As a small business owner, every dollar counts. You’re always looking for ways to cut costs, maximize profits, and (most importantly) keep more money in your pocket come tax season. That’s why one of the most common questions business owners ask is:

“Are bookkeeping fees tax deductible?”

The short answer: Yes.

Bookkeeping fees are generally considered a deductible business expense. But let’s dig a little deeper into what that actually means, why it matters, and how you can make sure you’re getting the full benefit.

Why Bookkeeping Fees Are Deductible

The IRS allows businesses to deduct “ordinary and necessary” expenses that are directly related to running a business. Bookkeeping falls squarely into this category.

Think about it: bookkeeping is how you keep your financial records accurate, prepare for tax season, and stay compliant with laws and regulations. Without it, your business wouldn’t run nearly as smoothly.

That means the money you pay a bookkeeper (whether in-house, remote, or through a bookkeeping service) is considered a business expense—and therefore tax deductible.

Examples of Deductible Bookkeeping Expenses

When we talk about “bookkeeping fees,” we’re not just talking about someone entering numbers into QuickBooks. The deduction can apply to a range of related services, such as:

• • Monthly or ongoing bookkeeping services

• • Payroll setup and management fees

• • Cleanup or catch-up bookkeeping work

• • Cloud accounting software subscriptions (like QuickBooks Online, Xero, or FreshBooks)

• • Consultations or training provided by a certified bookkeeper

• • Outsourced bookkeeping firms or freelancers

As long as the service is directly tied to maintaining or managing your business finances, it’s usually deductible.

How Bookkeeping Deductions Work

Let’s say you pay $300 per month for bookkeeping services. Over the course of the year, that’s $3,600. When you file your taxes, you can list that $3,600 as a business expense on your Schedule C (for sole proprietors) or under “professional fees” on your business return if you’re incorporated.

This deduction reduces your taxable income. So instead of being taxed on your full income, you’re only taxed on the amount after bookkeeping fees and other expenses are deducted.

For example:

• • Business income: $75,000

• • Bookkeeping fees: $3,600

• • Taxable income: $71,400

It may not sound like a huge difference at first, but these deductions add up—especially when you combine bookkeeping fees with other business write-offs.

Why Accurate Bookkeeping Helps Even More

Here’s the kicker: good bookkeeping doesn’t just give you a deduction—it helps you maximize all your deductions.

A professional bookkeeper ensures that all your expenses are properly tracked and categorized, which means you’re less likely to miss deductible items like:

• • Home office expenses

• • Mileage and travel

• • Office supplies

• • Marketing and advertising costs

• • Professional services (legal, tax prep, etc.)

In other words, the cost of hiring a bookkeeper often pays for itself by helping you uncover tax savings you might have otherwise overlooked.

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What About Tax Preparation Fees?

It’s worth noting that bookkeeping fees and tax preparation fees are two separate things.

• • Bookkeeping fees (keeping your records organized) → Deductible as a business expense.

• • Tax preparation fees (filing your personal taxes) → Only the portion related to your business return is deductible.

So if your accountant does both your personal and business taxes, make sure they separate those charges. That way, you can write off the business portion.

Keeping Records for Your Deduction

As with any deduction, you need to keep documentation in case the IRS ever asks. That means saving:

• • Invoices from your bookkeeper or bookkeeping service

• • Bank or credit card statements showing payments

• • Receipts for bookkeeping-related software subscriptions

Pro tip: Ask your bookkeeper to send a year-end summary invoice showing the total fees you paid. That makes things extra simple for tax filing.

Final Thoughts

So, are bookkeeping fees tax deductible? Absolutely.

Not only can you deduct the cost of bookkeeping services, but investing in professional help often saves you even more money in the long run—by keeping your books accurate, uncovering additional deductions, and helping you avoid costly mistakes.

Think of it as a win-win: you get peace of mind knowing your finances are in order, and you get a tax break at the same time.

Next Steps

If you’re currently doing your own bookkeeping and wondering if it’s worth it, consider this: the money you spend on a professional bookkeeper is an investment in both your time and your bottom line.

Even if you’re not ready to outsource everything, it might be worth having a conversation with a certified bookkeeper about your options.

After all, wouldn’t it be nice to spend less time worrying about your books—and more time growing your business?

Ready to get started?

Take routine bookkeeping off your never-ending to-do list with the help of a certified professional. At Eric Buchholz Bookkeeping, we can help ensure that your business’s books close every month, and you’re primed for tax season. Our expert certified QuickBooks ProAdvisors have over 25 years of experience working with small business bookkeeping across various industries.

Whether you’re learning how to streamline your accounting to save time, or how to set-up your chart of accounts for the first time, Eric Buchholz Bookkeeping can guide you down the right path. Schedule your FREE phone consultation today!… Simply CLICK HERE.