The Pros and Cons of Hiring a Bookkeeper

What is a bookkeeper?

A bookkeeper is a financial professional who handles administrative tasks related to recording transactions, managing accounts and preparing financial reports.

Bookkeepers are responsible for maintaining accurate financial records, following up on past-due payments, sending billing reminders, processing payments for suppliers and running payroll. They’re a more appropriate choice than accountants for basic financial tasks because their hourly rates are generally less expensive. [Related Article: Importance of a Strong Finance Team for Accounting and Seeking Capital]

However, according to Charlie McClain, principal at GrowthPoint Bookkeeping, bookkeepers’ responsibilities go beyond basic financial tasks.

“Beyond data entry, a skilled bookkeeper provides foundational insights into your business’s financial health, offering clarity that can inform more strategic decision-making,” McClain explained.

Mark Wilkinson, co-founder and chief financial officer (CFO) at TileCloud, emphasized that bookkeepers play a crucial role in maintaining financial accuracy. “Bookkeepers often act as an early warning system, able to spot discrepancies or errors before they become bigger issues,” Wilkinson noted. “In small businesses especially, they often take on additional tasks like helping with budgeting or tracking cash flow, which can be a lifesaver for [business] owners trying to juggle everything.”

What are the pros and cons of hiring a bookkeeper? 

While bookkeepers can be a valuable asset to your business, allowing someone else to manage your finances does pose some risks. Here are the advantages and potential drawbacks of hiring a bookkeeper.

Pros of hiring a bookkeeper

• Bookkeepers are experienced: Bookkeepers are generally more skilled in managing financial tasks than other employees. While nonprofessionals or inexperienced staff members may be able to handle some bookkeeping duties, they are more prone to mistakes. Trained bookkeepers are less likely to make errors that could lead to financial penalties.
• Bookkeepers offer a fresh perspective: A new bookkeeper can offer a fresh perspective on your business and its operations. They can give you an outside viewpoint on budget management and share tips for running your business more efficiently. They can also teach you ways to cut business costs, provide insights into your spending habits and much more.
• Bookkeepers often have industry-specific expertise: McClain noted that many bookkeepers specialize in specific industries. “They can navigate nuances like commission tracking for Realtors or inventory management for retailers,” McClain explained. “This targeted knowledge streamlines financial processes, maximizes deductions and provides tailored guidance, ultimately yielding more meaningful insights and a competitive edge in your market.”
• Bookkeepers can help you save money: While hiring a bookkeeper comes with costs, it can ultimately save you money. A knowledgeable and professional bookkeeper can help you avoid financial penalties, identify cost-saving opportunities and improve overall financial management.
• Bookkeepers loosen up cash flow: Wilkinson pointed out that bookkeepers can be invaluable in managing cash flow. “A bookkeeper helps with cash flow management by keeping on top of when bills are due and when payments come in,” Wilkinson said. “This makes it easier to avoid cash crunches, which is especially important for businesses that operate on tight margins.”
• Bookkeepers save business owners time: Hiring a bookkeeper gives business owners and company leaders more time to focus on crucial business tasks like growth, customer retention, product development and more. When you don’t have to worry about organizing your books, you can spend more time and effort on your business’s core activities. 

Cons of hiring a bookkeeper

• Hiring an external bookkeeper increases the risk of data exposure: Your bookkeeper will have access to sensitive banking information, including account numbers and online banking credentials. While you’ll likely find a trustworthy financial professional, sharing vital financial data always carries some risk.
• You’re liable for your bookkeeper’s errors: The bookkeeper’s accounting mistakes become your company’s mistakes. Your business is responsible for the bookkeeper’s errors, missed payments and noncompliance.
• Bookkeepers may have hidden costs: Hiring a bookkeeper may incur unexpected fees beyond their standard hourly rate or service package. Some bookkeepers charge additional fees for specific tasks, such as tax filings, financial reporting or software integrations.
• There may be limited face-to-face interaction: McClain noted that outsourcing a bookkeeper — especially a remote one — can make it harder to build a strong working relationship. “Limited in-person contact may lead to communication gaps, slower response times or less personalized support,” McClain cautioned. “Overcoming this requires clear expectations, regular check-ins and a proactive approach to maintaining a close working relationship.”
• Bookkeepers aren’t the best fit for financial strategy: Wilkinson emphasized that while bookkeepers excel at managing financial records, they may not be the best choice for strategic financial planning. “While they’re great at keeping the day-to-day records straight, they’re not always equipped to give high-level financial guidance,” Wilkinson cautioned. “In an instance like this, an accountant or CFO comes in.”

What are some types of bookkeepers?

Before hiring a bookkeeper, it’s important to understand which type best suits your business needs. Consider the following options.

In-house staff bookkeeper

Hiring an in-house bookkeeper is ideal if you have a medium-sized business and want to keep track of the bookkeeper’s day-to-day duties. However, this type of bookkeeper requires a steep financial investment. If you hire an in-house bookkeeper, you must pay for all the resources they need, including their salary and employee benefits.  

Freelance bookkeeper 

If you only need a bookkeeper to reconcile your accounts periodically, consider hiring a freelancer. These independent professionals typically charge an hourly rate based on their expertise and experience.

Virtual bookkeeper

With the rise of cloud-based accounting software and remote work, businesses can easily hire a virtual bookkeeper. Better yet, some of the best accounting software services include access to live virtual bookkeepers through their platforms (or offer this feature as a paid add-on). 

