As a small business owner, you will eventually need to get your books in order. Ideally, you’re thinking about this from the day you open your doors. However, most businesses have not built a budget around professional services such as bookkeeping. A quick Google search shows us that the average salary for an in-house bookkeeper in Canada is between $36000-$44000/year, however, for a business this adds up to much more when you factor in benefits, payroll taxes, insurance and all other incidentals that start to add up quickly to an employer. Now you may be saying to yourself…”Holy Moley I can’t afford that”. So lets look at all the options available to you.
A. Using Cloud-based accounting and doing it yourself
If you’re an accounting guru or have a good eye for financials, you could look at buying and managing a cloud-based accounting system that can handle all you need: bookkeeping, payables, receivables, and payroll. You should know that that software can cost anywhere from $15 to $200+/month depending on needs. This is the most cost effective alternative.
B. Hiring an accountant
Hiring an accountant is a great idea. I strongly suggest having both an accountant and a bookkeeper. A bookkeeper for managing all of the day to day business, and an accountant to deal with quarterly statements or at the very least end of year finances and closing of the books. Accountants are unfortunately the least cost effective unless you can find a good cloud accountant with decent rates. Accountants typically charge $50-$200 per hour, so definitely the least cost effective but even as a bookkeeper I strongly suggest to my clients to have both.
C. Outsourcing a bookkeeper
The next step in analyzing your current situation revolves around needs, complexity, and volume of transactions. This is where many small businesses prefer to outsource to cloud accounting firms like Cover Your Assets Books and Taxes, as they are looking to pay for only the help they need. Additionally, the expertise and years of experience and customer care that goes along with the monthly fees. The expertise and customer care goes a long way here especially knowing that your books will be done right. This is a cheaper solution than an in-house bookkeeper by far, but not as cheap as the DIY option.
While bookkeepers may charge hourly, many more charge a flat monthly fee based on an agreed upon scope of work. This pricing will depend on the skills needed to properly manage your small business finances. If you are looking for simple data entry and monthly financials, that is very different than looking for someone that can handle data entry, payables (billing), receivables(invoicing), reconciliations, payroll, tax remittances and government deadlines– not to mention tax strategy and cash flow management.
In any case, you should expect an agreed upon fixed fee – this way, there are no unexpected costs or bills, you can budget better, and the bookkeeping firm can build the capacity to better serve you. Not to mention the major advantage of having the ability to grow or scale back your bookkeeping based on how your business is doing, so that your bookkeeping package works with your business and not against it. Cloud based bookkeeping firms normally carry packages starting around $250 up to $2000 per month based on the size of your company, the amount of transactions, and the amount of accounts to reconcile. Some even offer tax services come the end of the year.
Outsourcing your bookkeeping needs is a cost-effective way to ensure that your books are in order, that your sales tax filings are compliant, and that your payroll is done on time. Typically, this is what most clients are seeking in the first place: to get organized, and on track.
If you have any questions i would be happy to answer them. You can contact us on Facebook or through our website at www.coveryourassets.ca