When you’re running a small business there are several tasks that can distract you from achieving your goals. Accurate information about how your business is performing allows you to focus your effort where it will make the most impact.

Professional bookkeeping services help you maintain clean financial records so you have the visibility you need to lead employees and grow your business.

This ultimate guide covers everything you need to know about bookkeeping services including costs, the best bookkeeping services, and important considerations to help you find the best service for your business.

What is Bookkeeping?

In simple terms, bookkeeping is recording and organizing the financial transactions that take place in a business. Bookkeeping maintains accounting and financial documents such as ledgers, journals, financial statements, income tax records, and more.

Bookkeeping is the backbone of a small business. The financial system depends on it.

Without accurate financial statements, it’s nearly impossible to tell if your business is winning or losing. When done correctly, bookkeeping is the primary way for owners to get the pulse on what’s happening with the business.

Whether you handle bookkeeping in-house or outsource with a reputable provider, the service a bookkeeper provides will only add value to your business.

How can a Bookkeeping Service Help My Business?

A bookkeeping service can assist you in solving organizational problems in the following ways:

Resource Allocation

A good bookkeeper can untangle the web of accounts and transactions to develop clear and concise financial statements.

This gives you the information you need to identify areas of opportunity that wouldn’t be possible without clear reporting. Start with the easy opportunities and use the profits to grow your business.

Crisis Avoidance

Regularly updated financial statements give you the visibility you need to overcome challenges before they transform into full-fledged crises. A few things to pay close attention to that if left unchecked could spell the end of your business:

  • Customers delaying payment
  • Planning for seasonality
  • Change in the cycles of your business
  • Debt service obligations
  • Expense creep / bloat

Cash Flow Problems

Just because there’s money in the bank, it doesn’t mean it’s yours to spend. Your bookkeeper will log every cash inflow and outflow code it according to a system that makes sense so you can understand your position.

They can also act as an advisor and assist you with budgeting and projections.

Tax Preparation and Filing

Most bookkeeping services are experts at preparing and filing taxes. Either they provide you the service to file, or they can coordinate with your CPA in filing quarterly and year-end taxes.

Their coding of income and expenses will help you maximize deductions. Having clean and organized books will also help in the event of an audit.

Accounts Payable and Receivable

Bookkeeping services keep your accounts payable and receivable up to date. Payment reminders can be setup to help you know which customers to contact about outstanding invoices to reduce late payments.

Expect to see a complete record of all outstanding invoices and bills in a simple and understandable format.

Uniform Accounting Structure

Bookkeeping service providers will enforce a uniform financial structure across all company platforms. Every part of the company will work with the same accounting system.

This allows you to standardize operations and focus on making strategic decisions. When all your employees use a unified accounting structure, it significantly reduces the chance for discrepancies between departments.

Payroll Management

Mistakes and errors, especially because of paper time cards, during data entry can lead to underpaying or overpaying an employee. Or you could deposit the pay into the wrong account.

Effective payroll management also requires extensive knowledge of tax laws and deposit rules. Bookkeepers can help with efficient payroll management by providing:

  • Direct deposit for paychecks
  • Federal tax liabilities
  • State and local tax liabilities
  • Unemployment tax liabilities
  • Tax forms (both quarterly and year-end)
  • Customized reporting
  • Management of W-2’s and 1099’s

The right bookkeeping service will make sure that your entire payroll process goes smoothly so you can focus on running your business.

Financial Statements

Some businesses assume that generating financial statements quarterly or bi-annually is adequate. A careless attitude about financial reporting is like texting and driving – if you’re not paying attention, the risk of having an accident increases exponentially.

Bookkeeping services generate monthly income statements, sales reports, balance sheets, and cash flow statements for your business. Some services even offer real-time reconciliation of accounts.

As long as you’re getting monthly statements you will have the data you need to scrutinize your financial position and monitor your performance compared to industry benchmarks.

Best Bookkeeping Services for 2021

Here are the best bookkeeping services so you can decide which provider is right for your business.

