What Do You Charge For Accounting/Bookkeeping?

While the focus of my practice is mostly on taxes and financial planning, I have found that the income is rather seasonal and I'd like to even out the cash flow throughout the year. Accordingly, I have been considering the addition of accounting/bookkeeping to the list of services that my firm provides. The issue is coming up with a pricing scheme that makes sense for clients and is sufficiently profitable.

There seems to be an extremely wide range of pricing from online bookkeeping services like Bench (starts at $169.00 per month if billed monthly) to CPA firms charging $950 per month for accounting and bookkeeping (https://www.vmwasek.com/how-we-work/). I certainly would like to shoot for the higher end in terms of fees (I currently charge $325.00 per hour for income tax consultation and financial planning) and would rather have a few high-paying clients than a large number of low billing clients. With that said, your feedback regarding the following would be greatly appreciated:

1. What do you charge per month for accounting/bookkeeping?

2. What determines the amount charged per month (hours, the number of transactions, fixed fee, etc.)?

3. How do you quote new clients? Do you evaluate their books first and then provide a quote or do you simply have a set pricing structure and stick with it?

4. What specific services do you provide for the above-mentioned fees (bank reconciliations, downloading and sorting of transactions through the bank feed, generation of financial statements, etc.)?

Thanks in advance!

I would not lock yourself into any set fee so scrap the fixed monthly fee method. Instead go with the “what the client will pay” method. I find the clients who are very profitable and do not want to be bothered with having a bookkeeper are willing to pay a premium for bookkeeping. We do a lot of funeral homes and most would rather we handle that end.

We only offer after the fact bookkeeping so no paying bills, going to their office,etc. They deliver bank statements,ledger,etc. Some even pay their bills using quickbooks but send us the info because they have no idea what it is supposed to look like.

Good bookkeepers are impossible to find so CPAs can fill this role. If you have clients that are price conscious then you can refer them out to cheaper options if they are available. Sometime they realize cheaper options are not available

We’ve been making a shift to shedding lower margin tax work and picking up bookkeeping/payroll clients. What I like about it is my assistant can do 90% of the work and it spread out throughout the year. She gives me an email summary and then I email the client with a few thoughts on their monthly numbers. It should make tax season much easier for the businesses where we control the financials and everything is caught up to get right to work on Jan. 1.

For payroll, we collect the client data but use ADP/Gusto as the backend processor. I hope that also makes January much more efficient this year.

I’m still learning on the pricing. I’ve been building out a flat rate, but pricing it on projected hours. I price my assistant’s time at $90/hr. I figure I have at least an hour each quarter into it at $250 an hour. If we are doing a tax engagement or payroll, we price that in to the monthly as well. I tell everyone we’ll assess at least once a year and adjust accordingly.

On pricing upfront, will typically fill in hourly rate for catch-up work. I give them a range of what to expect on the front end, but then tell them will know the actual rate after we get a feel for their books. If the books are caught up already, which seems to be rare, then we can see what the usual transactions are.

I would love to hear how others are doing it since I’m still learning best practices on pricing.

Varies. If I have a bookkeeper do the work, I tend to bill at $85/hr if it is strictly hourly arrangement but have also set minimum monthly fees. If I am doing the work on an hourly basis, no discount--my full hourly rate. Most of my routine clients are contractual using "value pricing," which is also heavily based on their desire to not be involved and that comes at a premium.

I find it interesting to hear people describing tax work as lower margin than bookkeeping and accounting. In my experience it's the opposite. Also, I view bookkeeping as separate from accounting.

I'm surprised to see the pricing of VM Wasek because that is not a typical fee for bookkeeping and accounting. Clients that need bookkeeping help are typically (but not always) lower-end clients. Berkshire's example of a funeral home is one of those exceptions, but the market for bookkeeping is flooded with landscapers and (in non-COVID times) dive bars needing bookkeepers, although a $950/month minimum fee will probably keep them away

The biggest upside to bookkeeping and accounting (and, honestly, payroll) is that it keeps the client relationship regular and strong, makes it harder for the client to leave, and drives tax returns to your practice. The biggest downside to all of this is that it needs to be done year-round, so you either need an employee to do it, or you will lose bandwidth during a time that you're busy billing out $325/hr.

