What’s the Cost of Monthly Bookkeeping?Mar 30, 2023
Today we are going to be talking all about the cost of bookkeeping. Obviously whenever you start thinking about outsourcing, the first thing you think is, ‘What's it gonna cost me?” I am very transparent about our packages and our cost. When I look at someone's services I’m interested in, I wanna know what the cost is. I wanna know what the investment is going to be for my business.
There are two things you need to think about when considering the cost of monthly bookkeeping (this can apply to any investment you’re considering). The first thing is, “what is the cost of NOT outsourcing your books?” And the second is, “what is the cost of outsourcing your books?” So today’s post we’ll be going over the cost of both, what goes into the cost of monthly bookkeeping, and other things to consider like your banking institution.
The Cost of NOT Outsourcing your Books
Obviously, whenever you think about the cost of outsourcing your books, it's gonna be money (I’ll talk about this more later) You have to pay someone else to do your bookkeeping. But what is the cost of not outsourcing your books? And what is the cost of not having them done on a month to month basis? And accurate, so that you can know and trust and that you understand exactly what is going in and going out of your business? That cost is being stressed out and being overwhelmed.
And you might be thinking you're doing it on your own so it’s fine. It might be in QuickBooks, but QuickBooks is guessing for you. And then you're like, “Okay, I think that's where it's going...” And then you second guess the reports and you're not sure if they're right. So then you don't have accurate numbers to go off of for making your decisions.You need those numbers in order to make strategic and informed decisions that's gonna really propel and grow your business going forward. So I highly suggest you think about the cost of not outsourcing.
Whenever I think for myself and my company on outsourcing, again I ask those questions of, “What is the cost for not doing it, and what is the cost for doing it, and how does that weigh out?” Because there will be times when you might not be able to afford outsourcing. I will say that a lot of times people will come to me and they say, “Well, I'm not sure exactly where I should be at and what I should do.” So we talk through those things because most of the time they do not have those accurate numbers to make the decisions off of.
So if someone's just starting off their business and they are in the red every single month, over month, over month, then I really want them to do their own bookkeeping. Now, if they come to me as an agency, they're an S corp, and are making at least $8,000 per month or more, then yes, you need a bookkeeper. We need to figure this out and to really understand your finances. If people come to me and they're hitting 4-6 million in revenue, which we do have clients like that, then obviously, of course. Duh. You need a bookkeeper. And those clients know they need a bookkeeper too. That's not even a question.
But whenever I'm looking at smaller companies that are just starting out and they're like, “Okay, is it worth the money to spend on outsourcing?” I kind of want you to reframe that. Think about it as investing in your business. Outsourcing your books isn’t direct, client facing. I’m not out there marketing or talking with you clients. What I AM doing is giving you the insight that nobody else can give you other than other bookkeepers.
How will you know what services are doing well, and what services and offers you need to be promoting? Because the numbers will tell you that they're doing super well. “What expenses are working? Are those ads working? Are they not working? Is that investment in that business coach actually paying off or is it not? Do you need to cut that membership down? What are the things that I need to do on a financial side in order to grow my business?” And so that right there is an investment. It's an investment in the knowledge of understanding your finances so you can grow. And that's really, really, really big.
I see people that have not had accurate financials, and they’re burned out on their business. They're barely breathing, they're barely above water because they don't know what's going on and they haven't really been paying themselves. And if they've been paying themselves at least a little bit of money, it's still not enough. They need more to survive. They need more for the time that they're putting into the business. Whenever you're not getting properly compensated and the business is barely making it, and you’re getting exhausted, that’s when you need to figure out ways that we can increase that profit margin because you can't continue to go month over month over month, barely making it by (or being in the red). If you’re an agency hitting higher numbers and you’re in the red, look into outsourcing to a bookkeeper or even CFO because you have an internal financial cash flow problem.
So that is the cost of not outsourcing. Stress, anxiety, worrying about tax season and if your numbers are right or if your business will make it.
The Cost of Outsourcing and What Goes Into It
Now the cost of outsourcing is obviously that you have to pay somebody to do it. Personally I am very upfront with our services and what we cost. You can always check out our services page and our prices are gonna be there. With everything that I offer in the future, my prices will be upfront and I will not keep them from you. But there's a few things that play a factor in pricing. So all of our clients get individualized pricing and quotes whenever they come to us, book a discovery call, and then I send a proposal out because everybody's business is different. They are individual businesses and they need different things.
That being said, in the creative space, all my photographers, their businesses run very similarly. And then all of my brand and web design clients, they're very similar. But they do have their unique things that happen. So when we go on our discovery call, we talk through you, your business, how you got started, because that's very important. I want to learn about you and then we talk through what I provide, what our team members do, the benefits of outsourcing your books and answer any questions. Then we're going to go through the pricing. Your pricing depends on the flow of money and how streamlined it is.
