookkeeper vs. outsourcing your bookkeeping?
You can use this guide to compare the two:
Pros and Cons of In-House Bookkeeping
Let’s further break down the advantages and drawbacks of hiring a bookkeeper in-house:
In-House Bookkeeping Pros:
- Familiarity with your systems: You get a bookkeeper who knows your process, operations, and financial structure deeply.
- Full control: You always have access to your bookkeeper, so you don’t have to schedule meetings in advance to get issues sorted out.
- Confidentiality: Businesses can be more comfortable sharing sensitive data with an in-house team.
In-House Bookkeeping Cons:
- High overhead: Ecommerce businesses are especially susceptible to market fluctuations. You’re still paying high salaries even during slow months.
- Limited expertise: If you’re hiring a full-time traditional bookkeeper instead of an ecommerce-specific bookkeeping team, you may not get the expertise in all areas of bookkeeping that you need to support growth.
- Turnover risk: When your bookkeeper leaves, you risk losing time and money finding a replacement. Your books may also be left untended while the position remains vacant.
Pros and Cons of Outsourced Bookkeeping
Now, let’s compare the benefits and disadvantages of outsourced bookkeeping:
Outsourced Bookkeeping Pros:
- Cost savings: Outsourcing your bookkeeping is typically much cheaper than hiring a full-time staff member. You pay only for the services and time spent on your books, instead of spending on benefits on top of salaries.
- Flexibility and scalability: Outsourced teams are a plug-and-play support that can grow as your financial structures become more complex. Scale up or down easily depending on your needs.
- Access to specialized service and expertise: When you outsource, you have access to a bookkeeping team, not just one person on your payroll. This gives you the advantage of a wider breadth of expertise.
- Tech advantage: An outsourced team also uses advanced systems and tools that help make integrations seamless and ensure the accuracy of your bookkeeping.
- Less risk: You don’t bear the burden of hiring or training your bookkeeping team.
Outsourced Bookkeeping Cons:
- Your bookkeeper works remotely: Compared to an in-house team that you can see and communicate with daily, an outsourced team works remotely. If you don’t find the right fit, your relationship may feel transactional.
This is why it’s important to find a team that aligns with you on culture and work ethic, so you have a strategic partner, not just someone doing data entry. - Communication issues may arise: Since an outsourced team is remote, there is a higher need for clear communication channels and protocols early on to ensure alignment on goals.
Choose a bookkeeping firm that provides proactive support to prevent communication issues down the line.
What Affects the Cost of Bookkeeping?
It’s not just the type of bookkeeping service that tells how much you’re expected to spend.
Here are common factors that affect how much your bookkeeper charges:
- Transaction volume: The more bookkeeping work is involved (e.g., higher sales and expenses), the higher the cost.
- Financial complexity: Larger businesses have more complicated structures for managing inventory, sell on multiple platforms, or use accrual accounting to accurately reflect margins. These bump up the workload and require more expertise.
- Number of accounts: Selling on various merchant platforms or managing several bank accounts and credit cards makes reconciling accounts trickier and more time-consuming.
- Depth of reporting: You can always just ask for the basic P&L and balance sheet. But when you want deeper insights into your financials, such as SKU-level analysis, that will cost you more.
- Work frequency: The more often you need work done, the more expensive the service becomes. For example, monthly bookkeeping is much cheaper than weekly bookkeeping.
- Specialization: The level of expertise that your chosen bookkeeper brings also affects how much they charge (For example, an ecommerce bookkeeper vs. a traditional bookkeeper).
Where Can I Find Reliable Bookkeepers for Less?
Now that we’ve answered the question “How much are bookkeeping services?”, we’re guessing your next question will be “Where can I hire bookkeepers?”
These are our top picks:
What Is EcomBalance?
EcomBalance is a monthly bookkeeping service specialized for eCommerce companies selling on Amazon, Shopify, eBay, Etsy, WooCommerce, & other eCommerce channels.
We take monthly bookkeeping off your plate and deliver your financial statements to you by the 15th or 20th of each month.
You’ll have your Profit and Loss Statement, Balance Sheet, and Cash Flow Statement ready for analysis each month so you and your business partners can make better business decisions.
Interested in learning more? Schedule a call with our CEO, Nathan Hirsch.
And here are some free resources:
- Monthly Finance Meeting Agenda
- 9 Steps to Master Your Ecommerce Bookkeeping Checklist
- The Ultimate Guide on Finding an Ecommerce Virtual Bookkeeping Service
- What Is a Profit and Loss Statement?
- How to Read & Interpret a Cash Flow Statement
Frequently Asked Questions (FAQs)
Let’s look at some of the most commonly asked questions about bookkeeping costs:
When Does It Make Sense to Pay More for Bookkeeping?
Higher-level bookkeeping pays off when:
- You need accurate COGS: Any ecommerce business needs accurate COGS timing and calculation, but the impact is felt even more by brands managing a large inventory or those dealing with higher landing costs.
- You’re scaling quickly: Growth can wreak havoc on your business if you don’t have the necessary financial controls.
- Your books are messy: If you’re always playing catch-up or your books are unreliable, you need a professional to get your financials in order.
- You need financial advisory: When you need more than just record-keeping, it makes sense to hire a bookkeeping firm that can provide financial analysis on top of monthly bookkeeping.
Are there Affordable Bookkeeping Options for Startups?
Startups typically don’t need complex bookkeeping systems — at least not yet.
Here are more budget-friendly bookkeeping options at this stage:
- Basic bookkeeping: Such as recording expenses and managing AP/AR.
- Cash-based accounting: For tracking the movement of cash (transition to accrual as you grow and your finances become more complex).
- Minimal review: You DIY your books and have them reviewed periodically by a professional bookkeeper.
Are Bookkeeping Services Tax Deductible?
Bookkeeping services for your business are fully tax-deductible expenses, since they are considered an integral part of operating a business.
However, the same is not true for bookkeeping services for personal finances.
How Do I Know If I’m Overpaying for Bookkeeping?
You’ll know you’re overpaying your bookkeeping firm when you’re getting less than what you’d agreed upon, such as:
- Record-keeping vs. bookkeeping with financial analysis: Purely data entry with no financial insights.
- Late or inconsistent reports: When your books aren’t closed cleanly every month or when reports are unreliable, you’re not getting your money’s worth.
- Your books are still a mess: When your CPA comes in for tax prep and they’re still flagging errors, that’s a sign your books aren’t being done right.
- Your pricing model and business size don’t match: If you’re paying for enterprise-level bookkeeping for a startup, you’re spending way too much.
- You’re being billed for “extra”: You shouldn’t be billed for basic bookkeeping services that should already be included in your contract.
Conclusion
There you have it. We hope we answered the “How much are bookkeeping services?” question with accuracy and have given you enough information about the importance of bookkeeping, what it entails, and whether or not it’s worth investing in a bookkeeping service.
