New to the bookkeeping business?
Then you are probably uncertain about how much to charge for your services. This can be business information for Bookkeepers and other consultants too.
Once I began my accounting business in 1999, therefore was. Below are some hints on what to charge.
One thing I learned quickly is that EVERYBODY needs a bargain and they believe you should give them one, but the moment you do, they will undervalue your providers and consider it for a permanent discount.
Do not make the mistake of charging too little – Utilize reward incentives and bonuses for new customer referrals instead of lowering your cost for any customer. One can be the”Kiss of Death” to your speed sheet.
Don’t guess at how much to bill, either. When you start you need to seek out other professionals in your area and just ask them what the rates are that they are charging in this area. Ask them if there’s a sliding scale and if so, what criteria they use to determine these variables.
Here is what I figure –
Small business clients would rather pay a set fee than an hourly fee. Most bookkeepers bill an hourly rate but will charge a flat fee depending on the number of transactions that have to be entered, plus $5-10 (if they do not know the client beforehand ). You should also compute these prices into your calculations – Workers Compensation, self-employment tax (10% to the USA), and business insurance.
For a simple bank and credit card reconciliation, data entry and set of yearly financials you will work approximately 2.5 minutes per entrance. Each data entry transaction counts as “2.5.” So, when you have an average small business with 200 entries a month, you will need to charge 2.5 minutes per entrance minimal. Dedicated Bookkeeping Solutions
Experience tells me that some entries will take more time and some entries will require less time, but from beginning to finish all entries made will balance out to 2.5 minutes apiece. In the rate, I charge that means that a monthly flat fee with this customer equals 2.5 times number of admissions divided by 60 total minutes times hourly fee (2.5 x 200 / 60 x $45 = $360 per month flat fee).
Not many bookkeepers are willing to talk about their fee structure with others, so do not be scared to ask a few bookkeepers what they bill for a beginning point of reference. You’ll find there are ranges of prices from $16-60 + each hour. Pick one of these rates that feels like it covers your costs and still holds you liable as an expert in your area. If you bill $16 an hour afterward you truly must acquire more experience and/or education to be taken seriously. Bookkeeping Accreditation is one means to do that. Check with your local chapter of American Institute of Professional Bookkeepers for accreditation.
If your client appears apprehensive about your fee then ask them if they’d envision a set of documents introduced to their accountant at the end of the year with no problems, and if that would be an equitable way to think of your fee. Should they hesitate then you are best advised to assist them to find someone else.
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$25-45 is the average price per hour to get a fantastic bookkeeper who understands the business. For higher hourly rates you’re paying for a bookkeeper who works with an accountant. Those rates reflect the fact that they operate with professionals who oversee their work and the higher speed is symbolic of the review by a tax professional of the documents of business before they go from the doorway into the IRS or CRA. It’s worth the excess price for a lot of clients. For many others, it is not and those people probably don’t create the best customers for experienced bookkeepers.
When you’re creating your invoices for your own customer billings, temporarily rewrite the work you did for them (customer ) from the body of your invoice to them. There’s actually no need to add all of the things on your list of the solutions you provided for them. You only wish to include a 2-5 sentence outline for your client so that they understand what they’re paying for.
TIP: If you’ve got a massive amount on your invoice to present to them then attempt to break it up to 2-3 separate bills in the course of a month. Your clients may need you to do their job, but nobody appreciates a huge bill at the end of the month with no warning. These situations result in ill-will and short-term clients. Longevity is the key to owning and managing a reputable and long-standing bookkeeping business.
Invoice Descriptions Include:
“Bookkeeping services rendered for November included but were not limited to, the following: Bank and credit card reports and reconciliation for October statements, cash receipts journal, cash disbursements journal, general journal entries (for individuals within an accrual method of accounting. General diary and accruals, trial balance, general ledger postings. In case you achieved payroll services subsequently add”payroll preparation,””quarterly payroll tax returns,” etc..
The huge picture and a couple of details help your customer understand why you bill the way you do. And why you are worth it!
If you performed additional services that you choose to depart as un-billed go ahead and add it to your invoice for a note on the bottom listing that support – For example IRS phone calls for payroll issue 3 hours free of charge. ALWAYS say, “Thank you” NEVER ask a client to call with questions on your invoice.
Charge for telephone consultations and training sessions at reduced prices – Unless you want to be training your clients at no cost and that just takes away precious time you can be spending getting other jobs and clients. Time is Money-Use yours wisely to grow your business. Don’t nickel and dime customers – faxing and copies should not be charged out till they surpass $20.00 on your time and prices.
Always invoice your clients frequently – the exact same time each and every month. Create professional statements even if it’s within an Excel spreadsheet. Utilize the previous day of the month for a guideline in billing dates.