How much should a client pay? How do I know if I’m paying a reasonable price for my bookkeeper? How can I save money on my bookkeeper?
One thing customers do is (wrongly) assume that the work of putting together records for accounting purposes to get a real set of accurate financial records does not (or should not) take a very long time. In my experience, an average company has about 200-400 transactions per day. Month, and that average lasts during my posting period (over a ten-year period), each transaction takes about 2.5 minutes each.
Some records take longer, some records take less time. Multiply that time by your accountant’s rate and you will see (around) what you have to pay them for their service for that feature.
Entering data is a tedious and hard task. If you had time for it yourself, it would be done, so that’s one of the reasons why your bill may seem high to you. Think about your mindset about how long your bookkeeping ‘should’ take, and balance it against how long it actually takes to perform the necessary monthly and daily tasks that you do not have time for.
Bookkeepers charge one of two ways – Either a flat fee for designated and specific services or an hourly rate for things they can’t decide how long the process will take.
Usually, if you hire a new bookkeeper, they will be hesitant to go with the flat fee for the first two to three months because they don’t know you yet, how easy it is to get receipts and records from you, and what the details are involved in looking after your records.
If you’re still billed for an hourly rate after the first three months, it’s time to sit down with your accountant and find out how you can work better together to create a more cost-effective method.
Your accountant will benefit because their schedule will be better structured and they may feel comfortable freeing up time they may have provided pencil for you. You are dealing with a professional and they will understand.
If you need coaching or training in your accounting software or other software to track your records – spreadsheets for example, you pay extra for this service from an accountant. Maybe you would be wiser to apply for an online or in-house course at your local community school instead.
Hire a bookkeeper – Check their credentials, experience and education and references – Check it ALL.
If you hire the bookkeeper at $ 16 an hour out of paper, you get what you pay for – someone who takes twice as long to complete a task (Now you pay $ 32 an hour (or more) for the same person, plus opening up the possibility that you might need to hire another bookkeeper who knows what they’re doing to fix the $ 16 an hour error per person – Now you’re paying $ 78 an hour for the work you do thought you could save some money – MUCH).
One thing you can do To help you decide whether to hire this person, this person must take a simple posting test before hiring them. If they confuse debits and credits and assets and liabilities with expenses and revenue, you are in BIG trouble. Not only will you get your books done twice, but you will likely be revised several times.
Here are 3 examples of questions and answers you can use for basic journal entries, record adjustments, bank reconciliation, accounting error correction, and other key skills provided by The American Institute of Bookkeeping:
“1. On October 1, your calendar-year company, which is on an accrual basis, signs a
$ 15,000 painting contract and making a $ 5,000 advance that you register in Painting
Expense. If the management tells you that on December 31, 20% of the work has been
completed, you will:
a. credit Painting expenses to 2,000
b. debiting paint costs to 2,000
c. debiting paint costs to 3,000
d. credit Measurement expenses are paid for 5,000
2. While doing the bank reconciliation, you discover in your company’s bank statement
a $ 150 charge for another company’s check. To fix this error, you must:
a. Add $ 150 to the end of the month bank balance
b. Add $ 150 to the cash balance after the end of the month
c. subtract $ 150 from the end of the month’s bank balance
d. deduct $ 300 from the cash balance at the end of the month
3. On May 2, your company paid $ 225 for office supplies but incorrectly registered the check
in the cash payment diary as $ 252. When you discover the error, you must:
a. Charge the ledger Cash for $ 27
b. Charge office supply expenses for $ 225
c. Charge office supply expenses for $ 27
d. Credit Office Equipment Cost of $ 27
3. d “
Posting experience combined with a CPA means you pay more because your records receive bonus in a review from a licensed professional with strict credentials.
Accounting experience combined with an accounting certification also means a higher rate.
Accounting with experience, but no certification means an hourly rate of approx. $ 5-10 above average price. In Canada, that means about $ 35-50 an hour for a regular bookkeeping, as is the case in the United States.
Where the recession and the economy have hit hard, you find that the interest rate negotiations work very well.
A long-term relationship with your bookkeeper is ideal, but does not make it comfortable to hand over the keys to the vault either. It’s just scary – No matter how much you ‘trust’ them. After all, it was the church secretary who was serving 25 years for fraud and extortion.
Advance Fees – Usually requested with new clients. This fee is based on an estimate of what the costs will be based on what is needed and the number of transactions involved. It is also usually 1 / 3-1 / 2 of the total. If you cannot pay it, do not hire this bookkeeper.
How can I save money with my bookkeeper?
– Don’t fold your receipts
– Keep your receipts in date order
– Organize your receipts into categories (auto, office supplies, medical, job material, advertising, …)
– Write on your bill or receipt: Date pd, account pd from, check number, amount you pd if the balance is different, everything else that is relevant (for example, is part of a receipt of a gift and part of an office expense – document that for your accountant Time is money, your time, your money.
– Write on your invoices: Deposit date, to which account money was deposited, amount deposited, customer check number and other relevant information such as a change of customer address. Also keep the deposit slip with the invoice – if you can.
– Pay on time and don’t let your accountant spend their time calling you or sending you – further – invoices.
– Don’t miss appointments or have an accountant waiting for you. They have schedules and throwing their day means they have to plan others all the way. You pay more for that service. It’s called a “PIA” fee for ‘these’ clients.
– Don’t lie to your bookkeeper, otherwise they will fire you.
They need to know if your trip to the Bahamas was really for vacation or business.
They need to know that your dog, Lucy, is not listed as one of your caregivers.
They need to know that the new lingerie you bought for your wife in your local mall is not a “little tool.”
They need to know EVERYTHING about your business to avoid any fines or fines they may face because of your untruths. Then tell them everything.
The money you save by following these simple rules will not only save you money, but will promote goodwill and a long-standing relationship between you and your (most outstanding) accountant.