This is by far the number 1 question that we get asked on a day-to-day basis, so we made a video of it! Check out our break down of what you can expect to pay for the different level of outsourced bookkeeping/accounting services these days.
Topic – What to Expect from My Accounting Budget
[00:37] If you’re a new entrepreneur and just start hiring people. This budget is where you can start from. You can expect to get a basic set of the book from your bookkeeper with $500 budget. It’s not good enough to provide enough information to make strategic decisions. But with this budget, it should be good enough for filing tax.
[01:02] Many automated bookkeeping services are designed for this price range in the market. You’ll have a set of book and few reports. And you’ll make sure someone is looking into the numbers. However, the automated bookkeeping services need a lot of back and forth, but less hand-holding. That means no strategic planning session or consulting compliance work.
[01:37] If you’re a small company around $1 million, you should consider this price range of the services. You’ll have someone to take care of your bills and invoices and get the monthly close relatively easy. Also, you should have your reports in terms of balance sheet, income statement, and cash flow statement every month. And have someone who will walk through these numbers with you.
[02:04] At this point, you can except your financial partner sits down with you and help you sort thing out. For instance, build out the processes and systems and have a strategic conversation based on the numbers. The higher price you pay, the more complex work you should get such as “what metrics are we tracking”, “What numbers are we looking at?” These are at least you can expect at this level of accounting.
Over $6,000 Budget
Once you’re considering spending more than $6,000, you’ll think whether to bring in in-house controller rather than a high-end outsourcing accounting department. With $7200 budget, you can hire a decent controller. But our founder, Michael would suggest sticking with a high-end accounting department for now. And it’s better to wait until the budget exceeds more than $8,000/month. At that time, your company is getting bigger and probably more than $5 million for a year.
Takeaways – How to Calculate Accounting Budget
Keep your accounting efforts within 1% to 3% of your total revenue. If you’re doing a million dollar revenue, $30,000/year is where you can start at. If you’re running an $8 million company, $80,000/year is pretty good.
Hope you find this video helpful, and let us know if there’s any question. Cheers!