If you’re deciding between outsourced bookkeeping vs hiring in-house, start by looking at the size of your business. For most businesses under roughly $5 million in revenue, outsourcing is usually the more practical option. You get full-cycle bookkeeping, backup coverage, and another layer of review for a fraction of the cost of an employee, around $150-$600 a month compared with roughly $5,900 a month for a true in-house hire.
Hiring in-house can be the better choice when you genuinely need someone on-site every day or when your business has grown enough that building your own finance team costs less than paying an outside firm’s markup.
Predawn Accounting provides outsourced bookkeeping, so you don’t have to take our word for which option is better. Every figure comes from government sources you can check yourself.
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Outsourced bookkeeping vs hiring in-house: the side-by-side comparison
For a very small business, doing your own books in QuickBooks setup or a spreadsheet can work just fine. The Small Business Administration considers proper bookkeeping an important part of managing a business, and when transaction volume is low, there’s no reason you can’t handle it yourself.
When your books start taking too much of your time, it may be time to hire someone or outsource the work.
Either way, one thing doesn’t change. The IRS holds the business responsible for keeping records that support its tax returns, regardless of who actually enters the transactions.
Here’s the comparison between the two:
The biggest difference is control. An employee gets to know your business every day and can be redirected quickly when something changes. For some businesses, that level of control is worth paying for.
Most of the other factors tend to favor outsourcing at the small-business level, especially cost.
The person you’re likely hiring is a full-charge bookkeeper, not a specialized accounting clerk. A full-charge bookkeeper handles the business’s records from end to end, and clerks handle one part of the accounting process inside a larger finance team.
The true cost of a hire: in-house vs outsourcing cost comparison
So where does that roughly $5,900 monthly figure come from? We call this the True Cost of a Hire. It’s based on two government data points.
Start with the salary. The Bureau of Labor Statistics reports median annual pay of $49,210 for bookkeeping, accounting, and auditing clerks, based on May 2024 data.
Then you have the costs that come on top of wages. According to the BLS Employer Costs for Employee Compensation report from March 2026, benefits such as health insurance, paid leave, retirement, and legally required costs such as the employer’s share of payroll taxes made up 30.1% of total compensation for private-industry workers.
In simple terms, employers pay roughly 43 cents in additional compensation for every dollar of wages.
The table below shows the yearly cost of an in-house bookkeeper using government data:
That brings the monthly cost to roughly $5,900, not including the software, the time spent recruiting and training someone, and the risk of having only one person responsible for the books. If that bookkeeper leaves in March with tax season around the corner, you have another problem to deal with.
Some outsourcing companies push the cost of an in-house employee above $80,000 a year to sell their services. We’d rather use a lower estimate. Even using the more conservative government figure, an in-house bookkeeper can cost about three times what many small businesses spend on outsourced bookkeeping.
Another cost that rarely appears in salary comparisons is that one in-house bookkeeper can become a single point of failure. If they’re on vacation, get sick, or leave the company, the bookkeeping may stop altogether. In the cleanups we handle, “Our bookkeeper left eight months ago” is one of the most common things we hear.
What outsourced bookkeeping actually costs
Outsourced accounting pricing varies depending on the level of service, and our detailed guide on how much does it cost to outsource accounting breaks down every price range.
Freelance bookkeepers:
Roughly $20-$50 per hour. This is best for very small businesses with simple books.
Monthly bookkeeping firms:
Most small businesses pay around $150-$600 per month for full-cycle bookkeeping, including transaction recording, reconciliations, and monthly financial statements. This range works for many businesses under a few million in revenue.
Full-service bookkeeping with add-ons:
Payroll support, controller review, or our fractional CFO advisory can bring outsourcing accounting services, often called client accounting services (CAS) to $1,000-$3,000+ per month. That can be a good option when you actually need those services, but there’s no reason to pay for them if you don’t.
Review what’s included in the monthly fee:
Software, review, and backup coverage during vacations or other leave are part of the package. With an employee, those are additional costs or risks you have to handle yourself.
So, the useful comparison is roughly $150-$600 a month for outsourced bookkeeping versus around $5,900 a month for an in-house employee doing the same core bookkeeping work at small-business volume.
When hiring in-house is the right call
An outsourcing firm that tells every business to outsource is doing marketing, not giving you a complete accounting answer. There are situations where hiring in-house is genuinely the better option.
Daily on-site financial work is necessary:
If someone needs to handle cash, process walk-in payments, or count physical inventory, remote bookkeeping can’t replace having someone there.
Transaction volume is high and consistent:
Once a business reaches roughly $10 million in revenue, or its finance needs are approaching two or three full-time employees, the numbers can change. At that point, outsourced fees include the provider’s operating costs and profit margin, and building an internal team may cost less.
You’re building a full finance department:
If you’re hiring a controller or CFO and building a finance team around them, bringing those employees in-house can be a better option than combining several outsourced services.
You need someone deeply involved in daily operations:
In some businesses, the bookkeeper also manages office operations and works closely with staff every day. If that level of involvement matters more than keeping costs down, an in-house hire can be the better option.
If two or more of these describe your business, hiring in-house may be the right move. And when you’re ready to hire, the difference between an accounting clerk and a bookkeeper can help you decide what kind of role you actually need.
When you should outsource your bookkeeping
We usually notice with first finance hires that businesses under about $5M in revenue almost never have enough bookkeeping work for a full-time employee, but they pay full-time money for it anyway.
Outsourcing fits when:
- ✓ Transaction volume changes from month to month. You pay for the work that needs to be done, rather than paying someone during idle hours.
