Virtual vs. In-House Bookkeeping: Which One Saves You More?

Introduction

Bookkeeping is one of the most essential yet time-consuming aspects of running a small business. Keeping track of expenses, invoices, accounts payable, and payroll ensures financial stability, but many business owners struggle with whether to hire an in-house bookkeeper or outsource to a virtual bookkeeping service.

Each option comes with its own set of costs, benefits, and drawbacks. While having an in-house bookkeeper may seem like the most reliable choice, virtual bookkeeping is gaining popularity for its flexibility, lower costs, and ease of access to financial expertise.

But which one is more cost-effective and better for your business’s long-term financial health? This article breaks down the key differences, costs, and advantages of each approach to help you make an informed decision.

Understanding In-House Bookkeeping

In-house bookkeeping refers to hiring a dedicated bookkeeper who works directly for your business, either as a full-time or part-time employee. This individual is responsible for managing financial records, tracking income and expenses, handling payroll, reconciling bank statements, and ensuring tax compliance.

What Does an In-House Bookkeeper Do?

An in-house bookkeeper typically handles:

• Accounts Payable & Receivable – Ensuring bills are paid on time and following up on outstanding invoices.
• Payroll Processing – Managing employee salaries, tax withholdings, and benefits.
• Bank Reconciliations – Matching transactions with bank statements to prevent errors.
• Financial Reporting – Preparing balance sheets, profit and loss statements, and cash flow reports.
• Tax Compliance – Ensuring business taxes are filed accurately and on time.

The Costs of Hiring an In-House Bookkeeper

Having an in-house bookkeeper may seem like the best way to maintain control over your finances, but it comes with significant costs, including:

• Salary: The average hourly wage for a bookkeeper in the U.S. is $22.63, which translates to $46,144 per year based on a 40-hour workweek.
• Salary Range: Depending on experience, location, and industry, bookkeeper salaries typically range from $16.16 to $31.69 per hour.
• Employee Benefits: Full-time employees often require additional compensation, such as health insurance, paid time off, and retirement contributions, adding 20-30% more to labor costs.
• Office Space & Equipment: Providing a workstation, bookkeeping software, and office supplies adds to the total expense.
• Training & Professional Development: Staying compliant with tax law changes, accounting standards, and software updates may require ongoing training, which increases costs.

Pros and Cons of In-House Bookkeeping

Pros:

• Immediate availability – An in-house bookkeeper can quickly handle financial tasks on-site.
• Familiarity with company operations – They gain deep insight into the business’s specific financial needs.
• Direct control over financial processes – Business owners have hands-on oversight.

Cons:

• High fixed costs – Salaries, benefits, and office expenses add up quickly.
• Limited expertise – A single bookkeeper may lack specialized knowledge in tax law, financial forecasting, or industry-specific compliance.
• Scalability challenges – If your business grows, you may need to hire additional staff, increasing overhead.

For many small businesses, these costs and limitations make outsourcing bookkeeping an attractive alternative. In the next section, we’ll explore how virtual bookkeeping services like EzyBookkeeper work and why they are becoming the preferred choice for many business owners.

What is Virtual Bookkeeping?

Virtual bookkeeping is a modern approach to managing business finances, where bookkeepers work remotely instead of being physically present in an office. They perform the same essential tasks as in-house bookkeepers—such as tracking expenses, reconciling accounts, managing payroll, and preparing financial reports—but do so using cloud-based accounting software and digital collaboration tools.

How Virtual Bookkeeping Works

Virtual bookkeepers use cloud accounting platforms like QuickBooks Online, Xero, and FreshBooks to manage financial data in real time. This allows business owners to access their financial records from anywhere, ensuring seamless communication and transparency.

A virtual bookkeeping service like EzyBookkeeper typically follows this process:

• Initial Setup and Onboarding – Understanding the business’s financial structure and integrating accounting software.
• Ongoing Bookkeeping – Tracking income and expenses, reconciling transactions, and keeping financial records organized.
• Payroll and Tax Compliance – Ensuring employee salaries, tax filings, and financial obligations are met on time.
• Monthly Reporting – Providing detailed financial reports, cash flow insights, and recommendations for business growth.

