If you’re thinking about hiring a bookkeeper for your business, the first question you’re probably asking is, “Can I afford one?” Average bookkeeper salaries vary based on location, as well as a host of other factors. Find out how much bookkeepers charge in your area, and you’ll be able to make realistic salary offerings that won’t break the bank.
Not sure what a bookkeeper does? Learn all about it on the blog.
If you are trying to figure out how much you can realistically expect to pay a bookkeeper in your area, the state averages are a good place to start. We’ve broken out the average annual salary across the country and pulled out some key data:
Keep in mind that state isn’t the only geographical factor that can affect salary. Average salaries vary by city for a couple of reasons. First, areas with a high cost-of-living tend to also have higher average salaries. Second, bookkeepers in rural areas may be able to demand a higher salary because there aren’t many trained bookkeepers in such areas — although online services are rapidly disrupting that. You’ll need to take both these factors into consideration when deciding how much you’d need to pay a bookkeeper.
Location helps determine the average salary for the average bookkeeper, but the average bookkeeper may not be the right person for your business. Here are some other factors to consider before you set your salary requirement.
When you hire a bookkeeper, you can either bring them on board as an employee or as an independent contractor, depending on the type of work you have in mind for them.
Not sure about the difference between employees and contractors? Check out this article for all the details.
If you have a lot of ongoing bookkeeping needs, and you are looking to have a higher degree of control over how the work is done, an employee might be the right fit for your business. If you hire a bookkeeper who is an employee, you’ll be responsible for handling payroll and benefits for them, in accordance with the laws in your area. Plus, if you already have other employees, you’ve already got a payroll solution in place and adding one more employee is likely no big deal.
If you only have a few projects, and you don’t wish to have control over how the work is done, an independent contractor may be the right fit for your needs. With independent contractors, you typically pay an hourly or project-based rate – with no taxes withheld – and don’t provide health insurance, retirement accounts, or other such benefits. You will likely need to issue a 1099-MISC document to your contractors in January each year.
Depending on what type of business and what industry you’re in, you may need a bookkeeper with certain specialized skills or at least a significant amount of experience with similar businesses. Expect to pay significantly more for a senior bookkeeper than for a junior one. Here’s what freelancing site Upwork says the typical bookkeeping rates are based on the bookkeeper’s experience:
[Sourced from Upwork]
It’s important to choose a bookkeeper who possesses both the skills to manage your books now and the skills your books will likely require in the near future. For example, if you have employees, you’ll definitely want a bookkeeper who’s experienced with payroll. If you don’t have employees now but there’s a good chance you’ll be hiring in the near future, payroll is still a critical skill for your bookkeeper.
Experience with your industry is also extremely valuable in a bookkeeper. Managing the books for a doctor’s office requires a different set of skills and background knowledge than managing the books for a manufacturer, and an e-commerce business calls for yet a third set of specialized bookkeeping skills.
Unlike accountants with their CPA certification, there is no single certification for bookkeepers. The three top bookkeeping certifications are:
The first two certifications indicate a high level of basic knowledge, skills, and experience with bookkeeping overall. The third certification is specific to the QuickBooks bookkeeping software platform. Some bookkeepers get a QuickBooks ProAdvisor certification on top of a CB or CPB certification simply because QuickBooks is such a popular system.
Read more on how to choose a bookkeeping software.
Some bookkeepers also have experience with and some level of certification related to tax preparation. The top tax certification is Enrolled Agent (EA). This certification is issued by the IRS and requires the applicant to pass a three-part test that takes 12 hours in total to complete.
Several states also have tax preparer certifications, but these are not nearly as stringent or difficult to obtain as the EA credential. For example, obtaining California’s Registered Tax Preparer (CRTP) credential is as simple as taking a qualifying education course and purchasing a $5,000 tax preparer bond. An experienced EA could likely do a good job of preparing your business’s tax returns, but entrusting this job to a non-credentialed or state credentialed preparer could be risky.
You’ve thought through your requirements for a bookkeeper and think you have a handle on how much you’ll need to pay a qualified person to do the job. Don’t relax yet – there are a few other costs to consider before you can determine whether the bookkeeper of your dreams is within your budget.
First off, finding, interviewing, investigating, and hiring a bookkeeper can be a costly process. You’ll need to prepare job descriptions, post ads on career websites, come up with interview questions, run at least a basic background check and make sure your hiring process complies with regulatory requirements – all of which will take time and money.
Second, hiring an employee means you’ll also have to provide benefits like sick leave, vacation time, and health insurance. These expenses are ongoing and can mount up to a significant number over time.
Rather than hiring either an independent contractor or an employee to do your bookkeeping, consider signing up with Pilot. You’ll eliminate all the fuss and expense of finding and hiring an individual bookkeeper, or of replacing such an individual after their departure. Yet you also get most of the benefits of hiring your own bookkeeper, including a dedicated account manager who will quickly become familiar with your business and its financial quirks.
At Pilot, we have a team of expert bookkeepers using unique tools to fix your books no matter what state you’re in. If you want to keep better books, try Pilot.