Key takeaways
- Price the monthly close by hours, not by a flat guess.
- Ask every provider for the same written scope before comparing numbers.
- Quote payroll, sales tax and cleanup as separate lines, not inside the monthly fee.
- Apply the Form 1099-NEC threshold of $2,000 by the year the payment is made.
Separate the monthly close from everything else
A monthly bookkeeping fee should pay for one defined job: pull the bank, card and loan activity into the books, categorize it, reconcile each account to its statement, and produce the period's reports for the client's review. Payroll filings, sales tax returns, catch-up work on earlier periods and year-end tax support are different jobs with different hours. A quote that bundles them cannot be compared with one that does not.
Ask the provider to state in writing whether the fee includes month-end journal entries, accrual adjustments, a financial statement package, receipt matching and a monthly call with the owner. Send the question as "Does the monthly fee include month-end journal entries, accrual adjustments and a financial statement package? Please list each item." Decision rule: if a quote says the fee "includes everything" without a list, ask for the list before comparing it with any other quote. Those items are the most common places where two quotes for the same account count end up covering different work.
Build the number from hours
The Bureau of Labor Statistics reported a median hourly wage of $24.36 for bookkeeping, accounting, and auditing clerks in May 2025, and a median annual wage of $50,670. Treat those figures as the wage floor for clerical time, before benefits, software, insurance and the margin a firm needs. They are a check on the labor line, not a price.
Estimate the month in four lines. Categorization hours equal the monthly transaction count divided by the number of transactions your team categorizes in an hour. Reconciliation hours equal the number of accounts multiplied by the hours each account takes. Review hours cover the reviewer's time on the close. Client contact hours cover questions and the owner call. Add the four lines, then multiply by the hourly rate you pay or the rate you charge.
Worked example. A sole proprietor has one checking account, one credit card and about 180 transactions a month. Assume the bookkeeper categorizes about 60 transactions an hour, so categorization takes 3 hours. Two accounts at 45 minutes each take 1.5 hours to reconcile. Review takes 1 hour and the owner call takes 30 minutes. The month is 6 hours of work, and the price has to cover those 6 hours at the rate used plus overhead.
What drives the price up or down
Transaction count is the largest input and the one clients understate most. Pull the last three months of bank and card statements and count the lines before quoting. A business that runs its card through one account and pays vendors from another has more categorization work than a business with the same revenue that uses one account.
Account count sets the reconciliation load. Each bank account, credit card, loan, line of credit and payment processor balance needs its own tie-out to a statement every period. Ask for the list with the institution name and the last four digits of each account, not just a count.
Reconciliation frequency changes the cost more than people expect. A monthly tie-out of every account is the usual close. Weekly bookkeeping spreads the same work across more visits and more client messages, so the monthly cost is higher. Quarterly reconciliation is cheaper only when the client's cash is simple and nobody needs monthly numbers for a loan or a bank covenant.
Entity type affects the review. A single-member LLC reporting on Schedule C needs expense categories that map to the Schedule C lines. An S corporation needs owner compensation and distributions tracked separately, and a partnership needs capital account detail. Those schedules add review time even when the transaction count is low.
Payroll, sales tax and cleanup are separate lines
Payroll processing, payroll tax deposits and quarterly payroll filings are separate work with separate deadlines. Quote them as a line under the monthly fee, with the employee count and pay frequency written out, so the owner can see what changes if a second payroll is added in mid-year.
Sales tax is a separate filing in each state where the client collects tax. Count the states and the filing frequency. A monthly return in one state is a different job from a quarterly return in four states, and the monthly bookkeeping fee should not absorb that work by default.
Cleanup is priced by the months behind, not added to the monthly rate. Ask for the first open month and the last closed month. The provider reviews each open month, fixes the categories and closes the period. Decision rule: if the books are current through the last closed period, quote the monthly fee. If they are not, quote the cleanup first and start the monthly fee after the books are current.
Tax year and 1099 treatment of the bookkeeper's fee
For tax year 2026, with returns filed in 2027, the Form 1099-NEC threshold is $2,000 for payments made in 2026. For payments made before 2026 the threshold was $600. The threshold follows the year the payment is made, not the year the work was done. A bookkeeping invoice for December 2025 that is paid in January 2026 falls under the 2026 threshold.
If the bookkeeper is an independent contractor and the client pays $2,000 or more in 2026, the client generally issues a Form 1099-NEC. The IRS instructions say the form must be filed with the IRS on or before January 31. Because January 31, 2027 is a Sunday, the due date for 2026 payments is Monday, February 1, 2027. Collect the bookkeeper's name, address and tax ID before the first payment, so the form does not become a January chase.
The Schedule C instructions place fees charged by accountants and attorneys on Line 17. They do not name bookkeeping fees, so ask the CPA which line they want the fee reported on before the owner's return is prepared.
How to ask for a quote that compares scope
Send the same request to every provider and say so, using this text: "Please quote monthly bookkeeping for tax year 2026 with these inputs: four bank and card accounts, about 180 transactions a month, monthly reconciliation of each account, a month-end close with a financial statement package, and one owner call a month. Show payroll, sales tax and catch-up work as separate line items." Keep the wording identical for every provider so the quotes answer the same question.
Ask five questions in writing. What is the first month and the first closed period? Who categorizes, and who reviews? What happens when the transaction count goes above the estimate? Which software and which bank access do you need? What ends the contract, and how much notice is required?
Compare the quotes on hours and scope, not on the headline number. Convert each quote to the same account count and transaction count. A quote that is lower because it reconciles quarterly describes a different service, and the comparison should show it as one.
Failure modes and how to fix them
A flat fee with no transaction ceiling is the most common failure. Hours grow with volume, so the provider absorbs the loss or the client gets an unexpected invoice. Fix it by stating the transaction volume in the quote and naming a review date when the count changes by an amount both sides agree on.
Payroll left out silently is the second failure. The client assumes the monthly fee covers payroll reports, and the provider assumes it does not. Fix it by listing payroll as its own line with the employee count and pay frequency, and asking the owner to confirm that line in writing.
A third failure is pricing the first month as if the books are clean. Review the last three months of statements before the quote. If there are open items, add a cleanup line and do not let the first monthly invoice carry the backlog.