Bookkeeping solutions refer to various methods, tools, and software to help businesses manage their financial records, transactions, and reporting. Different options suit different needs of small businesses and growing companies, including manual, software-based, cloud, and outsourced bookkeeping.
| Bookkeeping Solutions | Bookkeeping Method | Benefits | Drawbacks | Best for | Price Range |
| Manual Bookkeeping | Paper or digital ledger | Affordable, chronological order | Time-consuming and error-prone, Require an in-house bookkeeper | Mom and Pop and Self Employed | $25 -$200 per hour |
| Software-Based Bookkeeping | Bookkeeping software | Save time, reduce the risk of errors, helps with compliance | Require in-house bookkeeper or expertise | Small and newly formed businesses, Self-employed | $5 -$150 per month |
| Cloud Bookkeeping | Cloud-Based Bookkeeping software | Save time, reduce the risk of errors, helps with compliance, and accessible, data backups | Require in-house bookkeeper or expertise | Small businesses, start-ups, and growing businesses. | $5 -$150 per month |
| Outsourced Bookkeeping | Virtual or Physical | Save time, reduce the risk of errors, helps with compliance | Dealing with the third party | Small businesses, self-employed, start-ups, and growing businesses. | $150 -$1,000 per month |
Manual Bookkeeping
Manual bookkeeping is a traditional method that records financial transactions in a paper or digital ledger. This method manually records transactions, such as sales, purchases, and expenses, in a journal or log. The transactions are then used to prepare financial statements, such as balance sheets and income statements, which help business owners understand the financial health of their company.
Manual bookkeeping can be time-consuming and error-prone, but it can also be the best way to learn the basics of bookkeeping and accounting. It is also an affordable option for small businesses with a low volume of transactions. The records are kept in a specific order, such as chronological or by account, and can be used to prepare financial reports such as balance sheets, income statements, cash flow, etc.
However, as the business grows, manual bookkeeping can become increasingly difficult to maintain and may not provide the level of detail and accuracy needed for financial reporting and tax compliance. In that case, it’s recommended to switch to software-based or cloud-based bookkeeping, which can save time and improve accuracy.
Software-Based Bookkeeping
Software-based bookkeeping is a method of recording financial transactions using bookkeeping software. This software automates many of the tasks involved in bookkeeping, such as recording transactions, preparing financial statements, and generating reports.
Some examples of popular software-based bookkeeping options include QuickBooks, Xero, and Wave. This software typically offers various features such as invoicing, expense tracking, bank reconciliation, and financial reporting. They also integrate with other business tools, such as payment processors, payroll services, and inventory management systems.
One of the main advantages of software-based bookkeeping is that it can save time and reduce the risk of errors compared to manual bookkeeping. The software can automatically record transactions and generate financial statements, which can help business owners stay on top of their financial situation and make informed decisions. The software also allows easy access to financial data, which can be shared with accountants, investors, and other stakeholders.
Additionally, software-based bookkeeping can help with compliance, as the software can automatically generate and file necessary tax forms, such as sales and payroll tax forms.
Software-based bookkeeping can be a good option for businesses of all sizes, as it can save time, improve accuracy, and provide more detailed financial information.
Cloud Bookkeeping
Cloud bookkeeping is a method of recording financial transactions using bookkeeping software that is accessed through the internet. This software is hosted on remote servers and can be accessed from any device. This allows business owners and their bookkeepers to access and update financial records from anywhere, at any time.
Some popular cloud-based bookkeeping software examples include QuickBooks Online, Xero, and Wave. This software typically offers the same features as its desktop counterparts, such as invoicing, expense tracking, bank reconciliation, and financial reporting. They often have added features such as collaboration and data-sharing options, allowing multiple parties to access the same financial data simultaneously.
One of the main advantages of cloud bookkeeping is that it allows for real-time access to financial data from any location, which makes it easy for business owners and their bookkeepers to stay on top of their finances. This is especially useful for small businesses with multiple locations or business owners who travel frequently.
Cloud bookkeeping also allows for automatic data backups, ensuring that financial records are not lost in equipment failure or other unexpected events. Additionally, much cloud-based bookkeeping software has built-in security features to protect sensitive financial data.
