Discussion:Letters of Engagement and Other Legal Stuff

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Discussion Forum Index --> Business Growth Community --> Letters of Engagement and Other Legal Stuff


Bayyoc (talk|edits) said:

September 12, 2006
I'm new to the bookkeeping business (not new to bookkeeping, just the business) and need some advice about ensuring that clients are legally bound to pay. How do you do it? Do you have them sign a contract? Do they just come in with a folder full of reciepts and you have to hope they pay you? I've worked around the public for 15 years and know how they'll screw you if they get a chance.

Sandysea (talk|edits) said:

12 September 2006
You said a mouthful there!! Engagement letters or accounting services forms to indicate what services you are providing, how often, the fees, etc. No guarantee but a leg to stand on!! Good luck to you!!!

Bayyoc (talk|edits) said:

September 12, 2006
Thanks. Is there a company that makes a standard accounting services form I could use as a template? Sorry, I've got a ton of questions. While the internet is loaded with information about how do bookkeeping, there is precious little regarding how to actually RUN a bookkeeping business.

Sandysea (talk|edits) said:

12 September 2006
I have a sample accounting services form I use...I can email it to you over the weekend if you need it. Forget where I originally obtained it, but it is pretty good for my use.

My email is sandy@sandyseacs.com. I can find and send it to you if you give me an email addy.

Dennis (talk|edits) said:

12 September 2006
Accountant's World has all sorts of sample engagement letters.

Sea-tax (talk|edits) said:

12 September 2006
I have a substantial amount of bookkeeping clients and have never used a contract. I do bill the client once a month and charge 1% late fee on outstanding bills. I try to get the owner to sign a direct debit form so that I can direct debit there account once a month and be guaranteed I am paid. When I do run into a problem I first try to solve it by with holding p&l's or sales tax reports until account is paid in full. This usually works. If it doesn't then I will send them to collections once I feel the client is not making an effort. I have never had a problem with a client disbuting the bill they no what it will be every month and pay accordingly.

BottomLine (talk|edits) said:

13 September 2006
Unfortunately almost all of us have a certain number of deadbeats. I rarely use contracts but if you do, include a personal guaranty in it. Then you have two entities to go after - the business and the individual. I have had some success holding their work for ransom like Sea-tax suggests. (Check your state law to determine how tough you can be with this.) I get about two bounced checks a year. I listen to their excuses, charge a $35 bounced check fee (or the maximum the state allows) then put them on a cash in advance basis for a year. Lots of my peers bill in advance. I'm a little different. The only time I collect in advance is for a new "box person". A "box person" is the one that brings one or more boxes of crumpled receipts, money, girls' phone numbers, unopened mail, etc. Over the years I've determined that each box is 8-12 hours of work (sorting and data entry). I then apply my hourly rate and charge at least 1/2 up front.

TH (talk|edits) said:

13 September 2006
I have a client that is an accountant/bookkeeper that charges a flat fee of $100 per month which comes out automatically from their business checking account.

The automatic draft works good for him.

If they enroll in the automatic draft then he waives the tax prep fee at the end of the year.

I thought that was an interesting way instead of billing the clients and trying to collect...if they dont have money in account...he does not do that months accounting/bookkeeping.

TH (talk|edits) said:

13 September 2006
This bookkeeper I mentioned above also scans all checks and bankstatments and sends them overseas for input into quickbooks. Be careful...one day bookkeepers may be outsourced!

Gosix (talk|edits) said:

13 September 2006
<This bookkeeper I mentioned above also scans all checks and bankstatments and sends them overseas for input into quickbooks. Be careful...one day bookkeepers may be outsourced!>

When new clients are shopping for a new accountant, I use that "shipped off to India" as a marketing ploy. As in I remind them that the cheapest price might be some firm that is zipping thier sensitive files and account numbers halfway around the world. So do you want to subject yourself to that? Or become my client, pay a little more, and know that I pledge nothing gets outsourced and the shredder is kept handy.

TH (talk|edits) said:

13 September 2006
I understand what you are saying...Good point. However, this bookkeeper has about 10,000 clients that live here that immigrated from another country that is doing the outsourced bookkeeping...the clients are aware of what is going on.

Bayyoc (talk|edits) said:

September 13, 2006
"Box person", heh, I love that. Brings to mind an image of a wino living under a bridge somewhere. I don't quite get the "outsourcing" thing. $100 per month sounds awfully cheap. He can outsource all that overseas and still make a decent hourly rate? How much time does it take just to scan everything?