- ✓ Your books keep falling behind. This is one of the clearest signs that your business needs bookkeeping help, and it shows up months before tax season.
- ✓ You’re raising money or applying for a loan and need financial statements a lender trusts.
- ✓ A costly mistake has already happened, such as a missed filing or an unexpected cash shortage.
- ✓ You’d rather focus on running your business than managing a bookkeeper.
Outsourcing bookkeeping services may seem like a big step, but switching is usually simple. You give the provider access to your current file, they clean up anything that’s behind, and then the books move into a regular monthly routine.
Most transitions we handle produce clean financial statements within the first month or two. With most remote setups today, a virtual accountant works directly inside your QuickBooks or Xero file. Your data stays where it is, only the person working on it changes.
Does it matter where your bookkeeper works from?
A lot of outsourced bookkeeping is handled by teams outside the US.
Predawn is a remote firm, and our team serves 135+ US businesses across e-commerce, real estate bookkeeping, SaaS, and agencies. Where the person entering the transactions is located matters much less than the quality of the work and how well your data is protected. That’s really where the benefits of going virtual show up, not in geography, but in process.
Before choosing any provider, ask about these four things:
- US standards knowledge: Your books should follow US GAAP conventions and provide records that are ready for tax preparation.
- Data security you can verify: Look for access controls, secure document handling, and software permissions that you can control and revoke.
- Clear accountability: You should know who works on your books and who reviews their work.
- References you can actually contact: Look beyond testimonials published on the provider’s own website.
Ask those four questions, and you’ll quickly know if the provider’s location really matters.
Is AI replacing bookkeepers?
AI is taking over the data entry side of bookkeeping, but the judgment side still needs a person.
Accounting software already automates things like bank feeds and first-pass transaction categorization. The BLS also projects employment for bookkeeping clerks to decline by about 6% through 2034, largely because of automation.
But software still can’t make every accounting decision correctly. Someone needs to decide what a transaction represents, spot a Shopify payout that was counted twice, correct a loan payment that was coded to the wrong account, and close the books properly so the financial statements tell you something useful.
In practical terms, AI has made simple data-entry work less valuable. At the same time, it has made professional bookkeeping more efficient and less expensive to deliver.
Whichever option you choose, you’re no longer really paying someone just to type transactions. You’re paying for someone to review the books, use good judgment, and catch the things the software misses.
Outsourced or in-house: how to decide
Take a look at your own numbers. Review how many hours you spend on bookkeeping each month, the true cost of a hire from the comparison above, and an actual quote for outsourced bookkeeping.
For many small businesses, the difference is significant. Full-cycle bookkeeping services can cost a few hundred dollars a month compared with the much higher annual cost of an in-house employee. For some businesses, though, hiring in-house is the better choice.
If you want someone to run the numbers using your actual books, book a free 30-minute consultation. We’ll compare both options honestly. What an in-house hire would cost at your current volume, what our monthly bookkeeping fee would be, and which option makes more financial sense. If the answer is, “Keep your spreadsheet for another year,” we’ll tell you that too.
This is general information, not personalized tax or financial advice. Consult a licensed CPA or financial professional for your specific situation.
FAQs
What is the difference between in-house and outsourced accounting?
In-house accounting means an employee handles the financial work inside your business. You have more direct control, but you also take on the full cost of employment. Outsourced accounting means an outside firm or freelancer handles the work remotely for a fee. You generally pay less and get built-in coverage, although you may have less immediate access to someone in the office.
How much does outsourced bookkeeping cost per month?
Most US small businesses pay $150-$600 per month for full-cycle bookkeeping, depending on transaction volume and the number of accounts. Freelance bookkeepers charge about $20-$50 per hour. Services that include payroll, controller review, or CFO advisory can cost $1,000-$3,000+ per month. Before choosing a provider, make sure you understand exactly what's included.
When does hiring an in-house bookkeeper make sense?
Hiring an in-house bookkeeper can make sense when your business has daily on-site financial work, such as cash handling or inventory counts, when your transaction volume keeps a full-time employee busy, or when you're building a larger internal finance team around $10M+ in revenue. At that point, the markup charged by an outsourcing provider may no longer be worth it.
Can I outsource the books and still keep someone in-house?
Yes, a hybrid setup can work very well for growing businesses. An outsourced bookkeeping firm can handle the monthly bookkeeping and bank reconciliation, while an in-house employee or fractional CFO handles daily operations, financial decisions, and strategy. It also gives you some protection against relying on one person for everything. If your in-house employee leaves, the monthly close doesn't have to stop because the bookkeeping process is already supported by an outside team.
Meet Muhammad Aqib: Our Expert in Financial Planning and Analysis
He is the founder of Predawn Accounting and has more than six years of experience helping small businesses maintain organized financial records, improve reporting accuracy, and better understand their financial position.
He is a qualified Chartered Accountant from ICAP Pakistan, holds a BS in Accounting and Finance, is an ACCA Candidate, an FMVA Certified professional, has also earned a Financial Planning and Analysis certification from the Corporate Finance Institute (CFI) and is a Certified QuickBooks ProAdvisor with experience working across industries, including real estate, construction, e-commerce, SaaS, and marketing agencies.
Before founding Predawn Accounting in 2023, Mr. Aaqib worked with businesses across multiple industries, doing bookkeeping, financial reporting, financial modeling, fractional CFO, and other projects. He has also completed financial projects that helped businesses raise funding and improve financial operations.
