When searching for a year-round financial solution for your small business, you may think that a monthly bookkeeping service is your only option. However, monthly accounting is a similar solution that also includes extra benefits for an extra cost.
At Patrick Accounting, we’ve provided comprehensive accounting, tax, and advisory services to hundreds of small businesses over the last 20 years. But we know that it's not the best solution for all businesses.
That’s why we’re addressing some common questions about the difference between monthly bookkeeping and accounting services.
Outsourcing With a Bookkeeping Service
Outsourcing your bookkeeping can save time and money, but where you outsource matters. Bookkeeping services typically charge either an hourly rate or a fixed monthly fee, and the cost and quality can vary significantly depending on whether the provider is overseas or based in the United States.
Overseas Bookkeeping Services
Overseas bookkeeping services typically charge $12–$25 per hour, making them an attractive option for budget-conscious businesses. But before you commit, consider these potential drawbacks:
- Time zone challenges: You might not always get answers when you need them.
- Language barriers: Miscommunications can lead to costly mistakes.
- Regulatory risks: Many overseas providers aren’t well-versed in U.S. accounting laws.
- Limited services: Need financial statements? Many overseas firms don’t include them in their offerings.
U.S.-Based Bookkeeping Services
Looking stateside? Domestic providers tend to charge more, but you’re also paying for experience and accessibility. U.S.-based services typically bill in two ways:
- Hourly rates: On-site bookkeepers cost $25–$100 per hour. For a small business, that’s about 3–15 hours per month.
- Flat monthly fees: Remote services usually charge $300–$1,200 per month for basic bookkeeping tasks.
What Does “Basic Bookkeeping” Actually Cover?
Whether you go overseas or stick to a U.S. provider, the base package usually includes:
- Categorizing transactions
- (Maybe) Monthly financial statements—check with the service to confirm
If you need more, expect the price to climb. Add-ons like annual tax preparation, payroll processing, or business consulting can significantly impact your budget.
Outsourcing With a Monthly Accounting Service
What’s the difference between bookkeeping services and monthly accounting services?
In general, the two are very similar. However, the biggest difference is that monthly accounting includes more services - and therefore more value - but at a higher investment. It’s basically a bookkeeping, consulting, and tax service all in one.
As an example, we'll use Patrick Accounting's setup for an idea of what the investment might be.
We've got a couple of different service packages depending on your business's needs. For our Core services, a client on average pays around $750 to $800 per month.
If you include payroll services, the cost averages around $1,000 per month.
However, depending on your activity and complexities, your fee can range up to $2,500 - $3,000 per month for one entity.
Monthly accounting includes the following in that set monthly investment:
- Bookkeeping
- Monthly financial statements and discussions around them
- Unlimited business operations and financial advice
- Year-round tax strategy: tax projections, planning, and preparation
Monthly accounting services also offer other services that you can add on for an extra cost:
- Annual tax filing
- Payroll processing and add-on features
- Business consulting (sometimes–depending on how large the project is)
- HR services, workers’ compensation insurance, and employee benefits
- Specialized tax services
Is Monthly Bookkeeping or Accounting Better for Small Businesses?
Is bookkeeping or monthly accounting better for you? It all depends on how much money your business makes and how much financial activity you have.
A bookkeeping service (paired with an annual tax service) is a good place for extremely small businesses and startups to begin. After all, it takes time to afford a larger investment, and you need to have more financial activity before you can truly get value from an insightful service like monthly accounting.
Meanwhile, monthly accounting is an ideal solution for established small or medium businesses and startups expected to scale that can invest in their accounting. It’s a complete service with value to match or exceed the price. This allows business owners to stay on top of their finances and make better-informed decisions.
If you’re ready for monthly accounting but you still only use bookkeeping, that can put your business at risk. If you have any issues, you won’t notice them as quickly with bookkeeping alone–and they can snowball.
Is Your Business Beyond Basic Bookkeeping?
Bookkeeping isn’t the only year-round financial solution for a small business! Monthly accounting is a great option that combines bookkeeping, advice, and taxes in one set monthly investment - and it includes options to add on more services as you see fit.
Now that you know about the differences in costs and benefits,
as well as when your business might be ready to upgrade to monthly accounting, give a read over Who is a Good Fit for Patrick Accounting.
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