Bookkeeping Pricing Structures: What Small Businesses Need to Know
Bookkeeping is an essential part of running a business, ensuring financial records are accurate, taxes are filed correctly, and cash flow is managed efficiently. However, one of the biggest questions small business owners have is: How much should bookkeeping cost?
Pricing for bookkeeping services can vary widely depending on the complexity of the work, the experience of the bookkeeper, and the pricing model they use. In this blog, I’ll break down different pricing structures, what small businesses can expect to pay, and which services might come with additional fees.
Comparing Different Pricing Structures for Bookkeeping Services
Bookkeepers typically use one of three pricing models:
1. Hourly Rates
Pros:
You only pay for the time the bookkeeper spent working.
Cons:
You probably don’t have a good sense of how many hours of bookkeeping your business actually needs. Most small business owners underestimate the time it takes to actually do the full bookkeeping for a company.
Costs can add up quickly if bookkeeping tasks take longer than expected.
Monthly expenses can fluctuate and be unpredictable.
If a bookkeeper has to learn new skills or research something for your business, you’ll essentially be paying for their training.
Best for: Businesses with irregular bookkeeping needs. One time services.
Many bookkeepers charge by the hour, with rates ranging from $40 to $100+ per hour, depending on their experience and location. Most people who ask about my prices are really asking for my hourly rate.
It should be noted that the hourly rate for an independent bookkeeping or accounting firm will be very different from the hourly rates for which bookkeepers may be hired part-time. If you go on indeed or Monster to hire a part-time bookkeeper at an hourly rate, what you are typically getting is in fact an administrative assistant. They typically do not have extensive experience in bookkeeping, even if they are able to do some basic tasks. For an independent bookkeeping specialist, the rate will be higher.
If you are going to hire a bookkeeper at an hourly rate, my biggest advice would be to ensure transparency. Both parties should have a good estimate of how long bookkeeping work is expected to take before anything is agreed upon. And if it seems like the actual number of hours is going to be different than the initial estimate, the bookkeeper should communicate that to the client as quickly as possible.
Personally, I only use an hourly rate for certain irregular work. And I do not give an hourly rate without also giving an estimate of how many hours the work will take. It is easy to be lured in by a low hourly rate, but if you don’t know how many hours you are paying for you are likely in for an unpleasant surprise.
2. Monthly Flat Fees
Pros:
Predictable costs
Often includes a set list of services (reconciling accounts, generating reports, etc.).
If you encounter a particularly tricky bookkeeping problem, the cost doesn’t go up.
Cons:
May not cover extra services that are not part of your monthly package.
Best for: Businesses with consistent monthly transactions.
A common approach is a fixed monthly rate based on the expected workload. This is the model I typically use. Prices might range from $300 to $800 per month for small businesses.
The key to this model is understanding what you are getting for your monthly payment. It isn’t enough to just say “Bookkeeper A charges less than Bookkeeper B per month”. You need to look at what each person is offering. You may find that Bookkeeper B includes services in their package that Bookkeeper A does not. Ask them for a list of what you can expect from them each month in return for hiring them.
Personally, I use a tiered system of flat monthly fees at varying levels. Each service package has its own price point and included services. Packages with a lower price offer a more limited scope of services, whereas the higher priced packages include far more. The difference between each package is not simply one of transaction volume, but also what kinds of tasks are included. For example, lower tiers do not include payroll. This kind of system allows me to meet clients where they are in terms of finances and priorities.
3. Per-Transaction Pricing
Pros:
Scales with business activity.
Big savings for businesses with low transaction volume.
Cons:
Can become expensive for businesses with many transactions.
May not include additional services like financial reporting.
High transaction volume does not necessarily mean high revenue. A restaurant for example will have a very high transaction volume. So they would pay far more under this system, even though their revenue may not be as high as some other companies.
How to account for services like payroll, financial reporting, and other tasks that aren’t just about individual transactions?
Best for: Businesses with infrequent but high value transactions.