Speaking of hourly rates (this should be a new topic probably), how much is reasonable for me to start out with? I'm think around $20 an hour (live in Arkansas), but since I've always done my own bookkeeping for my two businesses, I don't have anything to base my rates on. I do know that when I first took over my father's restaurant about 6 years ago, my CPA charged me $800 to do a simple 1120S (and I'm not sure, but I think he gave me a discount). He probably spent a maximum of two hours on my return (including one phone call to me). That's $400 an hour. I've done all my taxes myself since then.

Anyway, like I said, all this is new to me. I've got the business ready (LLC registered, business cards printed) but I can't start looking for clients until I get a grip on these little details.

Thank you all for your advice so far.

Brent

Sandysea (talk|edits) said:

13 September 2006
20.00 an hour? That is too cheap even in Arkansas I would think. If you are a legitimate business, you have taxes to pay, rent, utilities, insurance, office supplies, equipment, vehicle, etc. etc. 20.00 on a w-2 may work, but if you go too low, then you also lose credibility I think. I don't quote an hourly rate unless the work is non-routine, such as audits, sales tax audits, w/c audits, etc. I quote a monthly rate or annual or quarterly depending on what I think is involved. So what if it takes only 2 or 3 hours? Overhead and a profit margin have to be built in somewhere....

Go up on your hourly if you want to do hourly; damn 7-11 employees make 1/2 that much and they get w-2's!! This is only my opinion of course :)

Taxea@hawaii.rr.com (talk|edits) said:

13 September 2006
Just FYI...I've pretty much eliminated by "box clients" by sending worksheets to them with my yearly "it's tax time, again" letter and reminding them not to call for an appointment until all their paperwork/my worksheets are completed and together. I also advise them beforehand that any reconciling of receipts, etc attaches a $60 per hour fee in addition to the preparation fee. Taxeataxea 17:15, 13 September 2006 (CDT)

Bayyoc (talk|edits) said:

September 14, 2006
Thanks, Sandy. That's just what I needed to know (wanted to hear).

BottomLine (talk|edits) said:

14 September 2006
Taxea@hawaii.rr.com - I don't mind the "box people" because I charge them $50/hr and pay my clerical $10/hr to do it. Good profit margin!

BottomLine (talk|edits) said:

14 September 2006
Bayyoc - I wouldn't use the CPA's $800 for an 1120S for 2-3 hours work to compare to during the year bookkeeping rates. That's apples and oranges! Lots of things are included in the $800 that you don't see. Tax prep software is expensive, the work is being done during a rush time of year, it's a CPA and not a bookkeeper.

Natalie (talk|edits) said:

September 14, 2006
Bay, you may want to check out this website http://www.aipb.com/accounting_bookkeeping_tax_links.php. They have a lot of links -- I'm sure you'll find one or two that are helpful.

Sea-tax (talk|edits) said:

14 September 2006
I prefer collection over court becuase under most collectors they only charge a % of what they collect. The one I use charges like 30% of the bill so if they do get something then great if they don't then it doesn't cost me.

Sea-tax (talk|edits) said:

14 September 2006
sorry wrong thread

Taxea@hawaii.rr.com (talk|edits) said:

16 September 2006
Bottomline I used to do that but being self-employee with no employees I no longer have the time to do their bookkeeping for them. Nor do I want to...I highly recommend the DOME bookkeeping record book to them and often give it as a gift to my Sch C, Sch E clients. taxeataxea 04:44, 16 September 2006 (CDT)

Pacdallas (talk|edits) said:

16 September 2006
Natalie,

I did not realize there is such a thing as American Institute of Professioanl Bookkeepers (AIPB). The web site has a lot of useful information, although very basic.

Is there newletter worth the membership price?

Are there any real benfits to being a certified bookkeeper?

Would it help get more clients?

Does anybody have any thoughts on it?

Bottom Line (talk|edits) said:

16 September 2006
Taxea@hawaii.rr.com - I like the Dome book but unfortunately my clients don't know how to use a calculator so I'm still stuck with the same problem (yes - they're children). Pacdallas - I'm a member of AIPB. I've found that the newsletter is worth the price. I believe they still offer free advise for members too. As far as the "Certified Bookkeeper", the jury's still out. I've never seen an ad looking for a "Certified Bookkeeper". I am not a certified bookkeeper because I'm too busy earning a living to have the time to take the test. The general public barely knows the difference between a CPA and a bookkeeper. And forget the difference between a CPA, an Accountant and a bookkeeper. They've never heard of an Enrolled Agent (does that have something to do with the CIA or the FBI?!) I wouldn't use "Certified Bookkeeper" as an advertising tool. Not real sure that I'd use it on a resume in the industry. Have you ever heard of a "Certified Bank Examiner"? Was all the rage with the State of Tennessee government when I was in the industry 20 years ago. The bankers in Tennessee, Georgia, Alabama and Florida that I tried to go to work for had never heard of it!

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