I believe strongly that bookkeeping and accounting services, when done regularly (quarterly or more frequently) are best billed on a fixed fee. Project the hours doing the work for the year, build in an extra hour or two for phone calls, add in some higher rate hours for running tax estimates and doing planning at year-end, and divide by 12 or 4. You will take some risk but you should "win" overall. When you present this whole slate of things you're going to do for them, they may find $300 per month to be reasonable when they might be offended at hearing $90 per hour.

Interesting to read the various comments

I've done subwork for a CPA for over 15 years. (I'm an EA but don't do taxes.) Most of his clients are fixed monthly rates and I believe his lowest rate is $250/mth and those usually take me less than an hour a month. I charge him $45/hr. For cleanup work, he bills me out at $75-$125/hr. I handle all contacts with the client except for taxes. I have login's (accountant access) to bank accounts and use bank feeds which is a HUGE timesaver. (Of course, you do need to review it.) I chase any questions, get info for 1099's, copies of bank loans, invoices for depreciable assets, prepare reports, etc. If the client doesn't respond to my questions after three requests, I contact the CPA so he can contact the client. In October/November, I send the client an email reminding them to schedule a meeting with the CPA for year end review. In late January/early February, I send the CPA the QB file and any documents (invoices for depreciable assets) so he can do the tax return. Tax prep goes very quickly because he gets a clean set of books and any documents. He makes good money on the bookkeeping for virtually no work.

I agree that good bookkeepers are hard to find. You need someone that can identify when there is a problem with a financial statement and determine what caused the issue. You'll need to pay $30-$75/hr for this type of person. Also they'll need to be a self-starter that you don't need to babysit.

It might just be my experience, but some of the most fouled up books I've ever seen were done by CPA's. I don't know why...whether they forgot bookkeeping, look too "big picture", get bored, think it's below them...

It might just be my experience, but some of the most fouled up books I've ever seen were done by CPA's. I don't know why...whether they forgot bookkeeping, look too "big picture", get bored, think it's below them...

Various reasons, but the worst books I see are consistently from bookkeepers that do not have any formal education on the topic, even when they may have the oversight of a CPA.

As to CPAs screwing up books, when I have seen that occur, it is because they do not understand the client and/or are forcing things for specific purposes, such as taxes. I know there are times I stop digging at details and just make entries to force the books. It is a matter of maintaining balance between having proper books vs. overall productivity and cost effectiveness. Flip side is some bookkeepers get so caught up in the details that they drive themselves and their clients nuts, make entirely too little money, and have asinine charts of accounts.

I kind of joke (except it is based on a good bit of reality) that a differentiating detail between a CPA and a bookkeeper is a bookkeeper will spend an hour chasing a penny, whereas a CPA will do entries for any amount deemed immaterial.

It all depends on "critical mass" if you only have a few clients and need a good Bookkeeper then contract it out. There are plenty of independent BKs who are available. If you really seek out Bk-ing and market for it, and are expert in QB - you will need a good sized pile of clients, who pay well to cover your labor costs. The headaches are - your clients expect you do everything perfectly and get it done yesterday, including Payroll and deposits and sales tax (in different states and counties and cities) and you will or your Bk-er will overlook something, and they want you to agree to pay the penalties. The risk can be enormous - and the fear never ending. Especially with unfiled and unpaid sales tax.
You will forever tethered to your Office, unable to be away for long. And your clients will "drop by" without calling - expecting you to be at the shop, grinding away 24/7.

The headaches are ...

With all due respect, most of these items you bring up have more to do with being clear about communicating your method of practice. "Scope Creep" would be one of the primary risks. If you effectively address that dynamic, most of the items you've noted here should be managed effectively.