“These bookkeepers work remotely using online and virtual software to manage your financial records,” Wilkinson explained. “They’re perfect for small businesses that want easy access to their numbers on the go and prefer a flexible, virtual collaboration model.”

Agency bookkeeper 

Large enterprises often use bookkeeping agencies to manage their finances, but small and midsize businesses can also benefit from this approach. The cost of using an agency varies based on the type and level of service required.

Niche-specific bookkeeper

Every sector has unique financial considerations that businesses operating within it must account for when doing bookkeeping. McClain noted that niche-specific bookkeepers incorporate these specialized needs into their work.

“Niche-specific bookkeepers focus on a particular industry or business model, such as real estate agencies, medical practices or e-commerce stores,” McClain said. “Their specialized expertise with industry regulations, unique expenses and revenue patterns allows them to offer more targeted advice, create more accurate financial reports and improve overall operational efficiency.”

Outsourced bookkeeper

When you outsource your bookkeeping duties to a third party, that company sets up and trains a dedicated team to manage your financial tasks. The outsourcing partner typically provides the necessary infrastructure, including computers with accounting software, voice-over-internet protocol systems for billing reminders, office space and other essential resources.

What should a business owner look for when hiring a bookkeeper?

Here are some factors to consider when choosing a bookkeeper:

• Knowledge and reliability: Your bookkeeper should have a proven track record of success, especially among clients in your industry.
• Certification: While legal requirements for bookkeepers aren’t as strict as for accountants, a certified bookkeeper may provide additional credibility. Membership in a professional bookkeeping association is another factor to consider.
• Location: Most modern bookkeeping is done online and can be accomplished remotely. However, if you prefer occasional in-person meetings, you may want to focus on local bookkeepers.
• Accountability: Ensure your bookkeeper is open to accountability measures like regular bookkeeping reviews, project management software, authorization for specific bookkeeping tasks and other employee monitoring measures. These controls help ensure your books accurately reflect your finances and don’t lead to trouble at tax time.
• References: Ask bookkeeper candidates for references who can verify the quality of their services. Consider sending a list of questions to these references to gain deeper insights.

How much do bookkeepers charge?

Hiring a bookkeeper can cost anywhere from a few hundred dollars per month to lower double-digit hourly rates. McClain noted that costs vary based on expertise and certification level.

“In practice, a small business might pay $30 to $60 per hour for a qualified bookkeeper with QuickBooks certification,” McClain explained. “More advanced bookkeeping or advisory services may range from $75 to $100 per hour. CPA [certified public accountant]-level support often starts around $125 to $200 per hour.”

What is the best online bookkeeping software?

While many of the best accounting software solutions can handle bookkeeping functions, some bookkeepers may prefer dedicated bookkeeping tools. Here are some popular bookkeeping and accounting options to consider for your finance team.

QuickBooks Live 

QuickBooks Live offers comprehensive bookkeeping services for small businesses using QuickBooks Online. The service assigns a dedicated, QuickBooks-certified bookkeeper to your account, who will organize your financial records and ensure your accounts are accurate and current. You can communicate with your bookkeeper via chat, video calls or screen sharing for real-time collaboration.

QuickBooks Live can help you prepare your books for tax season but does not file tax documents. However, through QuickBooks Live Tax, powered by TurboTax, businesses can access expert assistance for tax preparation and filing within the QuickBooks platform.

FreshBooks

FreshBooks is a popular accounting solution with many bookkeeping tools for small businesses. It can generate invoices, handle expense management and create financial reports. The software has an easy-to-use interface and integrates with PayPal, Google Workspace, Stripe and other platforms. It also has a mobile app that lets you update and track your books on the go. Read our detailed FreshBooks review to learn more about features and pricing.

Zoho Books

You can organize your books and collaborations with Zoho Books on one platform. The software allows you to add your bookkeepers and accountants and monitor them through the platform. In addition to invoicing and billing reminders, Zoho Books can sync with bank accounts to track expenses and payments. It also allows you to keep an inventory of your office supplies or product stock to know when and how to replenish them easily. You can also request reports, such as profit and loss statements and tax summaries. Our in-depth Zoho Books review has more details about features and functions.

Xero

Xero is cloud-based accounting software that lets you handle all accounting and bookkeeping tasks on one platform. You can check product inventory, save contacts and evaluate business performance through generated reports. It also has a sales tax feature that helps you file your taxes and prepare sales tax returns with automatic calculations. Read our review of Xero for more information on features and pricing.

Kashoo 

Kashoo is considered a top QuickBooks alternative; it has essential accounting and bookkeeping services suitable for very small businesses. It helps you track expenses and bills, create invoices and generate basic reports, such as income statements and balance sheets. The platform is easy to use but doesn’t offer full bookkeeping features like product inventory and pre-invoice documents. You can access your account through a mobile app for on-the-go tracking. 

To hire or not to hire: That isn’t quite the question

The potential disadvantages of hiring a bookkeeper are the same as the possible drawbacks when hiring any team member, whether in-house or outsourced. The question isn’t whether or not to hire a bookkeeper but how to find one with maximum skill at the lowest cost and risk. Spending a little more to get organized, avoid costly penalties and improve your financial future is well worth the money.

Derek Gallimore and Jennifer Dublino contributed to this article.