Freelance Bookkeeping Rates - How to Charge For Your Bookkeeping Services

New to the bookkeeping business?

Then you are probably uncertain about how much to charge for your services. This is business advice for Bookkeepers and other consultants as well.

When I began my bookkeeping business in 1999, so was I. Here are some tips on what to charge.

Freelance Bookkeeping Rates - How to Charge For Your Bookkeeping Services

One lesson I learned quickly is that EVERYBODY wants a deal and they think that you should give them one, but the minute you do, they will undervalue your services and consider it to be a permanent discount.

Don't make the mistake of charging too little - Use reward incentives and bonuses for new client referrals instead of lowering your price for any customer. Even once can be the "Kiss of Death" to your rate sheet.

Do not guess at how much to charge, either. When you begin you need to seek out other professionals in your field and simply ask them what the rates are that they are charging in that area. Ask them if there is a sliding scale and if so, what criteria they use to determine those variables.

Here is what I figure -

Small business clients would rather pay a flat fee than an hourly rate. Most bookkeepers charge an hourly rate, but will charge a flat fee based on the number of transactions that need to be entered, plus -10 (if they don't know the client in advance). You must also calculate these costs into your calculations - Workers Compensation, self-employment tax (10% for USA), and business insurance.

For a basic bank and credit card reconciliation, data entry and set of monthly financials you will work approximately 2.5 minutes per entry. Each data entry transaction counts as "2.5." So, if you have an average small business with 200 entries per month, you need to charge 2.5 minutes per entry minimum.

Experience tells me that some entries will take more time and some entries will take less time, but from start to finish all entries made will balance out to 2.5 minutes apiece. At the rate I charge that means that a monthly flat fee for this customer equals 2.5 times number of entries divided by 60 total minutes times hourly rate (2.5 x 200 / 60 x = 0 per month flat fee).

Not all bookkeepers are willing to share their fee structure with others, so do not be afraid to ask several bookkeepers what they charge for a beginning point of reference. You will find that there are ranges of rates from -60 + per hour. Pick one of those rates that feels like it covers your costs and still holds you accountable as an expert in your field. If you charge an hour then you really need to get more experience and/or education to be taken seriously. Bookkeeping Accreditation is one way to do that. Check with your local chapter of American Institute of Professional Bookkeepers for accreditation.

If your customer seems apprehensive about your fee then ask them if they would imagine a set of records presented 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. If they still hesitate then you are best advised to help them find someone else.

The benefits of hiring a bookkeeper also include the fact that a full-time employee and payroll costs are eliminated, computer hardware and software and extra office space and storage for bookkeeping purposes aren't necessary.

-45 is the average cost per hour for a good bookkeeper who knows the business. For higher hourly rates you are paying for a bookkeeper who works with an accountant. Those rates reflect the fact that they work with professionals who oversee their work and the higher rate is symbolic of the review by a tax professional of the records of a business before they go out the door to the IRS or CRA. It is worth the extra cost for a lot of clients. For others it is not and those people probably don't make the best clients for experienced bookkeepers.

When you are creating your invoices for your own customer billings, briefly rewrite the work you did for them (client) in the body of your invoice to them. There is really no need to add all the items on your list of the services you provided for them. You just want to include a 2-5 sentence outline for your client so that they understand what they are paying for.

TIP: If you have a large amount on your invoice to present to them then try to break it up into 2-3 separate invoices in the course of a month. Your clients may need you to do their work, but nobody appreciates a huge bill at the end of the month without any warning. Those situations lead to ill-will and short-term clients. Longevity is the key to owning and operating 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 reconciliation and reports for October statements, cash receipts journal, cash disbursements journal, general journal entries (for those on an accrual method of accounting. General journal and accruals, trial balance, general ledger postings. If you performed payroll services then add "payroll preparation," "quarterly payroll tax returns," etc.

The big picture and a few details help your client understand why you bill the way you do. And why you are worth it!

If you performed additional services that you choose to leave as un-billed go ahead and add it to your invoice as a note on the bottom listing that service - For example: IRS phone calls for payroll issue 3 hours at no 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 rates - Unless you want to be training your clients for free and that just takes away valuable time you can be spending getting other jobs and clients. Time is Money-Use yours wisely to grow your business. Do not nickel and dime clients - faxing and copies should not be billed out unless they exceed .00 in your time and costs.

Always invoice your clients regularly - the same time every single month. Create professional invoices even if it's on an Excel spreadsheet. Use the last day of the month as a guideline in billing dates.

Still looking for clients?

- Look through the want ads for people who are interested in hiring a 10-15 hour person a week. Generally these people are less interested in hiring an employee. Give them a call or send your business card and resume and cover letter explaining why your service is good for them - outline the benefits for them and request a phone call to discuss it.

- Join a local networking group. I found that Business Networking International (BNI) not only helped me professionally with public speaking, and self confidence, but they also gave me a steady and solid stream of references every single week that grew my business and kept me busy. The cost of membership paid for itself in only one week.