0-40 expense transactions = $120/month.

40-80 expense transactions = $200/month.

80-120 = $300/month.

We don't do any controlling or write any checks. We take the bank and card statements and turn them into financial (and recon) reports for them. Period. We don't share access to QB with the clients (for them to screw up).

We're not CPAs, but we have accounting experience and educations, including QB.

The pros and cons of billing by the hour have been beat to death.

I prefer to charge by the job and handle PITA items with rules - which include me billing by the hour if I absolutely need to.

Finally, I would encourage you to offer bookkeeping services. You can only do so many tax returns as the deadlines approach. It's lots of icing on the cake, and easier to leverage (labor) than tax returns.

I do not believe in not accepting bookkeeping/accounting engagements. Quality clients want to work with a single firm for their various needs. If they cheap out by going to a different bookkeeper and me for taxes, I do not want them as a client. I want to understand the client's finances, and I can only do that by also maintaining their books.

I have no idea what thought you were actually trying to express here.

I was previously billing bookkeeping time at $75/hr but since the introduction of bank feeds and the efficiency they bring, that has greatly reduced the profitability of charging by the hour. I can see by comparative rates from people that are not even CPA's, we had been way undercharging. Going forward, I plan to charge a monthly minimum around $150 - 200, but will vary per client. Of course, all of my current clients will likely not be pleased with the price hike.

Thank you all for your valuable insights! After a whole bunch of research and revisions, I have created a price list for three different service offerings for bookkeeping/accounting services and would greatly appreciate your feedback!

The price list may be found here: https://imgur.com/hHO7cXY

In particular, I am curious as to:

1. Is the pricing clearly presented?
2. Is the scope of services close to what you would expect to see for each service offering?
3. Are the prices for services within the ballpark of what you would expect for the services/benefits offered (assuming that the practice is located in Los Angeles, CA)?
4. Am I missing any important aspects?

Thank you again for your help!

Very solid, IMO. Pretty much perfect.

I'm not just "saying that".

Not just presentation, but pricing too.

I know its for presentation and not an engagement agreement, but I would probably disclose what it doesn't include things like writing checks, entering weekly hours to run payroll for a business with 20 employees, or billing a client's customers. (I guess this is sometimes called "controlling"?). A lot of our enquiries ask for these services and think it is part of "bookkeeping".

Let me run it by my partner - she's the real critic. I might edit.

Thank you all for your insights and feedback! The only issue I noticed with the pricing is that, given that the "catch-up" bookkeeping/accounting service pricing for prior months is $250 per month and the regular monthly bookkeeping/accounting price is at least $375, new clients would have an incentive to defer getting started as they could pay only $250 per month at the end of the year as opposed to $375 per month throughout the year. In other words, I will adjust the "catch-up" service pricing to be at least $375 per month (possibly higher) to create more of an incentive for new clients to sign up earlier rather than later.

As always, thanks again everyone -- your help is much appreciated!

Out of curiosity, let's say you have a client that wants you to do their bookkeeping at year-end but just has maybe 10 - 15 transactions per month and the entire year takes you an hour or two to do. Would you still charge $375 per month for all 12 months of work?

I was thinking the same thing as Andrew CPA.

I think you need to have a fee range like It Depends wrote in post #10. The variable will be, of course, quantity of work involved.

Out of curiosity, let's say you have a client that wants you to do their bookkeeping at year-end but just has maybe 10 - 15 transactions per month and the entire year takes you an hour or two to do. Would you still charge $375 per month for all 12 months of work?

I would charge a premium rate to discourage clients from waiting until year end to give me their work.

Great insights in this thread.

I also would definitely not charge less for multiple months of catch up. We all know that these are most often the worst clients too. Alex, you have a YouTube presence, right? You will get enough clients to where you should not cater or perhaps even deal with those for which tax compliance is not a priority.

You built it,, they will come.

As far as a client with 10-15 transactions, this can be handled by just charging for one month, imo.