Discussion:How much do I charge for services?
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Discussion Forum Index --> Accounting Questions --> How much do I charge for services?
| 24 November 2007 | |
| Hello All,
After 20 plus years as a Corporate Accountant, my job has been "centralized". I have started down the road toward opening my own small business accounting practice. I am not a CPA but hold an MBA and am planning on taking the EA exam in 2008. I am hop9tn ghtat wrord of moutn wiol get my practice off the ground as I know q | |
Bottom Line (talk|edits) said: | 24 November 2007 |
| My condolences on your "centralization". (That's a new way of saying lay-off that I haven't heard before.) There are several threads here on pricing, advertising and starting a new practice. Put some phrases in the yellow search box to the left and you'll find some of these threads. | |
| 25 November 2007 | |
| There are several threads as BL mentions. Seems to be that bookkeeping is $45.00 per hour. I have a 2 hour minimum a month, some have a 4 hour minimum. I get a monthly retainer for it. As far as returns, the National Society of Accountants www.nsacct.org does a fee survey that you have access to if you join. I don't know just how scientifc it is, or how useful it is. If you have any friends who are business owners in your area, you may be able to get some idea from them. | |
Bottom Line (talk|edits) said: | 25 November 2007 |
| Intuit (manufacturer of QuickBooks) also as a survey.
Be sure to try to get a transaction count before you give a quote. Since people use debit cards and banks no longer send back the checks; just because a bank statement is thin, doesn't mean that there's not a lot of work to do. I do initial quotes as a range and tell them we'll review it in 3-6 months. You don't know how much "help" you'll get from the client. (Had a potential client that wanted to sit beside me and explain each check to me. Couldn't understand why my quote was $40/hour by myself or $70/hour if he "helped". Needless to say, I didn't get the gig and didn't want it.) Beware of "box people"; there's a lot more work there than you would first believe; definately get a retainer on box people. | |
| 25 November 2007 | |
| Thanks so much for all for your help. Yeah, centralized is the new downsized.
I guess I was under pricing myself at $35 per hour. Do any of you charge for travel time also? My new client is 40 minutes away. | |
Bottom Line (talk|edits) said: | 25 November 2007 |
| It depends. I do sub-work for a CPA and if the drive is more than one hour and I can't combine it with other stops, I charge him for the drive time. (I charge him less than "my" clients since he has to do all the collections and make all the decisions.) I don't think I'd separate bill your client for the 40 minutes but would build it into my pricing. (If you're charging an hourly rate, charge him an extra $5/hour which will cover your drive time without making him wonder if he could get the same service closer.) When I started out, I worked out of my home and got used to going to the clients. It's a hard habit to break. I'm out of the office three days a week but have specific days that I go specific directions. (Tampa on Wednesday and Friday, St. Petersburg on Thursday) The only way that I am out of my office on Monday and Tuesday is if I can schedule the entire day out. I charge anywhere from $40 to $80/hour depending upon what the work is, the timeframe needed and the working conditions. QuickBooks training and cleanup is closer to $80/hour. An established client that leaves me alone and their work is real clean is closer to $40/hour. A rush job gets charged a premium and is indicated as such on the invoice. Also be careful on your referrals that you charge a similar rate for similar work (they talk). | |
| 25 November 2007 | |
| Wow, thanks again.
I thought one way of billing for driving time would be the $.485 per mile deduction allowance. I went back and re-invoiced my client at that rate plus thw $40 an hour....thanks. I noticed you do sub work for a CPA. I have started a small list of CPA's in the areas I know and thought of going down that road. Good to know it is a viable option. Plus I hope to sit for (and pass) the EA exam in fall 2008. It is great of you to share your info , it is appreciated! As excited as I am to start my own business it is also very scarey. | |
Bottom Line (talk|edits) said: | 25 November 2007 |
| Agreed, very scary. Like you, I made the decision to start my own business after I got laid off. I got another full time job a couple of months later so was lucky to have a regular job while I got my own business up and running. That way I didn't have to count on it for groceries immediately. Prepare a resume for the the CPA's (and don't forget about other accounting practices); it will need to be somewhat different from what you would use to get a full time job working for someone else. Introduce yourself to them now so you'll be ready to go when tax season hits. I generally charge $40-$50/hour for bookkeeping but only charge the CPA $35/hour. Their big concern when they first start working with you (understandably) is that you not steal clients. I don't mind signing a non-compete but read it carefully to make sure that it isn't so restrictive that it puts you out of business. Some will have you only deal with them; others will have you work directly with their clients even down to scheduling the appointments. Make sure that the CPA gets a backup of your work on a regular basis. I tell their clients that I work "with" the CPA. Most clients assume that I am an employee. The CPA knows that I will not lie. If the client asks me if I am an employee, I will say no and that I have my own practice.
