Xero Bookkeeping vs In House Bookkeeper Cost: Full Comparison
Choosing between outsourced Xero bookkeeping and hiring an in house bookkeeper is one of the biggest cost decisions for small businesses. In house bookkeeping typically costs $45,000 to $70,000 per year, while outsourced Xero bookkeeping ranges from $250 to $2,500 per month. The right choice depends on your business size, transaction volume, and reporting needs.
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In House Bookkeeper Cost
Hiring an in house bookkeeper includes more than just salary
- Base salary: $45,000 to $70,000 per year
- Additional costs
- Payroll taxes
- Benefits
- Training
- Software
- Management overhead
Total cost often exceeds $60,000 to $90,000 annually.
Outsourced Xero Bookkeeping Cost
Outsourced bookkeeping provides the same core functions at a lower cost.
Typical monthly pricing
- $250 to $800 for small businesses
- $800 to $1,500 for growing businesses
- $1,500 to $2,500+ for complex businesses
See detailed pricing, Xero bookkeeping pricing
What You Get With Each Option
- In house bookkeeper
- Dedicated employee
- Limited bandwidth
- Requires supervision
- Dependent on one person
- Outsourced bookkeeping
- Team based approach
- Scalable support
- CPA oversight
- Consistent processes
Cost Comparison Examples
Small business
- In house: $50,000+ per year
- Outsourced: $3,000 to $8,000 per year
Growing business
- In house: $60,000+ per year
- Outsourced: $8,000 to $18,000 per year
Complex business
- In house: $70,000+ per year
- Outsourced: $18,000 to $30,000 per year
Scalability Difference
- In house
- Capacity is fixed
- Adding workload requires hiring
- Outsourced
- Scales with business
- Adjusts based on transaction volume
- No hiring required
Risk Factors
- In house risks
- Employee turnover
- Training gaps
- Single point of failure
- Outsourced risks
Lower if using structured provider Processes and redundancy reduce dependency
When To Hire In House
In house bookkeeping may make sense if
- You have very high transaction volume
- You require full time internal finance staff
- You need on site support
When To Outsource
Outsourced Xero bookkeeping is ideal if
- You want lower cost
- You need scalability
- You want CPA oversight
- You prefer predictable monthly pricing
Software Still Required
Both options use accounting software
- Xero subscription cost: $15 to $70+ per month
- Bookkeeping cost is separate
See total cost Xero accounting cost per month.
Real Business Examples
Freelancer
- In house not practical
- Outsourced $250 to $400 per month
Service business
- In house $50,000+
- Outsourced $400 to $700 per month
Ecommerce business
- In house $60,000+
- Outsourced $800 to $1,500 per month
Long Term Cost Difference
Over 3 years
- In house: $150,000 to $270,000+
- Outsourced: $9,000 to $90,000 depending on size
The cost gap is significant for most small businesses.
Compare cost for your business
Frequently Asked Questions
Is outsourced bookkeeping cheaper than in house?
Yes, outsourced bookkeeping is typically significantly cheaper than hiring an in house employee.
When should I hire an in house bookkeeper?
When your business requires full time financial staff and has high transaction volume.
Does outsourced bookkeeping include CPA review?
Many outsourced services include CPA review as part of the service.
Is Xero required for outsourced bookkeeping?
No, but Xero is commonly used for cloud based bookkeeping.
