How Much Does Bookkeeping Really Cost? A Clear Breakdown

Financial clarity is vital to maintaining a successful business, and one of the fundamental steps to having that financial clarity is to keep good and accurate books. If you are looking at hiring a bookkeeper, you have likely found yourself pondering a common question. How much should be expected to pay for a bookkeeper on an hourly basis?

While rates can vary based on location, market demand, level of experience, the services they offer, and the type of business you run, the goal of this blog is to break down everything you need to know about paying for bookkeeping services. From what makes up the price, to what value you get in return, we will uncover what the real cost is when it comes to bookkeeping services, for your business, besides just dollars and cents.

Why Do Businesses Need Bookkeeping

Before we get into costs, it is important to know the exact role of a bookkeeper in your business. The bookkeeper is accountable for recording the daily financial transactions, reconciling bank statements, reporting on account expenses and income, processing payroll, invoicing, and providing reports to the owner or management that help the business to stay organized, financially sound and compliant to regulatory and tax obligations.

Without bookkeeping, most small business owners will run the risk of financial mismanagement, tax remittance and deadlines can be easily overlooked, reporting can be inaccurate, and there is no visibility into actual cash flow of the business.

Important Elements That Affect Bookkeeping Fees

1. Experience and experience level

One of the main factors affecting bookkeeping fees is the experience level of the bookkeeper. A recently qualified bookkeeper or freelancer may charge you less than an experienced professional who works in your area and provides added value in the form of strategic financial advisory to your basic day-to-day bookkeeping.

2. Scope of Work

Not all bookkeeping services are the same; while some may involve retrieving data or reconciling your bank, other bookkeepers may perform specific advanced bookkeeping services, we also look to accounting to manage bookkeeping processes at times for even more valuable insights. The higher the complexity of the work, the more time will be consumed – and the more your fee will be.

3. Frequency of Service

How often you require someone, whether daily, weekly, monthly, or quarterly, will impact your ultimate fee. While for example, regular “maintenance” is often cheaper than hiring someone infrequently to tidy up several months of records, the time has a cost impact on how much you ultimately pay.

4. Location

Rates can vary depending on where your business is located. For example, bookkeeping services in major urban areas can be more expensive than when the services are provided in rural areas primarily due to overhead and demand for bookkeeping services. However, with everyone moving to remote applications and the virtue of virtual bookkeeping services, the cost of bookkeeping services based on location is starting to flatten out.

5. Software and Technology Used

Once you decide on the method and/or form of bookkeeping service required, consider which accounting or bookkeeping system you are using. For example, if your business uses a cloud accounting tool like Xero, QuickBooks Online or MYOB, this may save your bookkeeper some hours. On the other hand, if your business is utilizing an accounting package that is specific to your industry this could also require a more technologically advanced (and potentially more expensive) bookkeeper.

What Are You Really Paying For?

It’s easy to look at a price and assess value by seeing if the price fits a budget. However, with bookkeeping, you’re paying for something much bigger:

• Accuracy and Compliance: Your business is meeting ATO obligations, has the right BAS stepped up, and is managing payroll compliance appropriately.
• Time Savings: You get extra hours instead of having to deal with your bookkeeping. Instead, the business owner can focus on managing and growing the business.
• Strategic Insights: A good bookkeeper will not only keep your books in order, but will also help you get clear about cashflow, profitability, and cost-saving opportunities.
• Audit-Ready: Your financial books are well-organized and easy to access when an ATO review or audit occurs.
• Reduced Stress: You don’t have to panic at the end of the financial year or tax time as you’re not scrambling to pull out records, prepare obvious reports and justify the records.

Bookkeeping Pricing Models

Bookkeepers typically decide on one of the following pricing models:

1. Hourly Rate

This model is the easiest as it’s simple to both parties and is very straightforward to accept for a one-off job, or even if it’s an irregular job. You effectively only pay for the hours that your bookkeeper is doing your bookkeeping.

2. Fixed Monthly Fee

These are typical offerings for bookkeepers not only they allow ongoing support and service availability to business owners, but can also limit business owners with proactive budgeting. A bookkeeping business might have a monthly package that not only offers a set hour of services, but a predetermined range of services.

3. Value-Based Pricing

In this pricing model, your bookkeeper will not charge for the normal time taken to complete the work, but charge based on the value it generates or how much you accept it’s going to be worth to you as a business or business manager. Most value-based conversations will be there where the bookkeeper is offering advisory services, not just a letter, not just defining them into basic accounting or bookkeeping.

Average Pricing: What Should You Expect?

Business owners often consider their pricing average, and go online to see averages in the market. In fact, the numbers can be all over the board depending on your size, industry, and records complication. The values are fluid depending on geographic location, price on service, and skill. Many professionals in the industry recommend asking what the bookkeeping rates per hour are during the consultation process, to simply eliminate any confusion surrounding price.

For example, rates could move from basic to advanced based on you using a casual, part-time, or contracted professional. The preferred method is always value. You are looking for someone who creates value by saving you time, and helping you grow the overall business.

How To Choose The Right Bookkeeper

Here are some steps to consider in choosing the correct bookkeeper.

• Check Their Qualifications: Ensure they are certified and experienced in your industry.
• Ask If They Will Do A Discovery Call: This should be open ended questions regarding their process, systems, and style of reporting, and ask them if you will be working in a collaborative environment.
• Understand What Is Included: Confirm what is included in the pricing.
• Ask About Technology: Find out what accounting software they specialise in.
• Understand Communication Options: Good bookkeepers will describe financial information in English.

Please feel free to talk about the bookkeeper cost per hour upfront, to avoid checking later after you have already engaged your bookkeeper’s services with not limited to issues like lack of knowledge around bookkeeper pricing.

Are Bookkeepers Worth It?

In short, yes. Regardless of your form of business; sole trader, small business, or scaling operation, bookkeeping is an investment and you will not regret it with the controls, clarity and compliance you will be able to achieve in your own business. Bookkeeping is one of the fundamental services which keeps business operationally functional, when there may only appear to be additional costs, this service is a precautionary measure to fulfil your compliance obligations and avoid much larger costs in the future due to mistakes or non-compliance.

Final Thoughts

Every dollar you spend on bookkeeping should reduce your stress and or lead to strategic advantages (more on this later). Costs vary based on who you hire, as well as which services you need from bookkeeper services and how often. One thing is for certain though; bookkeeping is not a luxury, it is a necessity.

Choose your service provider based on skills, communication, and transparency. Whether you’re choosing to engage a local expert, virtual assistant or a full outsourcing firm, ensure you understand what services fall under the cost and what pricing model you are looking at. And of course don’t just ask, “How much?” instead ask, “What value am I going to get out of this?”