When you decide to switch away from your average hourly rates to a flat monthly fee, your instinct is to still base it on your time. You discover that it takes around 40 hours per month to complete your monthly bookkeeping tasks. Then you multiply 40 by your old hourly rate of $40, and you decide to charge a flat $1,600/month. If you’re having trouble determining how much to charge a client, it’s perfectly fine to start out working with them at an hourly rate and moving to a fixed rate later on. At the beginning of your working relationship, there could be quite a bit of cleanup you have to do for the client’s books, and that can be time consuming. You’re also learning their business and don’t know exactly what tasks you will be doing.
Consider investing in simple software like FreshBooks for additional help in handling your finances without breaking the bank. Ideally, prioritize the experience factor when hiring a bookkeeper. Go for professionals who have already worked with similar businesses. It’s also important to make sure they have experience in accounting software you use. Small business bookkeepers have a few simple responsibilities. They keep your financial books in order by tracking the revenue and expenditure This is achieved by performing data entry in accounting software.
Types of services
Ask other bookkeepers about services, rates, and gather any other information about working in your area that will help you stay competitive. Generally, small to medium-sized businesses expect to pay between $500-$2,500 USD monthly for their outsourced bookkeeping—an dauntingly large range to deal with. Full time bookkeepers earn from $35,000 to $55,000 per year.
Bookkeeping services pricing structure
Basically, a handful of common tasks that you might encounter on a regular basis. It’s the “good, better, best”, or “bronze, silver, gold” approach. Once you put together a good system, including a pricing list and some standard bundles, this is a great way to bill for your services. These are written by experts in value pricing, and can help you it all out. For example, calling the tax office to negotiate lower penalties limitations of activity based costing on tax arrears may only take 15 minutes of your time, but could save your client thousands of dollars.
Let’s break down the different sizes to their revenue, employee numbers and other key metrics. Then we will compare this to the fixed-rate monthly pricing I charge for bookkeeping services along with the bookkeeping tasks I do for each one. My goal is to help you understand what these breakdowns look like for each client. Customer expectations are changing, and they are now more insistent than ever on upfront pricing. This is pushing accountants like you to ditch hourly rates in favor of a new pricing strategy and method, which sometimes creates confusion about how to set your accounting services fees.
Define the Scope
There are two main types of bookkeeping to be aware of when deciding what type of bookkeeper to hire. These include basic and full-service bookkeeping, where the decision largely depends on your business goals and needs. Additionally, a bookkeeper may work with an accountant, who is responsible for more advanced tasks such as assessing the health of a business or generating financial statements. For another great article about billing for bookkeeping services by the hour, check out this post over at Fit Small Business. Instead, let’s talk about the different ways to charge for bookkeeping services. It’s a silly hangup, but I always want to find a way to skip past my hourly rate or the total cost of my first invoice and get straight to the work.
- However, any error or oversight that may appear on the sheet is fully at your business’s expense.
- Just because it takes you 10 hours per week with your construction client doesn’t mean it will take that long with your restaurant client.
- A common way to do this is by building a tiered system for different levels of service.
- Business owners love Patriot’s award-winning payroll software.
- There are two additional benefits if this method will work in your situation.
- Instead of setting an hourly rate, or an equivalent recurring charge, you set your prices based on the value they will provide.
There can be multiple variants that play in the pricing factor. The cost can be from a $20 hourly rate for basic how to generate ancillary revenue in your hotel or resort services. Ideally, hire part time bookkeepers when you can do some of the accounting yourself, and could use extra help for employee timesheets, accounts payable, and accounts receivable tracking. Even if you hire a part time bookkeeper, your management would still have to review their work.
What is a Small Client?
Different industries also require different services, which can affect the overall cost. I literally pick a number out of thin air based on feelings. For example, a Certified Public Accountant (CPA) is paid more than a traditional accountant due to having to meet higher education and licensing requirements depending on their state. Sales, production, and employee retention are all extremely important.
Chances are, clients are going to be more willing reconciling invoice payment transactions vs bank deposit transactions to pay an accounting firm more money over another if they have more experience. Pricing will also be affected by how frequently services are provided (weekly, monthly, quarterly, etc.). The cost of continuous, regular work may differ from that of sporadic or one-time services. Fixed-pricing looks at your costs in advance and applies your desired margin and voila, you have your price per month. Whether or not it makes sense for your small business client or not is another story.
To set the correct pricing, you need to start by assessing the various factors that affect your rate. Some are more impactful than others, but they should all be considered. The best way to do bookkeeping for small businesses is to come up with a framework, choose the method that works best for your business type, and keep track of all the details. You’ll find that bookkeepers who have completed all 3 programs have a much higher average hourly wage.