Book keeping complexity versus Cost

June 3, 2019 12:03 PM

I have my own business, and my book keeper recently raised their prices and it is now a sizeable sum. I'm not sure where the play off between 'its too complicated' and 'for that money, it's just not that complex so I shall do it myself' lies on the cost/benefit scale.

I run my business (LLC) through Quickbooks and it is not very complex (I feel) but my book keeper is now raising their prices to a level that is making me rethink if I really need them or (in fact) what they *actually* do given a modern accounts package like Quickbooks. Some outlines:

1: I am the only employee at this point. Quickbooks handles my payroll/taxes etc and I process the tax payments and everything when prompted by Quickbooks.

2: Last year, there was around 500 TOTAL transactions on the checking/savings and credit card accounts for the business. There may be max 700 this year, I think. It is basically Hotel/flights/rental car per trip I do, 2-3 times per month, plus occasional other expenses. Clients are invoiced per trip (so maybe 50 invoices per year).

3: Book keeper (I have a separate accountant for taxes) already lowered their service to once per quarter, per my request based on my feeling of lack of complexity, but now wants to raise their prices to what amounts to $1800 a year. Is that a reasonable cost for this level of complexity? They are saying that they wanted to raise it to $2400 a year but am giving me a year's warning, basically. I like them, but I think I am small fry and more hassle than they make money from.

I'm... just not seeing how it can cost that. Or, more precisely, not seeing what is needed that I can't set up/automate in quickbooks to get some of the way there and have my accountant deal with the rest at the end of the year. I can't imagine Quickbooks is perfect, but it is supposed to be book keeping software, so why can it also need nearly $2k of extra skilled manipulation? Can I do some of it myself and have an extra $500 bill from the accountant directly instead?

So. What does the book keeper do? Check through Quickbooks and basically align transactions to receipts and/or keep the software square with the real world transactions? Just how complex would it be for me to learn what I'd need to do this myself for (what I think must be) a simple-ish business. Or am I completely out of whack on that? Is it just not worth my time to do this myself?

posted by Brockles to Work & Money (7 answers total)

Option 3, get quotes from other bookkeepers and during this process, ask them to rate the complexity of your business and also have them explain to you what the value they feel a bookkeeper brings. One thing it brings is just having a task off your plate! Having an employee make your life easier and reduce your mental load (and someone who knows your business if and when you expand or grow) might be worth it for less than 2k/yr which is also a write off. What % would their services be as a cost to your business?
posted by amanda at 12:47 PM on June 3, 2019 [1 favorite]

What's your time worth? You're looking at less than fifty bucks a week here, and as amanda noted, this is a deduction. You'll never get your time back from the IRS.
posted by kate4914 at 1:11 PM on June 3, 2019 [4 favorites]

I look at this differently - as you noted, you have a separate accountant for taxes - so I find the IRS point kind of irrelevant - the accountant you hire is going to be the point person for all of those queries.

If you want to better understand what your bookkeeper is doing with quickbooks, I would look at doing a course like this. Bookkeeping is not rocket science, and tbh, at 500 transactions a year, I feel like this is something you EASILY could do on your own - that's less than 2 transactions a day!

The course itself is 4 hours and only $11. I would make a deal with myself - buy the course, and see if you do it over the next month or so. After that, see if you actually input/process your transactions. If you don't/feel like your time is more valuable, then hire another bookkeeper.
posted by unexpected at 3:45 PM on June 3, 2019 [1 favorite]

I'm pretty much with unexpected here, but it sounds like your first step should be to arrange a meeting with your current bookkeeper to better understand what they're doing for you. I used to work in a community centre, and had insight into our Quickbooks there; it was pretty easy to figure out how it worked just by looking at the various transaction histories.

After you meet with your bookkeeper, you should hopefully have an understanding of how their time is being spent, and then you can better judge whether it's worth making a (probably temporary) investment of time to learn Quickbooks, or continuing to hire a bookkeeper. Personally, I'd lean toward the former; the scale of the business sounds like you could probably handle it.

If you're already using Quickbooks yourself for some things, you're halfway there, too. Feel free to MeMail me if you have a bit more detail!
posted by sagc at 6:22 PM on June 3, 2019

How do they get the information for your expenses and invoicing? If you are sending them all that somehow, outlining invoicing and gathering all your expenses you can probably do the invoicing and posting of Expenses in aboit the same amount of time.

Are they using their own quick books? Something to consider would be that you will have to set that up on your own equipment. You will want to ask them to send you your company file etc.

If you are already entering all your expenses and invoices the
I would find out what all you Re paying for. Bank recs? Balancing accounts? A course is a good idea to learn to move around in the program with ease
posted by domino at 6:47 PM on June 3, 2019

Best answer: Based on your interactions here on Metafilter, I would say you are more than capable of doing this yourself. To me, what you are buying by getting a bookkeeper to help with Quickbooks is you are buying time. Whose cost per hour is more, your time or the bookkeepers? Do you have the available time? If it means less time billing a client then consider if your billable time is going to bring in more than the cost of the bookkeeper. If you have the time and will not have to cut back on client billables to do the bookkeeping yourself, then I suggest you should be doing it yourself.
posted by AugustWest at 11:30 PM on June 3, 2019 [1 favorite]

Your bookkeeper is unlikely to do anything that is rocket science. In essence you take your bank and credit card statements and make sure that the transactions are all reflected in your books.
You also raise the invoices and when they are paid you record that. There are a few reconciliations of one bit of information to another. So it is detail oriented work you need to be a bit methodical about but complicated not so much. However, a couple of points:

If you do some but not all the things your bookkeeper does or if your books start to contain a number of errors and you want the accountant to fix this at the back end, expect your accountant to raise their fees. At the moment they should be getting fully reconciled and nicely set up records that they literally just compute your tax on. If they have to spend time identifying and fixing errors before they can do their thing this will take more of their time, which they will expect to be compensated for.

Bookkeeping is a task you'll want to get caught up on at regular intervals. Presumably your bookkeeper has provided an estimate of how much time it takes them to maintain your books each month or quarter. Expect it to take longer if you do it. So the question would be if you have time and inclination to do this regularly and to do it well enough, so that the additional time the accountant will need to spend is limited. Personally, I am time poor. So I'd pay for somebody to do it.

So perhaps shop around and get recommendations for other bookkeepers.
posted by koahiatamadl at 8:29 AM on June 4, 2019