Understanding the Cost of Bookkeeping Services: A Guide for Small Businesses

An effective and rigorous bookkeeping process is central to the success of any business. It enables the prompt payment of bills, the tracking of accounts receivable, the ability to make payroll each period, the timely, accurate payment of tax liabilities, the data to accurately forecast and manage cash flow, and a host of other business-critical tasks. 

For small businesses, it can be appealing to try to maintain the bookkeeping process in-house. There is a sense that there is more direct, hands-on control of every aspect of the process and that those keeping the books have a more complete understanding of the business and its day-to-day processes. Some businesses also believe that doing the books entirely in-house saves money.

But while it is sometimes possible for a small business to successfully handle every aspect of their bookkeeping in-house, the fact is that many struggle with it and that they often are not saving money at all but are, in fact, spending more than they might otherwise if they outsourced some or all of their bookkeeping tasks. 

Let’s look at some of the costs associated with bookkeeping for small businesses and examine situations where some or all of those costs might be reduced or better spent via outsourcing.


There are a variety of direct and hidden costs associated with handling all aspects of the bookkeeping process in-house, and small business owners should be sure to consider them when deciding how to implement or revamp their bookkeeping process. These costs can include:

  • Hiring costs. Finding and hiring the right in-house bookkeeper, or bookkeeping team member, takes time and money and may include advertising job openings, interviewing candidates, and conducting background checks. And each time a bookkeeping employee leaves the company, the process must be repeated, while at the same time, the rest of the team must shoulder the burden until a replacement is found.

    Incurring these costs will make sense for some businesses, but for many others outsourcing part or all of their bookkeeping processes will cost less money while saving time and energy. A quality bookkeeping company will have its own process for attracting, vetting, and hiring bookkeeping professionals and can smoothly transition staff to your account in the event of a hiring gap.

  • Salary, benefits, and taxes. Maintaining the bookkeeping process in-house obviously requires compensation for in-house employees. With that comes extra responsibilities such as payroll taxes, benefits, health insurance, retirement plans, and paid time off.

    For some businesses, taking on these extra expenses can make sense, but for others, it may be more cost-effective to let an outsourcing provider take on these costs and responsibilities. In many cases, the efficiencies built into the business model of a specialist result in lower costs that can be passed on to clients.

  • Ongoing training. Accounting standards, industry regulations, and software updates are constantly changing. Any business that keeps its bookkeeping process in-house will need to invest in regular training for its teams to ensure that the company stays compliant with current requirements and implements the latest best practices.

    This is one area where a specialist bookkeeping company has a particularly notable advantage over in-house employees. Regular training and updates are built into a quality bookkeeping provider’s business model, and information is shared among employees and teams to augment that training.

  • Software. Paradoxically, the rapid advancement of technology and software has both enabled small businesses to take more control of their financial processes, yet also forced them to make significant investments or juggle multiple subscriptions, scramble to keep that software up to date, and struggle to determine which solutions are best for them.

    This is another area where outsourcing has a distinct advantage. Bookkeeping specialists who don’t keep up with software innovation will lose out to their competitors over time, so they are constantly researching and implementing the best solutions on the market. This means that agency-level subscription prices keep costs lower for their clients, and regular investments in the “latest” tech are minimized.


In addition to the direct financial costs listed above, there are “hidden costs” for small businesses to consider, as well, such as,

  •  Errors and compliance risks. Many small businesses need help implementing effective hiring and management of in-house bookkeeping. They may not have the expertise to find the best employees, be unable to keep up with changing standards or regulations, or be unable to enforce rigorous processes. Whatever the reason, these issues can result in incorrect financial statements, inaccurate forecasts, and penalties and fines if they miss deadlines or lack compliance.

  • Higher risk of fraud. In-house bookkeeping may need more checks and balances provided by an external bookkeeping service, meaning that employees or outsiders are able to steal from the company without being detected.

A quality bookkeeping service helps to minimize these hidden costs by hiring and training competent financial professionals, enforcing rigorous and timely bookkeeping procedures, and implementing proven risk management methods.

While it can be tempting for small businesses to handle their entire bookkeeping process in-house, the reality is that doing so often comes with significant direct and hidden costs. By outsourcing some or all of the bookkeeping tasks to a professional service, small businesses can potentially save money, time, and energy while at the same time reducing the risk of errors, improving compliance with regulations, and providing greater security against fraud.