New to the accounting business?
So you are probably not sure how much to charge for your services. This is business advice for bookkeepers and other consultants.
When I started my bookkeeping business in 1999, so did I. Here are some tips on what to charge.
One lesson I quickly learned is that EVERYONE wants a deal and thinks you should give them one, but the moment you do, they will undervalue your services and consider it a permanent discount.
Don’t make the mistake of charging too little – use reward incentives and bonuses for new customer referrals instead of lowering any customer’s price. Even once may be the “kiss of death” on your rate card.
Also don’t guess how much to charge. When you start, you should seek out other professionals in your field and simply ask them what fees 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.
This is what I imagine:
Small business customers prefer to pay a flat rate than an hourly rate. Most accountants charge an hourly rate, but will charge a flat rate based on the number of transactions that need to be entered, plus $ 5-10 (if they don’t know the customer in advance). You should also figure these costs in your calculations: workers’ compensation, self-employment tax (10% for the US), and business insurance.
For a basic bank and credit card reconciliation, data entry, and monthly finance set, 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 should charge 2.5 minutes per entry minimum.
Experience tells me that some entries will take longer and some entries will take less time, but from start to finish, all entries made will balance out at 2.5 minutes each. At the rate I charge, that means a monthly flat rate for this customer equals 2.5 times the number of tickets divided by 60 total minutes per hourly rate (2.5 x 200/60 x $ 45 = flat rate of $ 360 per month ).
Not all accountants are willing to share their fee structure with others, so don’t be afraid to ask multiple accountants how much they charge for an initial benchmark. You will find that there are rate ranges from $ 16-60 + per hour. Pick one of those fees that you feel covers your costs and still holds you accountable as an expert in your field. If you charge $ 16 per hour, then you really need to get more experience and / or education to be taken seriously. Accounting accreditation is one way to do it. Check with your local chapter of the American Institute of Professional Accountants for accreditation.
If your client seems concerned about their rate, ask if they would envision 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 of thinking about their rate. If they are still in doubt, you better help them find someone else.
The benefits of hiring an accountant also include the fact that the costs of a full-time employee and payroll are eliminated, computer hardware and software, and the additional office space and storage are not required.
$ 25-45 is the average cost per hour for a good accountant who knows the business. For higher hourly rates, you are paying for an accountant who works with an accountant. Those rates reflect the fact that they work with professionals who oversee their work, and the higher rate symbolizes a tax professional’s review of a business’s records before they walk out the door of the IRS or CRA. It is worth the additional cost for many clients. For others it is not, and those people are probably not the best clients for experienced accountants.
When you are creating your invoices for your own customer invoices, briefly rewrite the work you did for them (customer) in the body of your invoice for them. You don’t really need to add all the items on your list of the services you provided to them. You just want to include a 2-5 sentence outline for your customer so they understand what they are paying for.
TIP: If you have a large amount on your invoice to present to them, try breaking it up into 2-3 separate invoices over the course of a month. Your clients may need you to do your job, but no one appreciates a big bill at the end of the month without notice. Those situations lead to short-term, ill-will clients. Longevity is the key to owning and operating a long-standing and reputable accounting business.
Invoice descriptions include:
Accounting services provided in November included, among others, the following: reconciliation and bank and credit card reports for October account statements, cash receipt journal, cash disbursement journal, general journal entries ( for those using an accrual (or accrual) method of accounting General journal and accruals, trial balance, general ledger postings.
The big picture and some details help your customer understand why you bill the way you do. And why are you worth it!
If you performed additional services that you decide to leave as unbilled, go ahead and add them to your bill as a note in the list below for that service. For example: IRS phone calls for payroll are 3 hours free. ALWAYS say, “Thank you.” NEVER ask a customer to call if they have questions about their bill.
Charge for phone consultations and training sessions at reduced rates – unless you want to train your clients for free and that just takes away valuable time that you can spend landing other jobs and clients. Time is money – use yours wisely to grow your business. Do not make nickel or dime customers: Faxes and copies should not be billed unless they exceed $ 20.00 in your time and costs.
Always bill your customers regularly, at the same time each month. Create professional invoices even if it’s in an Excel spreadsheet. Use the last day of the month as a guide for billing dates.
Are you still looking for clients?
– Look in search ads for people who are interested in hiring a person 10-15 hours a week. Generally, these people are less interested in hiring an employee. Give them a call or send your business card and a resume and cover letter explaining why your service is good for them – describe the benefits to 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 speak in public and have confidence in myself, but also gave me a steady and solid stream of referrals each week that grew my business and kept me busy. The cost of the membership paid off in just one week.