What does a good bookkeeper cost?

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What does a good bookkeeper cost?

John Blackman
Developer · Austin, TX · Member since 2010 · 371 posts · 284 votes

So I've got a problem and thought the great minds on this site could help me out with my bookkeeping issue.

Our business is starting to grow to the point that keeping the books is taking more time than I want to spend on it. This year we'll be doing more than double the number of projects we did last year which is going to break me with the bookkeeping. So I went out and started looking into hiring one.

My accountant and other builders in the area all had recommendations for bookkeepers, but they all charge $100/ hour. I even found one that charges only $60/ hour. I don't like to think of myself as excessively cheap. I am willing to pay people what their skills are worth. The level of bookkeeping I'm looking for includes making an accurate QuickBooks entry and scanning a receipt to put in a dropbox folder. I'm not looking for a CPA who is going to structure my entities and give me tax advice.

What is a reasonable amount to pay a good bookkeeper? $100/hour is $200,000 a year, more than most executive incomes. I find that rather disturbing as it doesn't strike me as a skill that requires specialized education like a CPA, Lawyer, or engineer. Is bookkeeping so traumatic that no one will do it and you just have to pay that much?

Does anyone have a bookkeeper that charges by the transaction instead of the hour?

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Kenji Kuramoto
Atlanta, GA · Member since 2013 · 1 post · 8 votes
13y

John (and others),
While not a regular poster to this site, I came across this discussion and thought I'd weigh in on John's question about the costs of bookkeeping, since this is an area I have experience in. That said, I have to disclaim that I run a firm that provides entrepreneurs access to flexible accounting resources....including bookkeeping services.

So, in response to John's comments:
1. $100/hr for bookkeeping is far too high. So is $60/hr. I'm hoping that your accountant and other builders may have thought you needed something more than just bookkeeping and maybe more like a Controller. A Controller is performing a more sophisticated role that often requires a strong understanding of Generally Accepted Accounting Principals, uses high-level financial reporting and analytical skills, and often complex accounting systems.
2. You're correct that bookkeeping is not a highly technical nor specialized function. In fact, it's more akin to data entry. So you should not pay equivalent rates like you would to a CPA, attorney, or another professional with deep technical experience.

A few of additional thoughts and opinions (for what it's worth):
1. There is huge volatility in the quality level of bookkeepers. Because most bookkeepers are self-employed or contractors there are hidden gems and then there are some real stinkers. Make sure you perform solid due-diligence on these individuals as they'll often have access to all of your business assets (bank accounts, credit cards, etc) and the instances of fraud in small businesses occur far more frequently than the large company scandals that we read about on the pages of the Wall Street Journal.
2. Because the question about costs was framed up in a rate per hour context, I'll initially respond that I'd seek to be paying around $20 - $40/hour for bookkeeping. That said, when you're paying for a largely transactional/data entry role, I believe an hourly rate model has misaligned incentives. That bookkeeper will not be incented to work efficiently or use automation tools if they can make more income by being slower and more manual. I think bookkeeping can be done on a fixed price basis.
3. This view will likely make me unpopular with some people posting here, but I do not think your tax preparer should also be your bookkeeper. Tax preparation, planning, and strategy is a specialized skill that requires technical expertise and, therefore, you should be prepared to pay more than you would for bookkeeping. Not only that, your books should be accounted for with an eye toward producing financial information for you as the owner, your investors, or your lenders...and not just to make filing tax returns easiest for your CPA.

Thanks for letting me post here and I hope that my comments may prove helpful to some of you. Also, thanks for being patient with my long post....I'm passionate about helping entrepreneurs with their accounting function so I can get a bit carried away! :)

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  • Aaron Mazzrillo
    Investor · Riverside, CA · Member since 2011 · 2k+ posts · 3k+ votes
    11y

    I would strongly advise NOT hiring a bookkeeper off of Craigslist. Been there and spent a few thousand correcting that mess. Ask for a referral from other local investors. There are lots of bookkeepers that know diddly squat about real estate transactions. You need someone with that kind of specific knowledge. The average bookkeeper hasn't handled too many... or any HUDs before. 

    A good referral will go a long way. I got mine from a fellow landlord. She is exceptional, comes to my office for a few hours a month and charges $30/hour. She understand both the management and the flipping side of the business. 

    1Reply
  • John K.
    Investor · Madison, WI · Member since 2012 · 242 posts · 61 votes
    11y

    I spend about $125 per duplex per year on taxes.  I use quickbooks and do all the journal entries myself to save money.  It's also good to keep a eye on the numbers in real time throughout the year.  Only tricky things can be depreciation if you are not familiar with rental property accounting.

    1Reply
  • Allison OBrien
    Levittown, PA · Member since 2015 · 36 posts · 5 votes
    11y

    Many virtual assistants specialize in bookkeeping and can assist you for a fraction of the costs you're associating with these services. 

    0Reply
  • Gita FaustBusiness Member
    Accountant · Richboro - Philadelphia, PA · Member since 2008 · 901 posts · 246 votes
    11y

    Here are some rules about QuickBooks:

    - No journal entries except for Depreciation

    - other to come...

    Gita Faust

    0Reply
  • Joe Schaak
    Investor · Stillwater, MN · Member since 2015 · 106 posts · 44 votes
    6y

    I had a very poor experience with REI Books LLC / Kirk & Joni Yates. I had listened to a podcast with them on Biggerpockets. I hired them to keep my books up to date on a monthly basis so that I could see where I was at with each property at any time. I filed an extension for my 2018 taxes so that they could have time to get the books done (I had hired them late in the filing season). However, when the deadline came for the extension, they hit me with a ton of questions dating back to January of 2018. All things that they should have / would have been asking if they had been keeping the books up to date. My accountant put in some extra time (and my money paying her) to sort everything out at the last minute.

    We had a frank and open discussion about their performance and they took responsibility. I reiterated the importance of up-to-date bookkeeping and made it clear that I fully expected 2019 to be reconciled and completed by the first week of January 2020. First week of January comes and Kirk tells me that he has some questions which he'll get to me in a document. Several weeks later (in February), he finally gets the questions to me and they date back to January of 2019. The books were NOT kept up-to-date.

    REI Books LLC / Kirk and Joni Yates cost me a ton of time and money. There is NO WAY that I would ever use their services again or recommend that anyone else does.

    1Reply
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