What Should A Bookkeeper Charge
Bookkeeper Charges or Bookkeeper Fees – What Should Bookkeepers Charge!
Setting A Price When You Go Into The Bookkeeping Business
I received a Great email from “Susan” (not her real name) today and I wanted to share her question with everyone – And my Answer. She is transitioning out of a company going out of business into her own business – Great time to start a business (by the way!).
“Susan” wants to know how much she should charge for bookkeeping.
Today, I have been informed that my job is transitioning out because the company that I work for is really on the verge of going out of business. I totally understand that they have to slash all expenses — even personnel. I am the Office Manager with __ years of business experience. I have owned my own business – marketing and distribution for a ( _________) -planning markets, shows, forecasts, marketing,etc. as well as bookkeeping, customer service, fulfillment of shipments and anything else that was required for my business to be a success. It was ___ years ago when I went back into the workforce as Office/Project Manager in the (___________) industry. The business isn’t much better these days, but I find myself at another crossroads.
I am planning on starting my own business now — primarily for small businesses who do not want the responsibility of a full time employee with benefits, and I am now researching the hourly fee for such services as bookkeeping, administrative, correspondence composer and everything else that a busy owner does not have time for. I would so appreciate any advice (I am also reading your articles!) as how to set my hourly rate. I believe that I need at least $20 per hour to cover any travel, overhead, taxes and other necessities for businesses. I tend to undervalue/undercharge for my services primarily because, oftentimes, people just aren’t willing to “pay” for such services.
I would so appreciate your help and I already have learned so much from your articles. Thank you in advance for your time!
Hi,Susan, I am glad that you are reading my articles and that they are helpful.
I have tons of advice, but what I hear you saying is that you are wanting to know what rate you can charge for your bookkeeping services.
First of all, nothing you do will take the same amount of time – For instance, payroll for 1-5 people takes less time than payroll for 10-15 people, so you need to have different rates for number of people on payroll, monthly, quarterly, EOY Tax Filings, Financials, different rate for telephone help versus on-site consultation, have a standard hourly rate, but different rates for different functions and tasks . . . .For instance, I had one guy trying to get a bank loan, just always wanting me to come over and take a “QUICK” look at his financials. Every Single time I went I got roped into creating an entirely different and new set of financials based on new information – He always left that part out and I’d spend 1-4 hours every time for a “QUICK” look at a set of financials. I let that happen twice before I said, “No,” to a third – Free set of financials. He now gets a quick look at his bank financials for $65 an hour. Read Here about How To Hire An Accounting Professional
Data entry into a computerized bookkeeping system takes longer if you can’t read someone’s writing and if receipts are hard to read, there is missing information, or receipts have to be ‘unfolded’ first which is why if you have a bank statement you calculate 2.5 minutes per entry (30 entries for one statement= 2.5 x 30 = 75 minutes, or 1 hour, 15 minutes). Some entries will take longer, some will take less time than 2.5 minutes, but it always averages out to this amount.
NEVER – NEVER – NEVER . . . . go into a meeting with a new client without taking a contract they can sign outlining the duties you are performing for them. Here is why – People think that what you do, “Only Takes You 5 Minutes.” but you add a bunch of those 5 minutes up and pretty soon you are working for free. With a contract, you can legitimately say that, you were not contracted to perform that task and you’ll have to charge extra for it – Being “nice” won’t earn you a living – just a reputation as a schmuck who works for free. Get your contract in writing.
NEVER – NEVER – NEVER . . . . quote your price for a job over the phone – You never get enough information on the phone to know what is involved in completing the task to finish what the client wants – they always leave something essential out and it always takes longer than you think it will. Better to lose someone immediately by telling them you don’t quote over the phone because you don’t have enough information until you look at a job to know what it will cost to complete. Tell them you have a standard hourly rate, but that without seeing what they have for yourself, you are shooting blind and you just can’t do it. I’ve never lost someone for doing this. I’ve only found out who could afford to hire me – And who could not. If someone argues with you about this ask them if they would expect their car mechanic (dentist, attorney, plumber, heart surgeon, renovation contractor) to quote them a full price over the phone – People don’t understand “why” until you explain it that way.
To determine exactly how much to charge per item, or per hour, you first need to make a complete list of your services. The second thing you need to do is to call a local bookkeeping company and accounting company – You can probably get a list from the chamber of commerce. Use your list to ask what those people charge – Ask them if they ‘specialize’ in one industry over another (some accountants only take dental clients, others construction, etc . . . ). If they don’t want to answer your questions because they feel threatened or they just simply don’t want to answer then politely thank them and hang up and call the next person on your list. Call 5-8 people for this information.
Ask several accountants to go for coffee with you (one at a time) – Buy them coffee to get to know them for over flow work opportunities at tax time. Ask them what memberships they belong to and find out if it’s something you might be interested in joining.
Join a couple local groups to network with. If you end up going and the group does not meet your needs – In any way – then join a different group. You’ll have to get to know these people if you expect them to tell their friends, business associates and family about you.
Keep your day job until you are earning a full time income. This will take about 6 months if you are just starting (or longer).
Find out what the people in your area are using for accounting software – Learn it well.
Rates will vary from $20-60 an hour (and up) depending on your skill set and experience. In your contract include a note that your rates will increase ___ % every year, so that you aren’t working 5 years from now for the same rate or amount that you started out with.
$20 is a good hourly rate to start, but for where I go it is low. $25.00 is better, but the economy may not allow you to charge that rate. And, in my humble opinion if someone is paying $20 for a bookkeeper, then they just aren’t that good at bookkeeping. You can base your other functions on your main hourly rate , like payroll, but for regular office functions like correspondence and filing – that sort of thing, you may want to quote a lower rate (For instance – $12-18 is the industry standard).
Going online to research the titles you will be working at will show you a range of prices (from bookkeeper to accounting assistant), however also note that that range is 26% below the national average for what bookkeepers actually charge and get paid, which is why it is critical that you call the local people in your area who are doing the same thing to find out what they charge.
Professional at all times – Meaning dress and appearance as well as demeanor. You wouldn’t go to a business meeting in your sweats, so don’t show up at someone’s home (where they do their business bookkeeping) in your play clothes.
Hope that helps – All my best!