Bookkeeping ServiceOverviewCostBest for
BenchAll-in-one bookkeeping software with monthly reconciliation; add-ons available for taxes, payroll, and benefitsFrom $139 to $349 per month depending on monthly expensesCash basis small businesses who aren’t using bookkeeping or accounting software yet
Bookkeeper.comVirtual service that provides essential bookkeeping services and assistance with payroll, taxes, financial planning, etc.$285 or $495 per month depending on the number of transactionsBusinesses that already use QuickBooks Online and are looking for services beyond basic bookkeeping
KPMG SparkFull-service “cloud accounting” solution with add-ons available for taxes, HR and payroll, inventory management, etc.From $179 to over $495 per month depending on the number of bank accountsFast-growing businesses that need to integrate with other systems; larger businesses that need more from their bookkeeping services
Merritt BookkeepingSimple virtual service focused on basic bookkeeping tasksFlat fee of $190 per month (plus QuickBooks Online)Very small businesses on a budget who only need help with bookkeeping
QuickBooks LiveQuickBooks-specific virtual service that offers organizational assistance, monthly reconciliation, tax prep, and reportingFrom $200 to $600 per month depending on monthly expenses (does not include the cost of a QuickBooks Online subscription)Businesses who already use or want to use QuickBooks Online
Streamline BookkeepingVirtual service offering accurate and timely financial statements, great customer service, help with data entry, and monthly phone meetings to review books$200 per month for most businesses with up to 20 employeesProfessional service firms and small businesses

Bench Bookkeeping

Bench offers a unique app-based solution to help solve your bookkeeping challenges. They will categorize your transactions, reconcile bank statements, and prepare financial statements.

You can focus on running your business while their team of professionals takes the responsibility for handling your books.

Bench has five pricing tiers ranging from $149 per month to $349 per month. Your average monthly expenses determine the pricing. Bench, like most tech companies, also offers a discount for annual billing. 

Note that BenchTax for tax filing is a separate service and will cost an additional $600 to $1,320 per filing, depending on your corporate structure.

By default, Bench performs cash basis bookkeeping. You can also use a modified cash basis or accrual basis bookkeeping for an additional fee.

Bench features

  • Reconciliation of bank and credit card accounts
  • Monthly financial statements
  • Income statements
  • Balance sheet
  • Income tax summary report
  • Tax filing / preparation

Although Bench is most suitable for businesses that use cash basis accounting, its services are well recognized in the industry.

Related: Full Review of Bench Bookkeeping

Bookkeeper.com

Bookkeeper.com provides an all-in-one solution for small business bookkeeping, payroll, accounting, tax, and bill pay. They base pricing on the number of transactions across all your accounts.

The Small Business plan starts at $285 and allows 125 or fewer transactions. At $495, the Small Business Plus plan allows up to 250 transactions per month. The Small Business Plus plan also includes a few additional features beyond what you’ll find in the Small Business plan.

Bookkeeper.com Small Business features

  • Monthly reconciliation
  • Monthly financials
  • Balance sheet
  • Profit & loss statement
  • General Ledger
  • Statement of cash flows
  • Essential document storage
  • Accounting software setup
  • Expense management

Bookkeeper.com Small Business Plus also includes

  • Monthly performance report with KPIs (key performance indicators)
  • Class and location tracking (additional fee possible)
  • CFO / advisory for strategic planning

Bookkeeper.com could be a perfect fit for your business if you have a few substantial expenses as they price their service solely based on the number of transactions. They can also help you understand whether cash basis or accrual basis accounting is best for your business and keep your books accordingly.

KPMG Spark

An ideal choice for companies that need their accounting software to integrate with other systems. KPMG Spark offers a full suite of accounting services, including payroll and invoicing.

KPMG Spark bookkeeping relies on “cloud accounting” to keep your books up to date. Once you connect all your business bank and spending accounts, then transaction data flows into your account in real-time.

The live bank data eliminates manual entry and reduces the chance for errors. It also means your online dashboard is always current, which eliminates the need to do monthly reconciliation.

Monthly pricing is based on the number of accounts that include transactional data. This includes checking, savings, credit card, loan accounts, and payment processors like Stripe or PayPal.

