Compare Bookkeeper vs Accountant Costs
Many people are confused about the differences between a bookkeeper and an accountant. Some even use the term interchangeably, but the roles and responsibilities of each are actually very different.
A bookkeeper has the tedious job of recording all information about a company’s financial affairs. He or she keeps track of all revenue and expense information, including the dates, amounts and sources of every transaction. At the end of each cycle - usually the end of the month - a bookkeeper makes any necessary adjustments and prepares a report.
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Most bookkeepers charge anywhere from $15 to $60 an hour, according to Entrepreneur.com. The number of hours you will need each month depends on the size of your business and the complexity of the financial information.
- Cost - Bookkeeping services cost much less than accounting services because the work is not as comprehensive.
- In-house control - Hiring just a bookkeeper allows you to retain full control of your financial decision making, which is appealing to some small businesses with do-it-yourself mentalities.
- No analysis - A bookkeeper will hand over the numbers at the end of the month, but he or she won’t tell you what they mean. A bookkeeper doesn’t offer financial advice, just number crunching. It will be up to you to analyze and scrutinize the financial information.
Accountants are essentially advanced bookkeepers. After performing basic bookkeeping tasks, they use that information to analyze the bigger financial picture and offer strategic advice. Accountants also offers services such as auditing, financial planning, tax planning and business consulting.
Looked at another way, all accountants are bookkeepers. But not all bookkeepers are accountants.
Accountants usually charge an hourly fee early on, when they’re getting to know your company and its specific needs. Hourly rates depend on background and experience of the person handling the account.
At most accounting firms, junior staff members command about $60 to $120 an hour, while top-of-the-pay-scale CPAs charge $150 to $250 an hour. Most likely, a junior staffer will work on the simpler aspects of your accounting while a more senior staff member will handle any complex work.
After you’ve established a relationship with an accounting firm, it’s usually possible to negotiate a flat monthly fee based on the anticipated amount of work.
- Expert analysis - An accountant won’t just hand you the numbers at the end of the month. They will tell you what the numbers mean and offer business advice based on those numbers.
- Lighter workload - Accountants take much of the guesswork out of important financial decisions. You don’t have to spend hours analyzing the books to decide how much inventory to buy next month - that work is done for you.
- Legal/tax issues - An accountant has a better understanding of how to keep your books compliant with laws and tax codes.
- Cost - Hiring an accountant is far more expensive than hiring a bookkeeper. If you’re in need of just basic record keeping, not financial advice, you’re better off hiring a bookkeeper.