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How Much Does Outsourced Accounting Cost?

Outsourcing is normally framed as the cost effective alternative to hiring full time. What most don’t consider are the variables that affect cost, hidden fees, and the level of support needed. The cost of Outsourced Accounting Services depends on many variables. From the size of your organization, number of employees, sources of funding, accounting complexity, number of programs, whether you’re subject to audits, etc. These are just some of the variables. There are levels to outsourced accounting and I’m going to dive into a few and what we offer at Visionary Accounting Group.

During the grassroots stages, nonprofits tend to rely on volunteers or the leadership to manage the day to day bookkeeping. As the organization grows and certain thresholds are triggered, organizations will hire an accountant to complete the 990 tax return and annual audit. However, what happens to the day to day as your organization grows and the accounting becomes more complex? At this point, you can choose to hire an employee(s) or outsource to a firm that will handle the day to day for you.

Basic Bookkeeping

Basic bookkeeping focuses on data entry and compliance with state and federal regulations. It entails recording bills, getting paid, processing payroll, and monthly reconciliations. A part time bookkeeper can usually fulfill this role and the average cost is $20- $50 per hour. Another alternative pricing structure is fixed fee which can range from $100 - $500 a month. Factors that affect pricing are often location and job description.

Nonprofit bookkeeping tends to be a little more involved so when considering a bookkeeper for your organization, some of those tasks include

  • Preparing grant-specific financial reports

  • Managing the time tracking process for employees with hours billable to grants

  • Coordinating with outside CPA and Auditors in preparation of year-end audit and tax filings

  • Tracking program revenue and expenses to ensure compliance with spending protocol and procedures

  • Supporting the Controller or CFO as needed

At some point, your organization will cross a threshold and you will need to begin thinking about higher level reporting, accrual based accounting, cash flow management, etc. This is when you go beyond basic bookkeeping to a more advanced level that supplies you with the financial intelligence and data needed to make strategic decisions for your organization.

Beyond Basic Bookkeeping

Full service accounting requires a different level of expertise and more effort than basic bookkeeping. It goes beyond data entry and includes levels of analysis, advisory, audit management, and financial reporting. At this point, you’ll begin to consider whether you need a full time hire or if you want to outsource this function altogether. A full time bookkeeper’s salary will range from $35,000 to $50,000 a year plus benefits and overhead. In cities where the cost of living is high, salaries for a full time bookkeeper can be as high as $65,000 to $70,000 a year plus benefits and overhead. A full time bookkeeper not only manages the day to day accounting functions but also manages the operations of those tasks and usually reports to the head of the organization.

In my experience, once you cross the threshold of basic bookkeeping, having a bookkeeper alone whether part time, full time, or outsourced isn't enough. There’s usually more work than one person can handle. Nonprofits have many moving parts and different levels of work and review are required to manage the entire picture. Nonprofits typically need an accounting department at this point which is made up of a bookkeeper, staff or senior accountant, and a controller. You might be thinking this sounds like a lot and for some it is which is why this is still dependent on the needs of your organization.

In house vs Outsourced Accounting Department

When going the in house route, at a minimum nonprofits tend to have a team of three and that means three levels of accounting and financial support and three separate salaries with benefits and overhead costs associated with these hires. On the contrary, the average price of having an outsourced or virtual accounting department is $2,500 - $5,000 depending on complexity and level of services required. The appeal of outsourcing is that organizations can receive advanced accounting and controller level services at a fraction of the cost of just one full time hire. At this stage, some of the responsibilities include:

  • Management of the entire accounting function

  • Cash flow management

  • Audit preparation and management

  • Month end close

  • Creation and management of accounting policies and procedures

If you lack the capacity to manage these various functions or tasks in house, outsourcing could be the best option. Advancements in technology have made outsourcing much easier and there are many benefits that come along with doing so.

What’s best for your nonprofit?

Identify the needs of your organization and where gaps exist. You don’t have to be tied down to one solution. One type of bookkeeper may have worked for you in the past but if you’ve grown and things have become more complex, you may need a full accounting team.

At Visionary Accounting Group, we offer outsourced accounting led by a controller. We operate as your accounting department and manage the entire accounting function. If you're ready to put more effort into increasing your impact while having the necessary financial intelligence and data needed to do so, book a call to see how we may be able to assist you.


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