It shouldn’t be surprising that managing your business’s finances will take time, extreme precision, and a certain level of expertise. Unfortunately, it’s also one of the less glamorous parts of being a business owner, yet a fundamental aspect you can’t ignore. With benefits like cost savings, expert financial advice, and fewer accounting hassles, many businesses outsource accounting. But the key question is: What is the actual cost of outsourcing accounting services?
Setting up and maintaining an in-house accounting team is a luxury in today’s evolving financial landscape that fewer businesses can afford. In contrast, small—to mid-sized companies that work with outsourced accounting teams see an increase of 11.5% in annual revenue growth.
Let’s break it down and find out if shifting to outsourced accounting is the right financial move for your business.
Ready to cut costs and streamline your accounting?
Partner with 1840 & Company to access expert accountants at a fraction of in-house costs. Get in touch today!
Outsourced Accounting Services Cost: Quick Overview
If you’re in a rush, here’s a quick overview of the costs associated with outsourced accounting.
| Service Category | Price Range | Details |
|---|---|---|
| Basic Bookkeeping | $300 – $2,500/month | It includes transaction recording, bank reconciliation, and financial statements and is ideal for small businesses. |
| Payroll Processing | $20 – $100 per employee/month | Some providers charge a flat monthly fee, which varies based on the number of employees and payroll complexity. |
| Tax Preparation & Filing | $500 – $5,000+ per year | It depends on business size, entity type, and tax filing complexity. |
| Accounts Payable & Receivable | $500 – $5,000/month | Costs depend on transaction volume, including invoicing, payment processing, and collections support. |
| Fractional CFO Services | $2,000 – $10,000+/month | Strategic financial planning, forecasting, and high-level reporting for growing businesses. |
| Full-Service Accounting | $1,000 – $10,000+/month | This comprehensive package includes bookkeeping, payroll, tax preparation, and financial analysis. The costs vary by provider and business needs. |
Note: These numbers provide a general guideline, but actual costs may vary based on the service provider, contract terms, and customization needed for your business.
What Influences the Cost of Outsourcing Accounting Services?
When it comes to which factors influence the costs of partnering with an outsourced accounting firm, it’s good to remember that there is no flat rate. The price tag of your solution depends on a mix of factors, which range from how complex your finances are to where your accountant is based.
Some companies only require basic bookkeeping, while others need full-service accounting with tax strategy, financial reporting, and financial forecasting—the more complex the work, the higher the cost.
Here’s a closer look at the factors that determine pricing.
1. What Services You Need
Are you looking for someone to keep your books organized simply, or do you need a team to manage payroll, taxes, and financial strategy? The more specialized the service, the more you’ll pay.
- Bookkeeping services (recording transactions and reconciling accounts) are typically the most affordable.
- Payroll processing, tax filing, and financial reporting fall into the mid-range.
- Fractional CFO services (financial planning, forecasting, and strategy) are on the higher end.
Knowing your business’s requirements can help you avoid paying for unnecessary services or omitting critical accounting functions.
2. The Complexity of Your Business
Small businesses that handle only a few transactions each month do not require the same degree of accounting support as larger retailers managing thousands of sales monthly. Additional revenue streams and accounts increase the accountant’s workload and costs.
You will likely need more specialized assistance if your business operates in multiple countries or has distinctly complex financial structures. The more nuanced your requirements are, the lower your cost savings.
3. Do You Need Industry-Specific Expertise
Specific industries have unique accounting needs. Healthcare, real estate, e-commerce, and manufacturing involve particular tax rules and compliance requirements. Outsourcing to accounting professionals experienced in your industry may lead to higher costs, but it can protect you from costly mistakes, penalties, or audits in the long run.
4. The Level of Expertise You’re Paying For
Not all accounting work requires the same skill level. The cost depends on who’s handling your finances:
- Bookkeepers ($30–$80/hour) Manage daily financial tasks such as transaction recording and bank reconciliation.
- Accountants/CPAs ($100–$300/hour): Handle tax preparation, compliance, and financial reporting.
- Fractional CFOs ($2,000–$10,000/month): Provide strategic financial planning and long-term business advice.
If you just need help with record-keeping, a bookkeeper might be enough. But if you’re looking for tax-saving strategies or financial planning, you’ll need a CPA or CFO-level expert.
5. The Pricing Model You Choose
Different outsourced accounting departments use different pricing structures. Here are the most common:
- Hourly rates – Best for businesses needing occasional financial support.
- Fixed monthly fees – Ideal for companies that need consistent, ongoing accounting services.
- Per-transaction pricing – Common for firms with high invoicing or payroll volumes.
- Custom packages – Tailored pricing based on the complexity and scope of work.
6. Technology & Software Costs
Most outsourced accounting services use cloud-based tools like Xero. Some accounting firms include software costs in their pricing, while others require you to pay for your subscription. If you need custom integrations with your existing systems, that may add to your overall costs.