Key Benefits of Virtual Bookkeeping

Cost Savings

Without the need for office space, salaries, or employee benefits, virtual bookkeeping significantly reduces financial overhead.

Scalability and Flexibility

Businesses can adjust the level of bookkeeping support as needed, without the commitment of hiring full-time staff.

Access to a Team of Experts

Rather than relying on a single employee’s expertise, virtual bookkeeping services provide access to a team with diverse financial knowledge.

24/7 Accessibility

With cloud-based financial management, business owners can review their finances at any time, from any location.

In the next section, we will compare the costs of in-house and virtual bookkeeping to determine which option saves businesses more money in the long run.

Cost Comparison: In-House vs. Virtual Bookkeeping

One of the biggest factors in deciding between in-house and virtual bookkeeping is cost. While both options ensure financial management, their price structures differ significantly. Here’s a breakdown of how much each option costs and where businesses can save the most money.

Salary and Labor Costs

• In-House Bookkeeping – A full-time bookkeeper in the U.S. earns an average hourly wage of $22.63, translating to about $46,144 per year. Depending on location and experience, salaries can range from $16.16 to $31.69 per hour. In addition, hiring an in-house employee comes with costs like benefits, taxes, and paid time off, adding 20-30% more to the base salary.
• Virtual Bookkeeping – Instead of paying a full salary, businesses using a virtual bookkeeping service only pay for the work they need. Virtual bookkeeping packages often start as low as a few hundred dollars per month, scaling up based on the level of service required.

Overhead Expenses

• In-House Bookkeeping – Hiring an in-house bookkeeper means providing office space, equipment, and software. Businesses may need to purchase a dedicated computer, bookkeeping software, and other office supplies, adding thousands of dollars in annual costs.
• Virtual Bookkeeping – With a remote team, businesses do not need to cover office expenses. Virtual bookkeepers use cloud-based software, eliminating the need for costly in-house infrastructure.

Software and Training Costs

• In-House Bookkeeping – Bookkeepers require access to accounting software, payroll systems, and tax tools, which often come with recurring subscription fees. Additionally, ongoing training and professional development may be necessary to keep up with industry changes.
• Virtual Bookkeeping – Many virtual bookkeeping services already include software and compliance updates in their pricing, reducing the need for businesses to invest in additional tools.

Total Cost Savings with Virtual Bookkeeping

EzyBookkeeper clients report saving an average of 78% in bookkeeping costs compared to hiring in-house staff. By outsourcing financial tasks, businesses eliminate salary commitments, benefits, and office-related expenses while gaining access to a team of bookkeeping experts.

In the next section, we’ll explore the efficiency and flexibility of each option, helping business owners determine which bookkeeping solution best suits their needs.

Efficiency & Scalability

Beyond cost savings, businesses must also consider efficiency and flexibility when choosing between in-house and virtual bookkeeping. The ability to scale, access expertise, and maintain accurate financial records without disruption can significantly impact a company’s financial health.

Scalability and Adaptability

In-House Bookkeeping

When a business grows, financial needs become more complex. Hiring an in-house bookkeeper may work initially, but as the volume of transactions increases, businesses may need to hire additional staff, increasing overhead. Conversely, if financial needs decrease, businesses are still committed to paying a fixed salary.

Virtual Bookkeeping

With virtual bookkeeping services, businesses can scale up or down as needed. Whether handling increased seasonal transactions or cutting costs during slow periods, virtual bookkeepers adjust their services accordingly, making them a more flexible solution.

Access to Expertise

In-House Bookkeeping

A single bookkeeper may have expertise in general financial management but might lack specialized knowledge in tax law, payroll compliance, or industry-specific bookkeeping requirements. If the in-house bookkeeper encounters complex financial issues, the business may need to hire an external consultant or accountant, adding more expenses.

Virtual Bookkeeping

Virtual bookkeeping services provide access to a team of experts with diverse financial knowledge. Businesses benefit from specialized support without the need to hire multiple employees or consultants.

