When it comes to small business bookkeeping, there are a few options. Here, we hone in on two of them: bookkeeping services and bookkeeping software.
You might think that the only thing to consider is price, but there are a few key differences to highlight before you decide to move forward with a bookkeeping solution.
At CSI Accounting & Payroll, we’ve worked with small business accounting for over 50 years. In all that time, we’ve talked to thousands of small business owners who wanted to know:
- What are the pros and cons of monthly bookkeeping services?
- What are the pros and cons of using bookkeeping software?
- Are there any other bookkeeping solutions?
What Are Monthly Bookkeeping Services Like?
Bookkeeping services can come in a few different forms. To simplify this article, let’s focus on remote U.S.-based bookkeeping services that charge a set monthly fee.
Not what you’re looking for? Click here to learn about other bookkeeping service options.
Bookkeeping Service Pros
There are two major pros to working with a monthly bookkeeping service; the grunt work is handled, and it’s often very accurate.
Bookkeeping makes up a majority of accounting work throughout the year. When a service handles this for you, you have more time to focus on your business – whether you want to improve it or even grow it!
Just think about it – what’s your time as a business owner worth?
As far as accuracy goes, why does that matter? Well, bookkeeping numbers are based on each other month-over-month. If there are mistakes that aren’t caught right away early in the year, your books will still be wrong at the end of the year.
Then, when your books are wrong at the end of the year, your taxes will also be wrong. It won’t matter who prepares them; the tax preparer can only use the bookkeeping numbers they’re given.
Inaccurate books only affect you until they turn into inaccurate taxes – then they can result in penalties, fees, and even audits from the IRS. With an accurate service, all of these headaches are avoided.
Bookkeeping Service Cons
There is also one major con to working with a monthly bookkeeping service; the service has limited value for the price.
With a remote U.S.-based bookkeeping service, you’ll face an average of $300-$1,200 per month just for bookkeeping and potentially financial statements. You’ll lack many of the benefits that other accounting solutions provide.
Since these services only include the bookkeeping portion of accounting, that leaves taxes in your hands. You can handle this with the assistance of tax software or an annual tax accountant, but regardless, taxes are going to cost extra.
There are other downsides of doing your taxes with software or using an annual tax accountant. Since bookkeeping and taxes aren’t being done under the same roof, then year-round tax strategy won’t be properly communicated between parties.
That means the value you get will be extremely limited, whereas other accounting solutions will likely offer much better strategic tax savings.
What Is Bookkeeping Software Like?
Just like how you can do your own taxes with the help of tax software, you can handle your own books with the help of bookkeeping software.
There are also strong pros and cons for this option, but it’s much more common for small business owners to choose this if they value savings over putting in some grunt work.
Bookkeeping Software Pros
There are two major pros to doing your bookkeeping with bookkeeping software; it can be simple and quick to do at first, and it can be affordable.
This solution is common for very small businesses or startups that have extremely simple bookkeeping. Small business owners sometimes do their own bookkeeping or pass it on to an in-house employee, such as an administrative employee.
After all, if it doesn’t take advanced knowledge or take too much time away from anyone’s other responsibilities, it’s a no-brainer to have someone handle it as a side task when you’re just getting started.
Plus, it costs much less than hiring an accountant – or any employee – to do it in-house. Consider the costs of hiring, onboarding, and providing a salary and benefits. That adds up! It can also be more affordable than outsourcing a monthly bookkeeping service.
Of course, where there are savings, there are also potential risks and other fees. Let’s dive into those in the cons.
Bookkeeping Software Cons
There are three major cons to doing your bookkeeping with bookkeeping software; there’s more potential for mistakes, it can become more time-consuming, and there’s also limited value for the price.
While having someone use bookkeeping software on the side saves the ongoing cost of a bookkeeping service or an in-house bookkeeper, it’s still not entirely free. Most bookkeeping software now has a subscription-based fee, and it will vary depending on the brand and software needs.
Your books will also become more difficult to manage over time, and it will also become more time-consuming. That’s when things can start to get away from you unless you work with a professional.
Plus, just like other solutions, having somebody in-house handle your bookkeeping with software can mean time taken away from growing your business, a lack of tax strategy knowledge, and potential run-on mistakes that can result in incorrect taxes.
Speaking of taxes, you’re still left needing them handled outside of bookkeeping. You can do them with software or use an annual tax accountant, so taxes will cost extra.
Using tax software can be difficult, but it offers add-on virtual discussions with an accountant to help. However, that means that either way, you’re working with an annual tax accountant who won’t be able to provide year-round tax strategy to maximize tax savings. That’s another limited value that other accounting solutions may be able to do better.
Are There Other Bookkeeping Options?
There is another little-known bookkeeping solution that combines a bookkeeping service, annual tax service, and consulting service all in one: monthly accounting. It includes more services – and therefore more value – but at a higher investment.
The two largest value-adds are the unlimited one-off advising and the complete, year-round tax strategy. These can be achieved with monthly financial statements and meetings with your dedicated accountant, plus year-round tax planning, projections, and preparation.
Because of their limited reach, no other bookkeeping solution can offer a complete tax strategy or advice based on current financial data. For small businesses that use monthly accounting, the difference is vital.
What about the price? It varies based on your business’s accounting needs and the complexity of your statements.
At CSI Accounting & Payroll, our average monthly accounting fee is approximately $675. However, it can range from $500 to $1,000+ per month. This includes:
- Monthly Profit and Loss Statements
- Monthly Balance Sheets
- Monthly bank reconciliation
- Business tax strategy and filing
- Sales tax filings
- Audit representation
- Unlimited one-off questions
To learn more about what monthly accounting might cost you, click the image below:
Go Beyond Bookkeeping; Outsource Monthly Accounting!
Now that you know about the benefits and downsides of outsourcing and doing your own bookkeeping with software, as well as how monthly accounting offers bookkeeping, taxes, and advice bundled for a higher value, are you ready to check out monthly accounting services?
If so, please consider CSI Accounting & Payroll! To see if we can be a good fit for your business, click the button below for a free consultation:
Not ready to talk? That’s okay! First, learn more about what it’s like to work with CSI by clicking the image below:
