Bookkeeping pricing for small corporations: hourly, monthly flat fee or per transaction?

Bookkeeping for a small Canadian corporation is usually priced in one of three ways: by the hour, as a monthly flat fee tied to a volume band, or as part of a bundled package that also covers sales tax, payroll and year end. None is automatically cheaper. Hourly billing suits low or irregular volume; a flat fee suits steady volume and owners who want predictable costs; a package suits owners who want one provider for everything. The right choice depends on how many transactions you generate, how much of the work software can do, and what the quote actually includes.

This guide is part of the corporate accountant fees overview. All dollar amounts are illustrative.

The three pricing models

What is usually included, and what usually is not

Ask for the scope in writing. A typical monthly bookkeeping scope includes:

• Recording bank and credit card transactions, usually from bank feeds
• Coding expenses to the chart of accounts and sales tax codes
• Monthly bank and credit card reconciliations
• Recording sales invoices and supplier bills, or matching them to deposits and payments
• A monthly or quarterly set of management reports

Commonly excluded or billed separately:

• GST/HST, QST or provincial sales tax returns
• Payroll processing, remittances and T4 slips
• Accounts payable runs (paying suppliers on your behalf)
• Chasing missing receipts or explanations
• Inventory, job costing or project tracking
• Catch-up of months that were not done on time
• Year-end adjustments and the financial statements themselves

How transaction volume changes the price

Bookkeepers often define bands by the number of monthly transactions or bank lines, the number of bank and card accounts, and whether sales come through a payment processor that needs to be split into gross sales, fees and refunds. A corporation with one account and 40 transactions a month is a very different job from one with five accounts, two payment processors and 400 lines.

Illustrative comparison

Suppose a bookkeeper offers these illustrative options for the same corporation, which averages 120 transactions a month:

• Hourly: about 5 hours a month at $60 = 5 x $60 = $300 a month, or $3,600 a year
• Flat fee band (up to 150 transactions): $325 a month = $3,900 a year, including GST/HST returns filed quarterly
• Package: $550 a month = $6,600 a year, including bookkeeping, quarterly GST/HST, owner payroll and the year-end compilation and T2

To compare fairly, price the missing pieces. If the hourly option excludes GST/HST returns (four a year at, say, 1 hour each = $240) and the year end and T2 are quoted separately at $2,600, the hourly route totals $3,600 + $240 + $2,600 = $6,440. The flat fee route with the same year end costs $3,900 + $2,600 = $6,500. The package at $6,600 is close to both, so the decision turns on service, response time and who is accountable for errors, not price alone. Test your own numbers in the fee estimator.

Bookkeeper, CPA firm or both?

"Bookkeeper" is not a protected title in most of Canada, while the CPA designation is regulated by provincial CPA bodies. Many good bookkeepers are not CPAs and charge less per hour. What matters is that someone qualified reviews the books before year end and that the bookkeeper's work is in a form the year-end accountant can use without redoing it. A common setup is an independent bookkeeper monthly and a CPA firm for the compilation and T2. See DIY, bookkeeper or accountant.

Questions to ask before you sign

1. What volume does the monthly fee assume, and what happens if I exceed it?
2. Which accounts, processors and entities are included?
3. Who files sales tax returns, and who corrects them if they are wrong?
4. How quickly are the books closed after each month?
5. What is the hourly rate for work outside the scope?
6. Who owns the accounting file, and how do I get it if we part ways?
7. Are you insured for errors and omissions?
8. How do you handle receipts, and what do you need from me each month?

Mistakes that make bookkeeping expensive

• Running personal expenses through the business account, which forces the bookkeeper to ask about each item. See shareholder loans and personal expenses.
• Letting several months pile up before sending anything.
• Changing the chart of accounts without telling the bookkeeper.
• Connecting new bank feeds in a way that duplicates transactions. See automation errors and ITCs.
• Assuming the bookkeeper filed sales tax returns when the scope did not include them.

Monthly bookkeeping costs depend heavily on sales tax frequency, explained in GST/HST and QST filing workload, and on how much software does for you, covered in accounting automation costs.

Frequently asked questions

Is a monthly flat fee always cheaper than hourly?

No. It is predictable, not necessarily cheaper. For low volume, hourly billing can cost less; for steady volume, a flat fee can avoid surprises.

Can I pay quarterly instead of monthly?

Some bookkeepers work quarterly to match quarterly GST/HST reporting. The risk is that problems are discovered later.

Should my bookkeeper also do payroll?

It can be convenient, but payroll carries strict remittance deadlines. Make sure whoever does it has a reliable process and that the scope says so.

Do bookkeeping fees include GST/HST?

Quotes are often shown before tax. Ask, and compare all quotes on the same basis.

Sources

• Canada Revenue Agency — record-keeping requirements and GST/HST filing for businesses
• CPA Canada — the CPA profession and provincial regulators
• Canada Business Network — government guidance for running a small business