Technology and Automation Advantages

In-House Bookkeeping

Traditional bookkeeping methods often rely on manual data entry, spreadsheets, and desktop-based software, which can lead to inefficiencies and errors. Keeping up with the latest automation tools may require additional training and software upgrades.

Virtual Bookkeeping

Virtual bookkeeping leverages cloud-based accounting software, automated invoicing, and AI-powered financial tracking tools to streamline processes. This ensures faster data entry, real-time financial insights, and seamless collaboration between business owners and bookkeepers.

By offering a combination of cost savings, scalability, and technological efficiency, virtual bookkeeping provides a more flexible and adaptive solution for small businesses.

In the next section, we will look at a real-world example of how a business successfully improved its financial management by switching to virtual bookkeeping with EzyBookkeeper.

Real-World Example (Case Study)

Many business owners hesitate to switch to virtual bookkeeping, concerned that it might not be as effective as having an in-house bookkeeper. However, real-world results show that outsourcing bookkeeping can lead to significant improvements in financial efficiency and cost savings. One such example is Blue Collars Plumbing, a 24-hour plumbing, AC, and heating service based in Charleston, North Carolina.

The Challenge: Struggling with Accounts Receivable

Blue Collars Plumbing was already a well-established business, but they faced ongoing challenges in managing accounts receivable. While their team provided excellent service, they struggled with timely payment collection. The company wanted to improve its cash flow without straining customer relationships or spending too much time chasing down payments.

The Solution: Partnering with EzyBookkeeper

Instead of hiring an in-house bookkeeper, Blue Collars Plumbing turned to EzyBookkeeper to streamline their financial processes. The team at EzyBookkeeper implemented:

• A structured system of friendly, professional reminders for outstanding invoices
• Automated tracking of overdue payments to ensure follow-ups were timely and consistent
• A customized approach that allowed Blue Collars Plumbing to maintain positive customer relationships while improving collections

The Results: 30% Reduction in Accounts Receivable

By outsourcing their bookkeeping, Blue Collars Plumbing achieved a 30% reduction in outstanding accounts receivable. This directly improved their cash flow and allowed them to focus on growing their business rather than chasing payments.

This case study illustrates how virtual bookkeeping services like EzyBookkeeper can deliver real financial improvements without the overhead costs of an in-house hire.

Choosing the Right Bookkeeping Service for Your Business

The decision between in-house and virtual bookkeeping ultimately depends on the specific needs, budget, and growth stage of a business. While both options provide financial management support, virtual bookkeeping has emerged as a more flexible, cost-effective, and scalable solution for most small and medium-sized businesses.

When In-House Bookkeeping Might Be the Right Choice

Some businesses may still benefit from hiring an in-house bookkeeper if:

• They require constant, hands-on financial management and prefer having someone physically present in the office.
• Their financial operations involve highly complex, industry-specific transactions that require specialized knowledge beyond standard bookkeeping.
• They already have a large internal accounting team and need a bookkeeper to coordinate closely with other financial staff.

Why Virtual Bookkeeping is the Best Choice for Most BusinessesFor the vast majority of small businesses, outsourcing bookkeeping to a service like EzyBookkeeper provides greater efficiency, cost savings, and expertise. Virtual bookkeeping is the better choice if:

• The business wants to reduce bookkeeping costs without compromising accuracy and compliance.
• There is a need for scalable bookkeeping support that can adjust as the business grows.
• Owners need access to a team of experts instead of relying on a single employee’s knowledge.
• The business operates remotely or across multiple locations and benefits from cloud-based financial management.
• There is a desire to eliminate the administrative burden of managing payroll, accounts receivable, and tax filings in-house.

By outsourcing bookkeeping, businesses free up valuable time and resources to focus on growth, customer service, and strategic decision-making. Services like EzyBookkeeper offer a risk-free trial, allowing business owners to experience the benefits of virtual bookkeeping without long-term commitments.

Get Started with EzyBookkeeper

If you’re ready to streamline your bookkeeping, cut costs, and improve financial efficiency, EzyBookkeeper can help. Get started today and see how outsourced bookkeeping can transform your business.