The base plan for $179 includes monitoring for up to three accounts. 7-10 accounts gets an increase to $495 and there’s a custom option available in case you have more. Spark also offers many add-on features available for an extra fee.

KPMG Spark features

  • Simple onboarding / account connection process
  • Dedicated bookkeeper and manager
  • Real-time accounting dashboard
  • Monthly income statement
  • Balance sheet
  • Unlimited users
  • Expense tracking
  • Invoicing
  • 3rd party software integrations

KPMG Spark add-on services

  • Accept invoice payments (credit card payments include a fee of 2.9% + 55¢ per invoice paid)
  • Tax preparation (starting at $50 per month)
  • Business licensing (starts at $20 per month)
  • R&D credit feasibility study ($500 one-time refundable fee)
  • Payroll services

The major disadvantage of KPMG Spark is that it could be too expensive for small companies that follow an accrual-basis accounting system. That said, the reviews for this bookkeeping service are through the roof and the company employs excellent staff with impressive communication skills.

Merritt Bookkeeping

An excellent choice for businesses that are only looking to outsource bookkeeping, Merritt Bookkeeping offers a very narrow feature set for a low fixed-fee of $190 per month (plus a subscription to QuickBooks Online).

Merritt will update your books every month with recent business activity, using their best judgement to code transactions. You’ll receive monthly financial reports including a profit & loss statement and balance sheet.

You can review their work using a simplified user interface they developed. Their software is meant to makes the process easier for those without experience using accounting software.

Note that you cannot access the QuickBooks file Merritt keeps on your behalf.

Merritt Bookkeeping features

  • Automated bank statement retrieval
  • Fixed pricing
  • Easy user interface
  • Profit and loss statement
  • Balance sheet
  • Issues 1099’s

Merritt Bookkeeping doesn’t include

  • Tax filing
  • Accounts receivable and payable
  • Inventory management
  • Payroll services
  • 3rd party software integrations
  • Consulting and tax advice

If you’re looking for a simple service with a low fixed fee Merritt Bookkeeping could be a good fit for your business. A 90-day money-back guarantee can help you decide if it’s the right service for you.

Quickbooks Live

QuickBooks has an impressive range of products, including the industry leading accounting software for small businesses.

QuickBooks Live is essentially an add-on service for QuickBooks Online, relying on certified online bookkeepers to review and code your business transactions. They refer to this as “full-service” bookkeeping.

The cost for QuickBooks Live is based on your average monthly expenses and ranges from $200 to $600. You’re also required to subscribe to QuickBooks Online as part of this service ($25 to $150 per month).

The service has a one-time setup fee of $50 which includes setting up a chart of accounts, connecting bank and credit cards accounts, creating reminders, and customizing invoices. You’ll also receive tips from a bookkeeper by phone or videoconference.

Their setup service only includes setup of your QuickBooks Online account. Your bookkeeper does not help with cleanup, only setup. Also be aware that payroll is not included in the QuickBooks Live setup.

QuickBooks Live features

  • Transaction coding and categorization
  • Monthly reconciliation
  • Financial reporting
  • Monthly reviews and PDF reports
  • Year-end financial reports
  • Tax preparation and filing assistance

QuickBooks Live doesn’t include

  • Sending invoices
  • Paying bills
  • Inventory management
  • Accounts receivable or payable
  • Financial advisory services
  • Tax advice
  • Tax filing
  • Creating or sending 1099’s

Payroll services are not included with QuickBooks Live bookkeeping, but QuickBooks Online offers full service payroll for an additional cost. They provide support through video calls and chats with your bookkeeper. The service works with both cash and accrual basis accounting methods.

Related: Bench vs QuickBooks Live Virtual Bookkeeping

Streamline Bookkeeping

Streamline Bookkeeping specializes in process-driven virtual bookkeeping for small businesses and professional service firms. Clients are primarily doctors, attorneys, chiropractors, web designers, architects, consultants, real estate investors, and non-profits with 1-20 employees. As an experienced CPA, Streamline Bookkeeping helps business owners increase profitability through informed financial decisions.

