How Much Does A Bookkeeper Cost For Self-Employed Workers?

Being self-employed comes with plenty of perks. From getting to choose which projects you take on to making your own hours, you get plenty of freedom.

However, self-employed workers also have to deal with more responsibility. They must seek out their own clients and stay on top of their workload.

They also have to do their own bookkeeping. This involves much more than just filing your taxes when the season comes around. Throughout the year, your several duties: tracking expenses, looking for 1099 deductions, following tax laws, etc. You could miss out on earnings and get in trouble with the government if you're not careful.

So, you might want to consider hiring a bookkeeper. They won't just lighten your workload; they'll help you save big bucks. They will also ensure you are in compliance with the IRS laws.

Wondering, “how much does a bookkeeper cost?” This post is for you! We will go over typical costs and help you determine if hiring a professional is the right move.

Contracting with a Traditional Bookkeeping Firm

A popular option is contracting with a traditional bookkeeping firm. There are plenty of firms across the United States, making it easy to find one that serves your area.

A firm will do your books every month, either charging an hourly rate or a monthly fee. You will get a quote based on how long the firm thinks it will take. The bookkeeping rates vary by each firm and on your business' needs.

There are a ton of different factors which can affect how much it will cost you to hire a bookkeeper. For example, the price will vary based on the stuff you need them for, how long you need their services, the expectations of what they will handle, and the state your business is in might all impacts cost.

Should You Contract with a Traditional Bookkeeping Firm?

Hiring a firm takes bookkeeping off your plate entirely. However, it also means you won't have as much control. The professionals will likely take care of everything, from financial reports to your tax returns, only communicating with you for clarification on purchases, etc.

Note that every firm is different. One might work more closely with you than another. Before choosing a firm, be sure to review its process. Get a feel for how they work and see if it meshes well with your needs.

People may hesitate to contract with a firm not only because they give up control over their bookkeeping. They may also hesitate because of the unexpected costs. Even though your firm will give you quotes, these aren't set in stone. Your firm may end up taking longer to do your books or run into unexpected issues. This can drive up costs and leave you paying more per month than you were anticipating.

So, if you choose to contract, be sure to set aside enough money each month. This will ensure you aren't scrambling to pay your freelance bookkeeper.

Using Online Bookkeeping Services

Online bookkeeping services are much like traditional firms. When you use online services, a team of professional bookkeepers will do your books for you. You won't have to oversee the process directly.

However, unlike traditional firms, online services aren't restricted by geographical area. You can use them regardless of where you live. This can be great if you want to work with a highly recommended firm by an out-of-town colleague. It's also great as it gives you access to more professionals that have different specialties.

For instance, let's say you are a self-employed attorney. You may not want to high a general bookkeeper. Rather, you need someone that has experience doing bookkeeping in the legal field. This will ensure you keep accurate records and file your taxes without any hiccups.

The other advantage is of online bookkeeping services is that you can use these services any time of the year, and it's always the same process; no more waiting on bookkeepers at a firm to get back to you. You can upload and access your information quickly.

For example, with the Keeper Tax app, you won't be rushing to get records together during tax season. We keep track of everything month-to-month, so you don't have to worry about falling behind. We handle all your basic bookkeeping by scanning your credit card and bank statements. It is like outsourcing your own personalized accounting department.

Another key difference? Pricing. Online services usually don't charge hourly. Rather, you'll pay one monthly fee to use their services. With Keeper Tax, you will save thousands of dollars every year for only $16 per month. You can even save with a 14-day free trial.

Should You Use Online Bookkeeping Services?

Many self-employed workers choose to do their bookkeeping through online services (like Keeper Tax, Intuit, Quickbooks, or other Expensify alternatives). Accounting software makes the process so much easier, and the cost of bookkeeping is much more affordable and upfront than a full charge bookkeeper or other options.

You'll want to use a leading expense tracker for 1099 workers. Here are Keeper Tax testimonials from happy freelancers who enjoy the app. When you sign up, you should be assigned to a personal bookkeeper that reviews your financial accounts and look for purchases that qualify as tax write-offs. If you choose Keeper, we confirm these purchases with you via text and file them as Schedule C business expense categories.

You should also be able to file directly through an app or web browser (Keeper's app filing is only $89). Or, if you prefer, you can export a report and take it to your accountant.

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Is Hiring a Bookkeeper Worth It?

