Can You Afford to Pay a Bookkeeping Salary? The Cost of a Bookkeeper for Small Businesses
Do you know the biggest reason why businesses fail? Lack of cash flow. That’s why bookkeeping and accounting are so critical to the health of your business. You may be wondering what the best option is, whether you should hire in-house or outsource your bookkeeping.
You’ll quickly discover that there are pros and cons to each. You’re also going to weigh the costs. How much does a bookkeeping salary cost vs. outsourcing? Keep reading to find out.
The Types of Bookkeepers
There are several different types of bookkeepers. They range from basic bookkeepers to advanced.
Basic bookkeepers can handle tasks that include bill payments, account reconciliation, payroll management. They also understand state and federal labor and tax laws so your business stays within the law.
Usually, bookkeepers will send out invoices and contact vendors or clients to collect on late payments.
Advanced bookkeepers do much more than that. They take a strategic approach to business finances, the same way a CFO would at a large corporation.
At this level, a bookkeeper will audit your books regularly and look for opportunities. They can guide you on tax implications of hiring a new employee, or where you can improve your profit margins.
Each business has a unique bookkeeping need. Some businesses may start with basic bookkeeping and grow to need an advanced bookkeeper. Others may fall somewhere between the two.
Before you consider hiring an in-house bookkeeper, you should assess your bookkeeping needs.
The True Cost of an In-House Bookkeeper Salary
How much does it cost to hire a bookkeeper in-house? There are several factors at play. It depends on your location and the scope of the job.
Hiring a bookkeeper for a 10 person company in Atlanta will cost more than for a bookkeeper in Thomasville for a company with 3 employees.
On average, you can expect to pay about $40,000 a year for a full-time bookkeeping salary. It’s likely to be more if they have a lot of experience, or have advanced bookkeeping skills. You may opt to hire a bookkeeper on a part-time basis. That will lower some of your costs.
There are other costs to your business when you decide to hire in-house as well. You want to hire the best bookkeeper that you can find, and you’ll need to provide a comprehensive benefits package, especially if you hire full time.
Whether you hire on a full or a part-time basis, you’ll still have to pay payroll taxes.
There are also the costs to hire the employee. The time to write a job description, interview candidates, and decide on the best candidate all take time and energy away from your business.
You also have to invest in training the employee to get them up to speed on your business. You then have to trust that they have the expertise to do the job and do it well.
Hiring the wrong employee could be very costly to your business. A bad hire can cost your business as much as $14,900. You’ll have to start the process all over again, costing your business more time and money.
Investing in Technology
Business technology impacts every single part of your business, including your accounting department. If you choose to hire an in-house bookkeeper, you’re going to have to invest in the technology to enable them to do their best work.
How much you will need to invest will depend on the scope of work that’s required. You may want to have a simple cloud-based solution for your bookkeeping needs.
Another option is to have all of your accounting programs in house. That would require that you invest in servers and maintain them.
Outsourcing Bookkeeping Services
The alternative is to outsource your bookkeeping services. How much does outsourcing bookkeeping services cost?
It depends on your business needs and the scope of work that the firm is doing. Most plans will range between $500 – $2500 a month.
With this kind of range, you can expect that outsourcing bookkeeping services are extremely scalable. You can grow into a plan and upgrade services as your business grows or your needs change.
Bookkeeping firms already work with many other companies, and they’ve seen the challenges that businesses go through. They’re well-equipped to provide guidance in just about any situation.
You would have to pay top-dollar to hire someone in-house with that level of expertise.
Another advantage is that they already invested in the latest accounting and bookkeeping technologies. They also maintain them and update them. Outsourcing alleviates those costs.
You Have a Partner, Not a Data Entry Specialist
You may have concerns that you hire a bookkeeper that just focuses on data entry and account reconciliation. Ideally, you want to have someone who can spot opportunities that you don’t see.
Hiring a bookkeeper is a great investment for your business. You don’t need to hire an in-house bookkeeper. You can often save money by outsourcing to a bookkeeping firm.
It’s even better when you hire a bookkeeping firm that can do accounting and file taxes for you. You have one firm that handles everything. They can spot the potential ways you can minimize your tax bill before it’s too late.
Can You Afford a Bookkeeping Salary?
Bookkeeping is an essential part of operating your business. Without it, you have no idea how much cash you have on hand, nor do you know the financial health of your business.
How much is a bookkeeping salary? It’s so much more than you pay in salary. You have to pay for payroll taxes, a benefits package, and the technology to do the work in-house.
The alternative is to outsource bookkeeping to an experienced firm that acts as your partner and advisor. They can spot opportunities to increase your cash flow and minimize your tax burden. They already have an experienced team that costs much less than hiring in-house.
Would you like to know more about our accounting and bookkeeping services? Contact us today for a free consultation.