7. Location of Your Accounting Provider
Where your outsourced team is based has a significant impact on pricing and annual costs:
- U.S./U.K.-based accountants – Higher rates due to labor costs and local regulations.
- Nearshore providers (Latin America, Eastern Europe, etc.) – A balance of affordability and accessibility
- Offshore providers (India, Philippines, etc.) – Typically the most budget-friendly option, especially for bookkeeping and transaction-heavy tasks.
While offshore providers often offer lower rates, businesses needing real-time collaboration may prefer working with someone in a similar time zone.
8. Contract Terms & Service Agreements
Some outsourced accountants offer flexible, month-to-month contracts, while others require long-term commitments. If you need priority service, dedicated account managers, or guaranteed response times, expect to pay a premium for those added benefits.
Cost Comparison: In-House vs. Outsourced Accounting
Cost is often one of the most significant factors when deciding between setting up an in-house accounting department and outsourcing. While an internal accounting team offers hands-on financial management, outsourcing can provide the same expertise at a fraction of the cost.
Here’s a cost analysis of the differences between the two options.
Outsourced accounting teams are typically far more cost-effective than hiring in-house for small and mid-sized businesses. They provide access to expert accounting services without the high overhead. Larger enterprises with complex financial operations may still benefit from an in-house team but can supplement it with outsourced specialists for high-level expertise.
Steps to Minimize the Cost of Outsourcing Your Accounting
Outsourcing your accounting can save you money, but without the right approach, costs can add up. To get the best value, follow these strategic steps to keep expenses low while ensuring high-quality service.
Step One: Define what you need. To avoid overpaying, you can outsource essential tasks like tax filing, payroll, and financial reporting while handling simple tasks in-house.
Step Two: Choose the right pricing model – Pick a structure that fits your needs:
- Hourly Rates – Best for occasional tasks.
- Fixed Monthly Fees – Ideal for ongoing support.
- Per-Transaction Pricing – Great for fluctuating volumes.
Step Three: Consider Nearshore or Offshore outsourced teams – Hiring offshore accountants (e.g., in the Philippines or India) can cut costs while maintaining quality—just ensure that there is time zone alignment.
Step Four: Use automation tools. By adopting cloud-based accounting solutions, you can automate routine financial tasks, reducing manual work and the need for outsourced services. This streamlines operations, improves efficiency, and lowers overall costs.
Step Five: Negotiate and optimize your services – Customize your package, remove unnecessary extras, and regularly review your provider’s performance to ensure cost-effectiveness.
Common Pitfalls and What to Watch Out For
Outsourcing your accounting can be a smart move—if done right. However, without proper due diligence, it can lead to costly mistakes. Here’s what to watch for:
1. Prioritizing Cost Over Quality
Choosing the lowest-cost option can lead to setbacks. Novice accountants might make expensive mistakes, overlook tax deductions, or mishandle compliance, resulting in bigger financial issues. Prioritize expertise over mere cost.
2. Unexpected Fees & Confusing Pricing
Some providers attract you with low rates but add extra charges for software, transaction volume, or revisions. Always ask for a detailed cost breakdown before signing a contract.
3. Communication Gaps & Time Zone Issues
If your provider is in a different time zone, response delays may hinder your operations. Select an accountant known for clear communication, prompt updates, and accessibility support.
4. Data Security Risks
When you trust an external provider with sensitive financial data, ensure they implement secure platforms, employ encryption, and maintain compliance measures to safeguard against breaches and unauthorized access.
5. Inflexible or Non-Scalable Services
As your business expands, your accounting requirements will evolve. If your current provider can’t scale accordingly, you may need to change firms sooner than anticipated. Seek a provider capable of adjusting to your changing needs while keeping costs relatively stable.
FAQs About the Costs of Outsourcing Accounting Services
If you have any remaining questions regarding the costs of outsourced accounting services, we address some of the most frequently asked ones here.
What Are the Five Benefits of Accounting Outsourcing Services?
Outsourcingcuts costs, provides expert financial support, and allows businesses to focus on growth. It also offers scalability, ensuring the right level of service as your needs evolve. Plus, professionals stay updated on compliance and tax laws, reducing financial risks and preventing costly errors.
What Is the Key Cost of Outsourcing?
The key cost of outsourcing accounting depends on the service type, provider location, and pricing model (hourly, fixed, or per transaction). Depending on the complexity, expect to pay $300–$10,000+ monthly.
Is It Better to Outsource Accounting?
Outsourcing ensures scalability, compliance, and flexibility, benefiting growing businesses. Ultimately, the best choice depends on your firm’s size, complexity, and financial needs.
Final Thoughts
Outsourcing your accounting services can significantly cut costs and provide access to expert financial support. By carefully evaluating your needs and selecting the right provider, you can achieve both savings and efficiency without compromising on quality.
Ready to cut costs and streamline your accounting?
Partner with 1840 & Company for expert accountants at a fraction of in-house costs. Get started today!