With the standard mileage deduction, you get paid for your mileage but not your time. Depending upon the traffic conditions in your area, the standard mileage may not be a good exchange. Remember, the things you have to sell are your knowledge and your time and once your time is gone, it won't come back. | |
| 26 November 2007 | |
| BL's comment about a similar rate for similar work is so true: the referrals will talk. That is why your initial pricing is so important (keep it reasonable but not firesale). Be consistent. Read some other threads here also, there have been some recent ones on this same subject, see "sjpaccounting" (two posts) below on this page. | |
| 30 November 2007 | |
| Thanks, this is fantastic information. You both have been a tremendous help.
I had thought about starting my own business for years now, but the responsibilities of my full time job (50 plus hours, salaried of course) kept me from even giving it a second thought.. I have the luxury of still having about 6 months until my lay off is final.. Time to build a small client base, I hope. All of your ideas are great. Thank you. | |
| 8 December 2007 | |
| FWIW, I'm a CPA and have been for 27 years. I charge out my time at $150/hour normally. For bookkeeping work, I normally charge $80 - $100/hour. However, many of my projects have a flat fee for the entire job. | |
| 18 December 2007 | |
| I'm considering getting into Bookkeeping as a source of additional income, maybe 10-16 hours per week. I'd like to know if anyone has recommendations for the kind of training that would be required to do this job, as well as what the typical job responsibilities are. Also, I'd like to know average rates a fairly new bookkeeper in the Los Angeles area could expect to earn in the first year. Thank you. | |
Bottom Line (talk|edits) said: | 18 December 2007 |
| I don't know what your education/background/experience is so will start with the basics. (Since your post is gramatically correct, I'll assume you have a good education.) Get "Bookkeeping for Dummies"; costs $19.95 and will give you some basics on bookkeeping. Most small businesses seem to use QuickBooks. Learn the program backwards and forwards. If you choose to get certified as a Professional Advisor, that will increase your confidence. Although you won't get extra money simply because of the cerfication, you will be more knowledgeable than the competition. Take a bookkeeping class at your local community college.
Job responsibilities vary with the job. Can be anything from processing accounts receivable to being the office manager of a small company to working for an accountant. Check out the local classifieds and you'll get some ideas. Pay ranges will really vary with a lot of it depending upon the knowledge and responsibilities of the bookkeeper. Rates here in FL can vary from $8 - $75/hr. LA - I have no idea. | |
TheTinCook (talk|edits) said: | 18 December 2007 |
| Oh no! The competition!
Definitly take accounting 101 at one of the CC's. It's very, very easy to get lost in QuickBooks or other accounting software if you don't understand the j/e. You should also learn to do payroll. The CA FTB puts on some killer workshops (for free) on state employment tax. Also figure out if there is a specialty you want to get into. Might be special skills you need to learn, like medical billing. Join the ProAdvisors' Program. It's cheaper to join (and get the free software) then it is buying everything off the shelf. The training materials are pretty good. You also get the rates survey. Lots of jobs on craigslist. | |
| 18 December 2007 | |
| Go buy the Barron's Business Review Book "Accounting" by Peter J. Eisen, 4th Edition or higher. Barnes & Nobles and all the big bookstores should have it. Work through it by hand, as a review. It more or less let's you know what the software should do (lol), often trys to do in the background etc., and generally fouls up (the software and the client, that is). I like this book because it really takes you through the process step by step. It's not the same as taking a beginning Financial Accounting course at a community college: in some ways it's better, in some ways it's worse because you are not getting the full framework for accounting as you would in a college course. Woops, now I see you've been in accounting for years. Well, if the shoe fits, won't hurt as a review. If you've got the accounting down, consider some psychology review: heh, crazy clients will be your number one problem, but you probably already know that too. | |
| 19 December 2007 | |
| This info will help. | |
| 31 December 2007 | |
| Hi Everyone!! I also started my practice after being laid off from GT and then a smaller firm and then having the company for which I was working move the accounting function to another city. I also started charging a lower rate but I decided that my target market would be small businesses that won't get the attention they need from their CPA (because of their size). My initial rate was $35/hour for accounting services - and I only charged by the hour. 2008 the rate is going up to $45 for new clients and by the end of the year I expect all my clients to be at that rate. I am thinking about beginning to charge a premium for going to the client's offices instead of them bringing me their stuff - except it is easier to do the work at their location at times.
My tax rates are fairly standard - a little lower at the moment as I am still in my house and my overhead is pretty low and I am still new at this. I am hoping to begin working with some of the CPA firms in the area and get them to give me the smaller accounts - the ones that are a hastle to them. I would like advice on how to make the move to have "away" clients bring me their stuff or what at least an idea for other options - besides decline to work in their office. I do kind of like it because it makes me feel like I work with other people. I am still new enough that I only have a part time assistant, a part time payroll clerk and a part time accounting clerk. Thanks! | |
Bottom Line (talk|edits) said: | 31 December 2007 |
| Wow, I'm impressed! You describe yourself as new but you have three part-time employees!
