Is your small business growing a lot recently? And you are busy maintaining the transactional records and compliance with the Canada Revenue Agency? If that’s the case, read this blog to get insights into what factors can impact the cost of bookkeeping for small businesses. We’ll cover everything from the average cost of hiring a bookkeeper to the factors impacting the cost.
For those managing their own finances, understanding when to hire a personal tax accountant can also simplify financial tasks, especially during tax season.
BASIC RESPONSIBILITIES OF A PROFESSIONAL BOOKKEEPER:
Bookkeepers, as the name suggests keep records of your business activity. Responsibilities of a professional bookkeeper include:
- To enter, code, and pay bills
- Create and send client invoices
- Collect past-due receivable amounts
- Reconcile bank and credit cards
- Maintain Vendors for Accounts Payable and Clients for Accounts Receivable
- Support CFO/Controller and Outside CFO by preparing:
- Account Analysis
- Work Papers for Month-End Closing and Audit Support
- Scan & Attach Documents for Tax and Audit Support
- Preparing Client Source Documents (PBCs) For Audit Support
AVERAGE COST OF BOOKKEEPING SERVICES FOR SMALL BUSINESS:
The cost of bookkeeping services for small business depends on a lot of factors. They include company size, number of monthly transactions, number of employees, and how payroll is processed. In short, bookkeeping service for your small business will depend upon:
- Size of your business
- The complexity of your financial actions
- Services your business require
- The type of bookkeeper you hire for your small business. Whether it is:
- A professional full-time bookkeeper
- A professional part-time bookkeeper
- A freelance bookkeeper
- Or an outsourced professional.
Generally, small businesses may pay anywhere from $2000 to $10,000 per month for bookkeeping services. It depends on whether they hire an in-house bookkeeper, outsource to a professional bookkeeping firm, or use automated software solutions.
FACTORS AFFECTING COST OF BOOKKEEPING SERVICES FOR SMALL BUSINESS:
The cost of bookkeeping services depends on numerous elements. If you’re navigating the early stages of setting up a business, be sure to review our guide on registering a small business in Ontario for more foundational insights.
- The complexity of your business:
The first thing that impacts bookkeeping services for small business is the complexity of it. A corporation with various income streams, foreign transactions, or complex invoicing processes requires greater bookkeeping competence. So the more complex your business activities are, the more you’ll have to pay your bookkeeper.
- Frequency of service:
The frequency of service is a major factor affecting the cost of bookkeeping for small businesses. Companies that require real-time or monthly bookkeeping services may face higher costs. On the other hand, those who choose quarterly or annual services have low costs. The more frequently financial records are updated and managed, the more resources are allocated. It results in greater expenses for small business bookkeeping services.
- Software & technology integration:
The way you carry out your business functions using ultimate software technologies matters a lot. Businesses using advanced software tools for bookkeeping often face higher costs than those that don’t.
- Geographic location:
The cost of bookkeeping services for small business often varies significantly depending on the region in which a business operates. This variation in rates is largely influenced by the local economic climate.
In urban areas, bookkeeping rates are typically higher. It is due to increased operational expenses, demand for services, and competitive pricing standards. Conversely, in rural areas, bookkeeping services may be more affordable. Lower operational costs allow professionals to offer services at more competitive rates.
- Level of expertise:
Bookkeeping services for small business depend largely on the expertise level of the professional you hire. The saying “you get what you pay for” rings especially true in this field. Experienced bookkeeping professionals, who:
- Bring years of hands-on experience
- A strong grasp of tax codes
- An in-depth understanding of financial regulations are typically able to deal with the most complex financial scenarios.
This level of skill and insight often comes at a premium. However, it can be well worth the investment. Particularly for small businesses seeking to ensure compliance and optimize financial management.
CONCLUSION:
In conclusion, the cost of bookkeeping services for small business is influenced by multiple factors. It includes:
- The business’s size
- Complexity
- Required service frequency
- Software usage
- Geographic location
- The expertise level of the professional hired.
These variables dictate not only the price but also the quality and accuracy of financial management. For growing businesses, investing in experienced bookkeeping support can bring long-term benefits. Such as better compliance and strategic insights, which outweigh initial costs. By understanding these cost factors, small business owners can make informed choices, optimize their financial processes, and ensure efficient use of resources.