Here's how to determine if hiring a bookkeeper is worth it:

-First, figure out how long you spend on bookkeeping each month. Keep a record of the work you do and how many hours it takes. You know, the data entry, phone calls, handling of your accounts receivables, and financial transactions.  

For the sake of example, let's say you log 10 hours.

-Next, determine what your hour is worth. Let's say you work with clients and charge them by the hour. After expenses, you profit around $50 per hour.

-Finally, determine how much it costs you to do your own bookkeeping. What many self-employed workers fail to realize is that the DIY option isn't necessarily “free.” It takes up time that you could be spending making money with clients.

In our example, the cost of doing your own bookkeeping would be around $500 ($50 x 10 hours). This is quite the expense! You save a lot of time (and money) by hiring a bookkeeper.

So, getting a bookkeeper can improve your cashflow and growth. You can hire one part-time or full-time depending on where your business is at.

Signs You Should Look Out For

Before hiring a bookkeeper to handle your financial statements, you should determine if you actually need one. Here are a few telltale signs that it's time to make this big move:

Your Books Aren't Up to Date

When you do your books yourself, it's easy to fall behind. Other matters often seem more pressing.

But, when your books aren't up to date, you will pay the price. You won't know how much you're spending on expenses, how much you're profiting, and you overall cashflow. This can result in serious losses that could've otherwise been avoided.

Your Accountant Is Doing Your Bookkeeping

When some people fall behind on their books, they think it's no big deal. They may wait until tax season and hand the responsibility off to their accountant.

This is problematic for many reasons:

-For one, your accountant won't always provide the retroactive monthly records you failed to create. Without these records, you won't know where your finances stand.

-Another reason it's problematic to have your accountant do your bookkeeping? It's expensive. Accountants tend to charge a higher hourly rate than bookkeepers.

Considering you didn't keep your books up to date, your accountant will have to put in many hours. You can also expect a lot of back-and-forth with them as they will have to fill in the gaps. This can be frustrating and have you hunting for proof of purchases you made throughout the year.

You're Spending a Lot of Time on Bookkeeping

Most likely, you don't have prior experience with bookkeeping. You are probably spending a lot of time trying to get it right. This includes researching the best practices and developing a system for your finances.

If it seems like you've become a full-time bookkeeper, it's time to hire professional help. You'll thank yourself when you actually have time to work on your projects and not having to worry about your bookkeeping needs.

You're Missing Out on Tax Write-offs

Too many self-employed workers, startups, and business owners miss out on tax write-offs. They may not know about them or overlook them with everything else they have on their plate. Whatever the case may be, missing out on tax write-offs means less money in your pocket.

A professional will help you take advantage of these deductions. They know exactly what expenses qualify and will file them accordingly. Their experience will ensure nothing slips through the cracks and help you reduce your taxable income.  

Here's To Making Your Life Easier

Not every self-employed worker or small business owner needs a bookkeeper. Maybe your small business' bookkeeping is still manageable if you are new to the 1099 world or have simple finances. Maybe you are particularly tight on cash and can't afford to hire a CPA for help.

That being said, many self-employed workers benefit from professional help with their bookkeeping. It frees up time that they can use to take on more projects. It also improves their finances by helping them stay organized and take advantage of every possible tax write-off.

So, take a minute to analyze your situation before committing to any of these bookkeeping options. With this information, you'll decide if hiring a bookkeeper is within your budget:

-Determine whether your DIY bookkeeping is becoming too much to handle.

-Calculate how much time you're spending on it and figure out how much potential revenue you're missing out on.

We hope this post helps make your bookkeeping (and your life) easier and more profitable!

Jesus Morales-Grace

Jesus Morales-Grace

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Jesus Morales is an Enrolled Agent and has 7 years of bookkeeping and tax experience. He enjoys hiking, traveling, and studying tax law.

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Note: at Keeper Tax, we're on a mission to help freelancers overcome the complexity of their taxes. That sometimes leads us to generalize tax advice. Please reach out via email if you have questions.

Discover the tax write-offs you've been missing

Keeper Tax automatically finds tax deductions among your purchases. On average, people discover write-offs worth $1,249 in 90 seconds.

Download Keeper Tax→

Discover the tax write-offs you've been missing

Keeper Tax automatically finds tax deductions among your purchases. On average, people discover write-offs worth $1,249 in 90 seconds.

Download Keeper Tax→
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