Overall, cloud-based bookkeeping can be a good option for businesses of all sizes. It can save time, improve accuracy, and provide more detailed financial information while offering the flexibility of access from anywhere.
Outsourced Bookkeeping
Outsourced bookkeeping is the method that involves hiring a bookkeeper or a bookkeeping service to handle the bookkeeping tasks on behalf of the business. This can save time and reduce the cost of hiring and training an in-house bookkeeper while providing the expertise and resources of a professional bookkeeper.
Businesses of all sizes and types can benefit from outsourcing bookkeeping, as it can save time and reduce the cost of hiring and training an in-house bookkeeper. Outsourced bookkeepers can also provide valuable expertise, such as knowledge of industry-specific accounting regulations and best practices.
When outsourcing bookkeeping, businesses can choose between hiring a freelance bookkeeper or a bookkeeping firm. Freelance bookkeepers work independently and may be more flexible regarding services and pricing. On the other hand, a bookkeeping firm may provide a broader range of services and have more resources to handle more complex tasks.
Outsourced bookkeeping services can be provided on-site or remotely and include different options, such as full-service bookkeeping, where the firm handles all bookkeeping tasks, or virtual bookkeeping, where the firm offers support remotely, also called cloud bookkeeping.
Overall, outsourced bookkeeping can be an excellent option for businesses looking to save time and reduce the cost of hiring and training an in-house bookkeeper while having access to the expertise and resources of a professional bookkeeper.
All types of bookkeeping solutions have their advantages and disadvantages. The best bookkeeping solution depends on the size and complexity of your business, as well as the budget and resources available.
Cost of bookkeeping solutions
The cost of bookkeeping solutions is different. It’s best to shop around and compare prices from a few different bookkeeping services to find the best fit for your business.
Manual bookkeeping pricing
Manual bookkeeping is typically the most affordable option for small businesses, as it doesn’t require any special software or equipment. The main cost associated with manual bookkeeping is the cost of the journals, ledgers, and other record-keeping supplies. These can range from a few dollars for a basic spiral-bound notebook to several hundred dollars for a set of accounting journals.
Additionally, small businesses that choose manual bookkeeping may need to hire an accountant or bookkeeping professional to review and file their taxes, which can add to the cost. The hourly rate for an accountant or bookkeeping professional can range from $25 to $200 per hour, depending on the level of service provided and the complexity of the business’s financial records.
Bookkeeping Software Pricing
Bookkeeping software pricing can vary greatly depending on the type of software and the level of service provided. Here are popular bookkeeping software and their pricing:
QuickBooks Pricing:
QuickBooks offers a variety of software options, including QuickBooks Online and QuickBooks Self-Employed. Prices range from $5 to $150 per month for QuickBooks Online, while the self-employed version is $15 per month.
Xero Pricing:
Xero offers a cloud-based bookkeeping software that starts at $9 per month for their early plan, and goes up to $60 per month for their premium plan.
Wave Pricing:
Wave offers free, cloud-based bookkeeping software that includes invoicing, expense tracking, and financial reporting. They also offer paid add-on services, such as payroll and payments, which start at $15 per month.
Zoho Books Pricing:
Zoho Books offers a cloud-based bookkeeping software that starts at $9 per month for their basic plan and goes up to $29 per month for their professional plan.
FreshBooks Pricing:
FreshBooks offers a cloud-based bookkeeping software that starts at $15 per month for their Lite plan and goes up to $50 per month for their Plus plan.
While the cost of the software is a significant factor to consider, it’s also important to evaluate the features and functionalities that the software offers and how well it fits the needs of the business. Additionally, some software may offer free trial periods, which can be a great way to test the software before committing to a subscription.
Outsourced Bookkeeping Pricing
The cost of outsourced bookkeeping can vary depending on the complexity of your business and the level of service you require. Some bookkeeping services charge an hourly rate, while others may offer a flat rate or monthly retainer. On average, the hourly rate for outsourced bookkeeping services ranges from $20 to $50 per hour but can be higher depending on the location and experience of the bookkeeper. Some online bookkeeping services such as NumberSquad, Bench, or inDinero offer clear pricing packages rather than an hourly rate. Online bookkeeping service pricing starts from $150 to $1,000 depending on the size of the business and the number of transactions per month.