Some bookkeepers charge based on the number of transactions (e.g., $1–$5 per transaction). And I’m gonna be upfront about this: I am not a fan of this system. That is not to say that bookkeepers who use this pricing structure are bad. But I do think that this structure is not one conducive to good results for the bookkeeper or the client.
How Much Should a Small Business Pay for Bookkeeping?
The cost of bookkeeping depends on several factors:
1. Business Size & Complexity
A lot of people think that revenue is the main factor determining how much bookkeeping cost, but that isn’t true. It is less about revenue and more about complexity. Those two things are related, but not the same. I’ve dealt with multi million dollar business, and ones that made less than 25k in gross revenue.
A number of questions to ask when determining complexity. Among them are:
How many employees are there?
Is there inventory to track?
Does your business have multiple locations?
Do you operate in multiple states or counties?
Do you collect sales taxes?
How many transactions are there in a typical month?
How many bank accounts and credit cards are there within the company?
Do you use contractors?
My go to question for determining complexity is number of employees, because this number is typically indicative of other factors like transaction volume, number of credit cards, and more. I typically specialize in working with business that are between 1-10 employees.
2. Frequency of Service
Bookkeeping can be done on on a monthly, quarterly, or even yearly basis. And obviously, the more frequent bookkeeping is done, the higher the price. However, I do not recommend waiting to do your books, because bookkeeping becomes more difficult and less accurate the further back in time you have to go. Additionally, it is hard to make effective business decisions if you don’t get your books finished for months or years at a time. That is why I close my clients’ books every single month, and I usually make time to review them at least once a week.
3. Software Costs
There are a number of different software programs that can be used for bookkeeping. At the small business scale, the most popular is QuickBooks Online, which is what I use. But even within QuickBooks Online, there are a number of different packages with different software features that range in price from as low as $38 per month up to $275 a month.
You can pay for bookkeeping software yourself, or you can pay for it through your bookkeeper. As a certified QuickBooks ProAdvisor, I can offer exclusive discounts on the software for my clients who pay through me.
4. Location & Experience
Expect to pay more for bookkeepers with experience and certifications. Besides how many years a person has been doing bookkeeping, it is worth asking what kinds of companies they have worked with and what challenges they’ve dealt with. For example, some bookkeepers may have years of experience but have never had to deal with inventory management. The more specialized skills a bookkeeper has, the more they might be able to charge.
What Bookkeeping Services Might Cost Extra?
Many bookkeepers offer add-on services for an additional fee, such as:
1. Payroll Processing
This is a major job, especially if you run payroll more often than every other week. Expect that this will add extra to your bookkeeping bill. Maybe as much as an extra $200 per month.
2. Catch-Up Bookkeeping
If books are behind, expect to spend at least $500–$2,000+ depending on backlog. If the cost is beyond that, I will typically recommend that clients limit cleanup to only a certain period and basically try to start fresh. But if the client insist on it, the cost for clean up could exceed even that.
3. Custom Financial Reports
Some companies want specialized reports outside of the standard ones provided in QuickBooks. This will typically illicit an extra fee.
4. Audit Support
If you need help with an insurance audit, that will typically not be included in your standard bookkeeping services. A bookkeeper may do it for an extra charge.
How to Choose the Right Pricing Model for Your Business
Assess Your Needs – Do you need basic transaction tracking, or do you require payroll, tax help, and financial strategy?
Consider Consistency - Are you OK will having a bill that fluctuates month to month, or do you want a consistent bill that you can strategize around?
Think Ahead – Will the pricing model still work if your business grows? Or would a different model be better for scaling your business?
Final Thoughts
Bookkeeping is an investment in your business’s financial health. While cost matters, the value of accurate, timely records far outweighs the expense. No matter what pricing model is used, success in business requires investment. Make sure you are investing wisely in your future. Taking the time to find the right fit can save you money and headaches in the long run.
If you’re unsure where to start, try my free consultation to discuss pricing and services. Just click here to get started!