Good luck!

Freelance Bookkeeping Rates - How to Charge For Your Bookkeeping Services
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Find business tips go to my website here Having owned and operated a bookkeeping business since 1999, I always look for other good business tips and advice from others. Check here if you are looking for other opportunities.

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What is the Difference Between Bookkeeping and Accounting?

What is the difference between bookkeeping, accounting, and accountancy? When someone says they are an accountant, are they really a bookkeeper? Does it really matter?

Bookkeeping

Bookkeeping is the process of systematically recording the financial transactions of a business, so as to show how the transactions relate to each other. Bookkeeping is largely a mechanical process and does not involve any analysis of the financial transactions, but rather the recording of them.

What is the Difference Between Bookkeeping and Accounting?

Traditionally, the records were kept in a book, hence the name bookkeeping. These days, bookkeeping is normally performed using a bookkeeping software package, but the names of the books (daybook, cashbook, journal, and ledger) are still used.

A bookkeeper's function is primarily one of recording transactions in the journal and posting to the ledger, and is sometimes referred to as an accounts clerk.

There are two types of bookkeeping: single entry and double-entry. In single entry bookkeeping, the record of each transaction is carried to either the debit or credit column of a single account. In double-entry bookkeeping, two entries of each transaction are carried to the ledger: one to the debit side, and one to the credit side, of the corresponding account. This is so the two entries can be used to check each other.

Accounting

Accounting is the systematic recording, reporting, and analysis of financial transactions of a business. As bookkeeping involves making a financial record of business transactions, it is true to say that the role of bookkeeping is encompassed within the scope of accounting, and the bookkeeping system used by a business would form part of the accounting system.

Accounting also includes the preparation of statements concerning assets, liabilities and the operating results of a business.

Accountancy is the occupation related to accounting, and an accountant is the person who does, or at least is responsible for, the work. Accountants often specialize in a particular area of accounting such as taxes, auditing, or management.

In a small company, all of the bookkeeping and accounting tasks may well be performed by a single person. In this situation, that person would normally be referred to as an accountant.

What is the Difference Between Bookkeeping and Accounting?
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John Dixon maintains two bookkeeping applications. Both applications are aimed at small business bookkeeping.

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Accounting Outsourcing Companies: Advantages and Disadvantages

Accounting is a very important requirement in the business world but due to its high professional and difficulty level and the reasons for outsourcing, most companies especially small ones use it for financial records. To ease the problem of accounting in a company accounting outsourcing companies are established and their primary job is to shift the burden of financial accounting challenge to their professional neck to deliver high quality and cheaper accounting services.

Businesses especially small ones needs accounting records if not their financial position will become a mess. Because a company success is primarily based on the ability of evaluating their liability/access, income and expenditure positions, therefore, inability of ascertaining this will create a problem in the present and the future. In other words, without knowing the liability and access of a company or her income and expenditure, companies will not be able to know their profits or gain. These are some f the relevance of accounting outsourcing companies. To combat the vacuum that lack of accountability can cause, small businesses and large companies too are pushed to hire outsourcing companies.

The need for accounting outsourcing companies

Accounting Outsourcing Companies: Advantages and Disadvantages

There are different reasons for employing accounting outsourcing companies and they are:

• Lower capital cost: Because accounting outsourcing companies makes use of their hardware and software, the hiring company is free from such expenses. Example is the use of Quickbooks accounting software for the accounting job. Apart from this, other expensive infrastructures that will be required to do the job are borne by the companies and not their clients. This leads to lowering cost and encouraging savings.

• Reduced management problems: Employing and controlling or management of accounting personnel is removed along with the huge remuneration and compulsory incentives that comes with it. Accounting outsourcing companies only charge small rates per jobs delivered. No extra charges are expected from the clients.

• It saves time: Outsourcing companies executes jobs on time and without delays

Outsourcing enables companies to focus on other key company issues thus enabling them to zero on their primary strength and competencies in handling those vital jobs. Outsourcing indeed has its own merits and demerits but the merit far outweighs the disadvantages. For instance the disadvantages of outsourcing are the likelihood of the accounting outsourcing companies going out of business. Although this may be a disadvantage, it is however not a major one because there are many other companies out there, all that is required is to change to the other. Also, you can avoid this occurrence by hiring base on company's good client base, capital base and length of establishment.

Another possible disadvantage is the cost. Sometimes, outsourcing might be expensive but such times are far in-between and nothing compared to maintaining a professional accounting staff. Accounting outsourcing companies are established and positioned to solve a company's numerous accounting issues, cheaply and professionally. So companies especially small ones who cannot afford to hire accountants or may not have the formal knowledge to keep proper accounting records can outsource their accounting jobs.

Accounting Outsourcing Companies: Advantages and Disadvantages
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Outsourcing QuickBooks Bookkeeping improves financial operations as well as increased the level of efficiency while at the same time curtailing risks and costs. There are many QuickBooks Outsourcing Services that cater to small and medium businesses worldwide.

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