Every business requires accurate and up to date book keeping so as to analyze financial health of the business at year-end and to pay taxes as well. This task can be carried in house by any employee of the company or may be out sourced to a professional bookkeeper. Bookkeeping can be done by both an accountant and a bookkeeper. A bookkeeper does not necessarily have an accountant degree. He just has knowledge and experience to carry out bookkeeping tasks and maintain business records. Whereas as an accountant is a degree holder who not only maintains business records but also provide financial advice and recommendations related to financial wellbeing of the business.
Small business may go for bookkeepers to save costs as accountants are expensive to hire. Small business or entrepreneurs might not have huge data to be taken care of by a number of employees or a bookkeeping service company. All that is required by a small business is management and maintenance of scattered data it has.
Since a small business may not have a separate department for accounts handling, its data and entries must be available in a disorganized way. No proper accounting or entries are done by small businesses. Hence they require a bookkeeper who can arrange all data according to accounting rules and standards so as to show the true picture of business finances.
Book keeping cost is not too high for small businesses. The costs may depend on several factors such as:
Since nobody does any accounting in small businesses so all data is available in scattered form. The bookkeeper has to gather all data and arrange it in an orderly manner based on accounting standards.
Small business owners never bother to maintain records of personal and business expenses separately. Personal and business both expenses are done with the same cash and no separation is done during record maintenance. This might be a hectic job for the bookkeeper as he has to separate all personal and business expenses of the owner so as to present rue picture of the financial health of his business.
If the small business is registered, it might have to comply with some reporting requirement regulations. The business must not have prepared accounting records so as to meet these reporting requirements. The bookkeeper is responsible for bringing the businesss data into standardized reporting formats and to calculate separate taxes of both business and personal incomes.
Based upon the above-mentioned functions, a bookkeeper might charge hourly rate, project fee and some might demand a fix fee. Average hourly bookkeeping rates vary between $20-$50 per hour based on the complexity and location of business.
Small businesses may have on average $3500-$6000 in budget for bookkeeping services annually. However, the price may vary depending upon the bookkeeping workload for the bookkeeper.Freelance bookkeeping is also an option for small businesses today. The owner provides business data to a freelance bookkeeper online so as to carry out bookkeeping for the business and calculate taxes as well. Hence, bookkeeping is done without fuss creation at the workplace. Freelance bookkeeping might save a lot of cost to the business as there are cheap bookkeepers available on-line from countries where unemployment rate is too high.