The more accounts and softwares that your money flows through, the more it's gonna cost you. There are more transactions we need to keep track of. As an example, let’s say someone comes to me and they have five different ways they're accepting payment. They might use Venmo (which you should never use Venmo),PayPal, Dubsado, they might have tried HoneyBook and they have a few people in HoneyBook. They might have tried Square. They might just have a lot of different ways. In that case, that's a lot of places that I have to go in and record the different income and split it out properly so we can see what your income streams are producing.
Another thing that impacts your price is if you have a bunch of different bank accounts and credit cards. For example, if you are an agency and your team members have business credit cards, that's more transactions and more accounts that need to be reconciled. If you have investment accounts, that's more that we have to keep up on loans, line of credits, things like that. We have to go in and check those balances and make sure that it's accurate every single month so that your balance sheet shows you what you have and what you owe to people. We wanna make sure that's accurate. So the more accounts you have, whether it's bank accounts, credit cards, the more it's gonna cost you for the bookkeeping service.
Now, if you are an S corp, that is a little bit more because there's different things at play. You have payroll for yourself (and if you have a team, your team members as well). If you have an agency or something like that, you want us to take care of AR and AP, that's a lot of work on our hands and would add a bit more to your monthly cost as well. And we kind of just talk through all of that before onboarding because like I said, not one business is alike.
Examples of Our Typical Clients
I would say a lot of my clients that come to me in the entry level, they would have one savings account, one checking account, a credit card, and they’re probably accepting payment through HoneyBook or Dubsado (and only using one way they're receiving payment). So that's the entry level, typical client that would come to me and want bookkeeping services.
Other clients come to me as an S corp. Maybe they're hitting $40-$50,000 in revenue a month. They have a team of 8 or 10. They have multiple different things coming in and going out. They have a line of credit because they have a team, needed it at the time, but now it might be maxed out and they want to look at strategies to pay that off. Things like that can take more time and work for us and our team. Again, every business is different and will require slightly different services or support.
With our clients we look into strategy as well. Do they need a bump up to CFO services? We kind of talk through all of that on the discovery call, and then that's whenever I would give you the quote of what your monthly cost would be. If I'm not sure, in some cases I do request to have access to your QuickBooks file or your Xero file so I can go in there and see where things are at (and when the last time things were reconciled). See exactly where the balance sheet is at, see if anything stands out to me.
And whenever I'm talking to somebody, like I said, the normal entry level client that comes to me would have that savings, checking credit card and Dubsado or HoneyBook. That's a very common theme in our clients. I told one of my clients today, she just has a checking account and I'm like, “Hey, I really want you to open up 2 more savings accounts, if not 3-4 more”, just because of what we're trying to do with her goals and what she needs in her business. If you're very diligent on how you manage the different bank accounts, how you utilize them, and you have a streamlined process, that kind of plays a factor too.
Does it Matter What Bank You Use?
I have very big opinions on banks. Obviously we saw exactly what happened with the Silicon Valley bank and then there's just a lot of stuff that's going on with banks right now. But I would say my biggest thing right now from my perspective, it’s important to look at the way that integrations work and how they connect to our softwares. How well do they connect with Xero or QuickBooks Online? And I will say if you use a small local bank or a small local credit union, 9 times out of 10, they cause so many problems for us. We can't go in and get statements, we can't have read-only access. So we have to either have your login to where you have to send us a code every single time that we log in, or you have to send us statements every single month. As you can imagine, that’s a lot of stuff back and forth.
Sometimes they never sync with Xero or QuickBooks. And if they do sync, sometimes they disconnect, miss transactions, and then you end up with double transactions once they’re put in. Xero is better than QuickBooks in this area. I'll be honest, QuickBooks can really mess up the transactions and the bank feeds and stuff. But still it causes problems whenever you're using a small credit union or a small bank. If we can work around it, we always try with those banks. Especially if you really like it and you're really tied down to that bank, then we’re gonna try and figure out a way. Then if it really, really causes problems, we'll just let you know and we can decide on a solution for both of us and figure out what the next best step is.
So that's a little explanation on the cost of not outsourcing, the cost of outsourcing and really what to expect. If you're very interested or just a little bit interested in our services, you can submit an inquiry form and we'll get back with you within 24 to 48 hours. We can go ahead and schedule a discovery call and go over really what your business is doing and what is the best fit for your business. I will say, I am not somebody that is going to push you one way or the other. I'm not gonna say that you absolutely need monthly bookkeeping services when you can't afford it, and whenever it's going to really put a lot of stress on your business and yourself.
Instead, I would probably recommend you more towards the DIY Money Manager, as well as probably just a consulting session. The one hour with me is a very good investment price for the quality, the insight, and the knowledge that you get in that one hour consulting session. So again I will be upfront and say, “Hey, I really think you should be doing this, I think you should be doing that.” If you're coming to me and you're like, “I think I need a consulting session”, but you really need monthly bookkeeping, then I'll tell you that too. I'm pretty upfront and pretty chill with everything. Again if you’re interested, I would love to chat with you and see how we can support your business!