Each client has three dedicated staff members to ensure all transactions are properly recorded, reducing errors. Having several team members familiar with your account means you’ll always be able to get the help you need if questions arise.

During initial setup you’ll get a customized client checklist detailing how your accounts are reconciled. Secure limited access or view-only access is setup with your financial institutions for fraud prevention which also improves accuracy of data entry.

Pricing is a fixed monthly fee based on the average number of monthly transactions. Most clients pay $200 per month. A QuickBooks Online account is required, but when you sign up through Streamline Bookkeeping you’ll receive 50% off the standard rate.

Streamline Bookkeeping features

  • Monthly reconciliation
  • Data entry of all business transactions
  • Transaction coding and categorization
  • Monthly phone meetings to financial statements
  • Profit & loss statement
  • Balance sheet
  • Tax preparation
  • W-9 management
  • 1099 filing

While most of their clients use QuickBooks Online, Streamline Bookkeeping is also certified with Freshbooks, Wave Accounting, and Xero.

If you go with Streamline Bookkeeping you should feel comfortable knowing your financial records are accurate and up to date. An additional plus is their track record for friendly customer service and reliability are top notch.

The Best Bookkeeping Service for Your Business

Like most service orientated businesses, bookkeepers come in many shapes and sizes. As you develop the criteria to find the right bookkeeping service for your business, pay attention to these important considerations:

Dependability

A downside to hiring an individual bookkeeper is they become a single point of failure if they take a leave of absence or otherwise cannot perform their duties. This could leave you scrambling, trying to figure out their system, potentially causing errors and taking time and attention away from running the business.

Since maintaining financial records plays such an important role in your business, it should come as no surprise that the dependability of your bookkeeper matters. Look for a bookkeeping service that has proven and efficient processes.

The service you choose should have multiple team members reviewing your transactions so that if one has an issue, the service can continue uninterrupted. An additional benefit of choosing a bookkeeping service organized this way is that you should see a reduction in errors because of their system of checks and balances.

Payroll Services

If your company engages contract-based employees or freelancers it might require more extensive payroll services including management of W-2’s, W-9’s, and 1099’s. While most bookkeeping services offer payroll assistance, some do not.

Among those that do, some providers offer a fully managed service while others offer support so you can manage payroll yourself. Be sure to pay attention to the details each service provides to ensure you can make the most of this.

Setup Services

When you hire a bookkeeping service they will require you to install and setup new software such as QuickBooks. It’s imperative to get the data migration right since it’s the foundation for your financial records.

While you could try this yourself, we recommend leaving it to the professionals.

Make sure that the service you choose provides personalized software setup and migration services to help avoid the pains of data normalization. Besides being tedious, this is best left to those who specialize in accounting to ensure accuracy.

Customer Service

Although many bookkeeping services rely on technology and are now cloud-based or online, it’s still important to call your bookkeeper when issues arise.

KPMG Spark is known for having the best customer service and support of the large online bookkeeping services. We found Streamline Bookkeeping to have the best customer service of the independent services we reviewed.

Most services work around the clock offering help and guidance to clients. For a fast-growing business, you need a bookkeeping service willing to go to great lengths to solve your problems.

Costs / Pricing Model

There could be a wide range of prices, even for similar services, so it’s important to consider how the providers classify your particular business. Each provider has a different pricing model.

The cost for bookkeeping service may be based on the number of accounts, your total expenses, or how many employees you have. Others use an hourly rate, set monthly fee, or retainer.

If you want to compare prices from all of the top virtual and online bookkeeping services, check out our guide on bookkeeping pricing packages.

Begin by evaluating your company’s accounting requirements, then evaluate multiple providers to find the best fit for your business.

Final Word on Bookkeeping Services

Outsourcing your bookkeeping with a professional service will take the weight off your shoulders, giving you more time to focus on running your business. An organized bookkeeper will help your CPA save time when you file taxes, which should bring you additional savings.

Remember that bookkeeping isn’t just about compliance. The reporting, analysis, and guidance provided by an expert service will give you the visibility you need to help your business thrive. Bookkeeping is a solution that every business will benefit from.

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