TL;DR
- Short answer: Most small businesses should outsource bookkeeping because it usually costs less, gives you broader expertise, and reduces key-person risk.
- Best fit for in-house: Hire in-house if you need full-time, on-site support that blends bookkeeping with admin or operations tasks.
- Best fit for outsourced: Choose outsourced or fractional bookkeeping, meaning part-time outsourced bookkeeping support, if you want accurate books, monthly reporting, and a professional process without hiring a full-time employee.
- What this post covers: Real costs, tradeoffs, a side-by-side comparison table, and when each option makes sense.
Last updated: May 6, 2026
For most small businesses, outsourcing your bookkeeping is the better choice. It usually costs less than hiring in-house, gives you access to more than one person’s experience, and removes a lot of management work. If you need someone physically in the office every day handling admin tasks too, an in-house hire may make sense. This guide is for founders and small business owners who want a clear way to compare cost, coverage, and fit.
How much does an in-house bookkeeper cost?
Many business owners look at salary first. That is only part of the cost.
A typical full-time bookkeeper may earn $45,000 to $55,000 per year. But your actual cost is higher once you add payroll taxes, workers' compensation insurance, benefits, and paid time off.
You also have overhead costs, which means the extra business expenses required to support an employee. That includes desk space, a computer, software subscriptions like QuickBooks Online or Xero, training time, and management time.
For many small businesses, the total annual cost of an in-house bookkeeper lands around $65,000 to $75,000.
How much does outsourced bookkeeping cost?
A professional bookkeeping service usually costs between $20,000 and $42,000 per year, depending on transaction volume, cleanup needs, payroll, accounts payable, and reporting complexity.
That often makes outsourcing 25 to 50 percent less expensive than hiring in-house. It also removes the need to recruit, train, supervise, and backfill the role.
What does the cost comparison look like side by side?
| Cost Category | In-House Bookkeeper | Outsourced Bookkeeping |
|---|---|---|
| Base service or salary | $45,000 to $55,000 | $20,000 to $42,000 |
| Payroll taxes and benefits | $10,000 to $15,000+ | $0 |
| Hardware and software | $2,000 to $3,000 | Often included or reduced |
| Office space and utilities | $2,000 to $4,000 | $0 |
| Recruiting and training | Additional cost | Usually not needed |
| Backup coverage | Limited | Included through team structure |
| Estimated annual total | $65,000 to $75,000 | $20,000 to $42,000 |
What are the benefits of outsourcing?
Outsourcing gives you access to a team instead of one person. That matters when your business runs into messy reconciliations, sales tax questions, payroll issues, or reporting delays.
At Books LA, we work with small businesses and startups in QuickBooks Online and Xero every day. That repetition creates stronger processes and more consistent reporting than most one-person setups can offer.
Outsourcing also creates redundancy. If one team member is out sick or on vacation, your books do not stop.
Many owners also prefer outsourced support because it is easier to scale. You can increase the level of service as your business grows without going through a new hiring cycle.
What are the benefits of hiring an in-house bookkeeper?
An in-house bookkeeper can make sense when the role is broader than bookkeeping. Some businesses need someone in the office who also helps with operations, paperwork, vendor coordination, or front-desk tasks.
In-house support can also be useful if your workflow depends on physical documents, cash handling, or daily coordination with staff on-site. In those cases, proximity matters.
If your company is large enough to support a full internal finance function, an in-house hire may also fit well. That is more common once complexity and volume rise substantially.
What are the risks of relying on one in-house person?
When one employee handles reconciliations, bill pay prep, and journal entries, you create concentration risk. If they leave, get sick, or make a mistake, there may be no immediate backup.
There is also less separation of duties. That means fewer built-in checks and balances across the workflow.
With an outsourced firm, the work is usually reviewed by more than one person. At Books LA, we use layered review so your books are not dependent on a single individual.
What does a real example look like?
Here is a simple example for a Los Angeles coffee roasting company doing $1.2 million in annual revenue.
Option A: In-house bookkeeper
- Salary: $50,000
- Payroll taxes and benefits: $12,500
- Software and hardware: $2,500
- Office space and utilities: $3,000
- Total annual cost: $68,000
This setup gives the owner one dedicated person. But if that person also handles admin work, financial reporting may still lag.
Option B: Outsourced bookkeeping
- Annual package: $30,000
- Benefits and payroll taxes: $0
- Software: included or reduced through the firm
- Total annual cost: $30,000
In this example, the business saves $38,000 per year. The owners also get reporting support without adding a direct employee.
How does turnover affect the decision?
The average in-house bookkeeping role can be hard to fill and harder to replace. If your employee leaves, important process knowledge can leave with them.
That usually creates a gap while you recruit, train, and rebuild the workflow. During that time, reconciliations and month-end reporting often slip.
An outsourced firm spreads that knowledge across systems, documentation, and team members. That makes continuity easier.
When should you hire in-house instead of outsourcing?
You should consider an in-house bookkeeper if you need full-time, on-site support every week. This is especially true if the job includes office management, operations support, physical paperwork, or daily coordination with staff.
It may also make sense if your transaction volume is very high and your business is large enough to justify a dedicated internal finance department. For many companies, that happens much later than owners expect.
For most startups and small businesses, the better fit is to keep decision-making in-house and outsource the bookkeeping.
Important Disclaimer
Please note: Books LA provides high-level bookkeeping and financial reporting services. We do not provide income tax advice or file income tax returns. We work closely with our clients' CPAs to ensure they have the clean data they need for tax season. We recommend that you always consult with a qualified CPA for matters regarding your income tax liability. Our focus remains on bookkeeping-adjacent compliance, such as sales tax, payroll tax, and business licenses.
About the Author
Jelena Arkula is the owner of Books LA, a Los Angeles bookkeeping and accounting firm that helps small businesses and startups keep their books clean, accurate, and up to date. Jelena and her team are QuickBooks ProAdvisors and Xero Certified, with hands-on experience in cleanup work, monthly bookkeeping, accounts payable, accounts receivable, payroll support, and cloud-based workflows. Their practical focus is simple: reliable books, clear reports, and processes that make life easier for business owners.
Conclusion: Should I hire an in-house bookkeeper or outsource my bookkeeping?
For most small businesses, you should outsource your bookkeeping. It is usually more cost-effective, gives you access to broader expertise, and creates more continuity than relying on one employee.
An in-house bookkeeper makes more sense when you need a full-time person on-site handling bookkeeping plus admin or operational tasks. If you want clean books, dependable reporting, and less hiring overhead, outsourced support is usually the better fit.
FAQ: Should I hire an in-house bookkeeper or outsource my bookkeeping?
1. Is outsourcing only for larger businesses?
No. It is often a better fit for small businesses because they get professional support without paying for a full-time employee.
2. What is fractional bookkeeping?
Fractional bookkeeping means outsourced, part-time bookkeeping support. You get the help you need without hiring someone full-time.
3. Will I lose control if I outsource?
No. You still own your software, bank access, and approval process. The bookkeeping team handles the work, but you stay in control.
4. What if my books are already behind or messy?
That is common. Many firms offer a bookkeeping cleanup service before moving into ongoing monthly work.
5. Can outsourced bookkeepers help with payroll, sales tax, or 1099 tracking?
Yes, often they can help with bookkeeping-adjacent compliance tasks like payroll support, sales tax workflows, and 1099 tracking. We do not provide income tax advice, and we recommend confirming income tax matters with your CPA.
6. When is in-house worth the higher cost?
Usually when you need someone in the office every day doing bookkeeping plus admin, operations, or document-heavy work.
Book a short call with Books LA if you want a bookkeeping review.