You may have some clients that you can never get away from you going to them. (I call these "out calls".) I've got some that I am their bookkeeper and they really appreciate me (as evidenced by the nice Christmas bonuses!) Charge a premium and limit how many you do. Can you send one of your part-timers out? | |
| 1 January 2008 | |
| I haven't gotten Christmas bonuses yet. How many accounting type clients do you have BL? | |
| 1 January 2008 | |
| Shaunnna, will you share your marketing plan? I will be starting my practice full time in August but am starting out now to cultivate some business part time. I have found that word of mouth will be my primary source of new clients. If you, or anyone else has some helpful hints on securing new clients, I would appreciate it. You sound like you are well on your way to a successful business. Good luck! | |
Bottom Line (talk|edits) said: | 1 January 2008 |
| How many accounting/bookkeeping type clients do I have? Well - let me see. I've got one that used to own 80 garbage rental houses and sold at the top of the market (he says luck not brains); I charge him $200 for about 3 hrs of work each week ($1,000 bonus). I've got a guy that sells boating & fishing products via the internet; about 2 hrs a week at $50/hr ($25 gift card). An auto repair shop that I charge $200/mth for about 4 hrs work ($100 bonus). A real estate developer that I go to monthly for about 2 hrs and charge $40/hr ($100 bonus). And last but certainly not least, a real estate investor whose books I'm fixing after a CPA set a new level for completely mucking up basic bookkeeping; I see him every Friday and charge him $400/day ($500 bonus plus $100 in gift cards). That's $1,700 plus $125 in gift cards! There's another 14 that I see either monthly or quarterly. I do the payroll and income taxes for all except the three that are involved in real estate. | |
| 3 January 2008 | |
| Well, BL, I would like some of your clients. How do you decide how much to charge your clients? | |
| 3 January 2008 | |
| BL: do you do any regular marketing, or did your referrals just mushroom over time? This past year, I had the worst year in a long time getting new clients for tax/bookkeeping. If you do any marketing, do you concentrate it nearby, or over your whole area? Do you use any type of internet marketing? All the rules have changed here in Atlanta as I am still near the center of town, whereas many of my clients are up to an hour north of town (they were down here!). Actually, they are an hour away mainly because of the traffic, and not the miles driven. Crazy. Bigger is not always better because it's hard to get your name out there. | |
| 5 January 2008 | |
| Shaunna,
I get quite a few referrals from my website. A website is a great place to "pre-sell" your services. Unlike direct mail recipients, a prospective client that finds their way to your website is already in need of your services and is easier to convert into a buyer. You already have their attention. The important thing about a website is that it has to be easy to find in Google / Yahoo / MSN and you have to make it easy for the customer to find your contact information. The internet is a powerful tool and it is the first place the younger generation goes for info. I have a paypal account and when doing work for an unfamiliar out-of-town client I get paid up front via paypal. My website = form990help.com | |
Bottom Line (talk|edits) said: | 5 January 2008 |
| I don't do any advertising and don't have a website. I did some advertising about 7 years ago and the new business didn't pay for the ad. I work about 60 hrs/wk during the year and around 80-90 during tax season. I'm not looking for any new clients but get some via referrals from existing clients. That's enough to replace the fall-out and shrinkage. (Fall-out I define as those that go out of business or grow so much that they need a full-time/in-house bookkeeper. Shrinkage I define as those whose bookkeeping I've cleaned up so that they no longer take as many hours.)
I've finally learned that I'm not good at managing people. I want to review each entry before I send the work to the client and want a "perfect" product with no typo's. I'm limiting my business to what I can do myself. While it limits the income, I sleep better at night. As far as determining what to charge: I ballpark it at around $50/hr. Some clients want to pay by the hour and some by the job. For those that want to pay by the job, I estimate how much time it will take to do the work, and then give the client a price range (leaning toward the high side). If it takes less time to do the work, I reduce the bill. Pricing on tax returns is a little different. I only do around 200-250 returns so don't really have a formula. I do put pricing into ProSeries and I use that as a guide. The returns are usually quick and easy since I do the bookkeeping during the year. Everyone's getting a 5-10% increase this year! | |
| 5 January 2008 | |
| Bottom Line,
I think 200-250 returns is pretty impressive for working alone, unless they are just a W-2 and 1099-INT. Once, at an IRS seminar I attended, a guy stood up and said he did 600 1040's by himself every year. Wow! | |
Bottom Line (talk|edits) said: | 5 January 2008 |
| Thanks David. Most of them have a K-1 and Sch A. I see in your profile that you're in St. Pete. I used to live in St. Pete but am now in Holiday. | |
