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Monthly Bookkeeping vs. Annual Tax Accountant: Which Is Better for Small Businesses to Outsource?

May 2nd, 2024 | 6 min. read

By Bryan Cremeen

Accounting consists of bookkeeping and taxes, but some small businesses don’t want to spend the money to outsource both – especially when there’s limited value if your bookkeeper and tax preparer aren’t working together under one roof.

If you want to choose an accounting solution to outsource, you can manage the other in-house with the help of bookkeeping or tax software. Let’s explore which option may be better for your business.

At CSI Accounting & Payroll, we’ve worked with small business bookkeeping, taxes, and more for over 50 years. In all that time, we’ve talked to thousands of small business owners who wanted to know:

  • Can I outsource my monthly bookkeeping and do my own taxes?
  • Can I do my own bookkeeping and outsource my taxes?
  • Are there any accounting solutions that handle both bookkeeping and taxes?

Outsourcing Bookkeeping & Doing Your Own Taxes

When you outsource with a bookkeeping service, you get help with the grunt work. A majority of your accounting will be handled for you, so you get more time to focus on running and growing your operations.

Plus, a bookkeeping service is often reliably accurate. That’s important because your taxes are done based on your bookkeeping. If your books are wrong, your taxes will also be wrong – and that can mean facing potential penalties, fees, and even audits. 

Bookkeeping services also mean an ongoing fee throughout the year. U.S.-based bookkeeping services – which avoid common issues that overseas bookkeeping services face – charge an average of $300-$1,200 per month just for bookkeeping and potentially financial statements.

After your bookkeeping is handled by an expert, you can choose to file your own taxes with tax software. You can do it alone, but it’s no joke if you’re not an expert! Think of the potential for incorrect filings, unclaimed credits or deductions, and even missing forms.

Luckily, most software now lets you call an annual tax accountant for additional fees. However, they lack an intimate understanding of your business, and it’s too late for them to use tax strategy to minimize what you owe.

Filing your own taxes with software has the potential to be cheaper than directly working with an annual tax accountant, but filing fees, other hidden fees, and the cost of optional help can still add up to hundreds to thousands of dollars.

So, while you can choose to outsource bookkeeping and do your own taxes with software, expenses can rack up quickly and there’s limited tax savings. It’s typically accurate and a great time-saver, though.

Doing Your Own Bookkeeping & Outsourcing Taxes

Small business owners sometimes do their own bookkeeping or pass it on to an in-house employee, such as an administrative employee. This is common for very small businesses or startups that have extremely simple bookkeeping. 

It also saves the ongoing cost of an outsourced bookkeeping service, but it’s not entirely free. You need to consider that most bookkeeping software now has a subscription-based fee, and that fee will vary depending on the brand and software needs. Ranges are generally $20-$200 per month.

However, doing your bookkeeping in-house 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.

Then, for your taxes, you can outsource them to an annual tax accountant if you don’t want to do them yourself. This is a one-off service with a one-time fee that usually ranges from $500-$2,500 for small businesses. 

The limitations are that they’ll use the bookkeeping numbers that you did in-house to prepare your taxes, and they can’t check your books for accuracy. They also can’t offer too much for tax savings because they don’t work with you year-round on tax strategy.

So, while you can choose to do your own bookkeeping and outsource your taxes, mistakes are more common, it can be very time-consuming, and there’s still little value from tax savings. However, it is the most affordable option.

Outsourced Bookkeeping and Taxes Under One Roof

Let’s re-examine the pros and cons of the options above. 

Outsourced bookkeeping and DIY taxes are typically accurate and great time-savers, but expenses can rack up quickly and there’s limited tax savings.

DIY bookkeeping and outsourced taxes are common for simple operations and the most affordable option, but mistakes are more common, it can be very time-consuming, and there are still limited tax savings.

Did anything stand out in those comparisons? Despite there being higher and lower options for costs, they both offer very little value. That’s because neither option can offer a complete, year-round tax strategy – only a monthly accounting service can.

A monthly accounting service is like a bookkeeping service, annual tax service, and consulting service all in one. 

Since it’s far from a limited service and provides a much higher value in tax savings and advice, it can cost a bit more than a bookkeeping service or a tax service alone. However, there are lots of benefits of bundling these services under one roof, and we believe that the value meets or exceeds the cost.

At CSI Accounting & Payroll, our average monthly accounting fee is approximately $675. However, depending on your activity and complexities, your fee can range from $500 to $1,000+ per month. Remember, 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:

Outsource Monthly Accounting for Bundled Value

Now that you know about the benefits and downsides of outsourcing and DIY-ing bookkeeping and taxes, as well as how monthly accounting bundles both (and more) at 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:

Bryan Cremeen

Bryan joined CSI Accounting in 2019. He joined the team after CSI purchased his accounting firm, AccountSource LLC, which he had owned since 2005. He graduated from St. Cloud State in 2001 with a Bachelor's Degree in Accounting and has been an Enrolled Agent since 2010. Before owning his own accounting practice, Bryan had worked at the State of MN handling financial reporting and had been in private industry as a Controller. His primary responsibilities include overseeing the accounting department and making sure clients are receiving quality service. Fun Fact: Bryan has played soccer since the age of 4. He still plays soccer year round through various adult leagues and is an avid supporter of the Minnesota United MLS soccer team. COYL!!! (Come on, you Loons!!!)