Service Fee

I start taking bookkeeping clients lately and I am trying to set my rate for the bookkeeping service.

Does anyone have a general idea as to the prevailing hourly rate of bookkeeping service in California?

Or are bookkeeping services usually charged based on a monthly fee?

We charge based on the number of monthly expense transactions on the statements.

We are in Hawaii.

We have employees with accounting degrees and QB certifications, but we are not CPAs. I'm the founder of the small firm, and I only have an EA.

Our bookkeeping service is extremely basic and it only includes taking the bank/card statements (and sometimes a cash summary) and turning them into a P&L, BS, and a reconciliation. We don't write checks, bill their customers, or anything like that - it's just the basic financial statements for them to do their taxes.

We do not share software access with the client either. We take their statements and prepare the reports with QB Desktop. We have found that shared access and joint efforts just make a mess with most clients.

We charge $120 per month for 0-40 transactions and $200 per month for 41-80 transactions. If it's right on the line at 40 transactions every month we charge $160 per month.

We generally do not take clients bigger than those with more than 80 transactions.

Thank you. Do you make an agreement with the bookkeeping clients before starting the service? Is there a commonly used one that I can find on the web and use as a template?

Hello, we use a blanket engagement agreement that doesn't touch too much on the bookkeeping, to be honest.

We only take a limited amount of these.

Rate depends on the entity, sole prop, S Corp or partnership, if they need payroll and/or sales tax returns prepared, 1099s. Fee also depends on the number of bank, credit card, loan, PayPal, and Venmo accounts. We have fixed fee monthly agreements which are customised to what the client needs.

I'm and EA, took accounting courses in college and worked for over a decade for a CPA firm. Some of my clients have a bookkeeper who has no accounting background or, at most, a pro-advisor certificate. I do review these books because the owner of the business wants a second set of eyes. One time I found a $145,000 mistake. Bookkeeper didn't know the difference between cash and accrual basis ...

You may have a background in accounting, I don't know. If you have one, good for you and you should be able to build your knowledge into your fee. Because of bookkeeping software, people mistakenly believe bookkeeping is easy.

We charge based on the number of monthly expense transactions on the statements.

We are in Hawaii.

We have employees with accounting degrees and QB certifications, but we are not CPAs. I'm the founder of the small firm, and I only have an EA.

Our bookkeeping service is extremely basic and it only includes taking the bank/card statements (and sometimes a cash summary) and turning them into a P&L, BS, and a reconciliation. We don't write checks, bill their customers, or anything like that - it's just the basic financial statements for them to do their taxes.

We do not share software access with the client either. We take their statements and prepare the reports with QB Desktop. We have found that shared access and joint efforts just make a mess with most clients.

We charge $120 per month for 0-40 transactions and $200 per month for 41-80 transactions. If it's right on the line at 40 transactions every month we charge $160 per month.

We generally do not take clients bigger than those with more than 80 transactions.

I like this idea. However, what about other variables like industry, entity type, number of bank/credit card acccounts and just overall complexity? All these could be factors impact the time it takes to complete the work.

As often discussed, charging by the job has certain pros and cons, and charging by the hour has certain pros and cons.

I like to charge by the job because I feel that I can increase my hourly rate if I do it right and manage the cons reasonably well.

Certainly a bookkeeping client who is a PITA, in a time consuming industry type, or likes to use 10 credit cards causes a problem with the "charge by the job" model.

If I can't somehow otherwise mitigate the increased time costs by guiding the client, I give a short and advanced notice of a rate increase, simply and honestly explaining that I made a mistake in the quoting.

The client has 3 or 6 months to decide and find another bookkeeper or pay my new quote.

If the increase must be so egregious (usually because the client turned out to be PITA) and I feel like the client will resent it, then we have a lose/lose situation and I will provide lots of advanced notice of disengagement. I'll most often finish out the year or whatever.

With my "by the job" model, I am very quick to get rid of unreasonable clients. It was hard to do this at first and I really went back and forth with it for a while, but now I'm used to it and I have a book of business that I really enjoy.

The bookkeepers I work with charge an hourly rate, which makes sense to me. If a project is a PITA, it will take longer and therefore cost more. I think they are charging between $45 - $65 per hour. It's hard to find a good bookkeeper. If you are good, I think you can then make yourself invaluable and raise your rates. When I get books that are a mess (bad bookkeeper), my fee goes up dramatically, and the client learns that it is much less expensive to hire a good bookkeeper.

I think the rate you charge also depends on where you are in CA. SF & LA rates are higher than rates charged in the Valley, for example.

I'm not in California, but my concept is simple. I want to realize $100-$150 an hour for bookkeeping. I'll dive into the client's books, take a look at everything, then determine how many hours it will take me to do the books. If it's 2 hours, depending on the client's financial situation and my desire to take their work on, it would be $200-$300 a month. I have a $200/month minimum. For some clients, I've fine-tuned their accounting work and charged them more than this rate because they're willing to pay the fee or their prior accountant charged them similarly. I don't charge per transaction as I can set up rules in QBO to auto categorize transactions without having to touch them.

I've personally found that bookkeeping is more of an art than anything when it comes to portraying your value and being able to charge a good fee. The biggest thing is that if the client needs clean up work to charge them upfront on retainer before taking on the work as you'll find out what type of client they are if they're not willing to do so.

We also ACH all monthly bookkeeping clients on the 1st or 15th of each month. If they're not willing to sign up for ACH then they're not a good fit because monthly retainers are the backbone of my business outside of tax season and I don't want to have to chase down the clients to pay their bill.

I'm not in California, but my concept is simple. I want to realize $100-$150 an hour for bookkeeping. I'll dive into the client's books, take a look at everything, then determine how many hours it will take me to do the books. If it's 2 hours, depending on the client's financial situation and my desire to take their work on, it would be $200-$300 a month. I have a $200/month minimum. For some clients, I've fine-tuned their accounting work and charged them more than this rate because they're willing to pay the fee or their prior accountant charged them similarly. I don't charge per transaction as I can set up rules in QBO to auto categorize transactions without having to touch them.

I've personally found that bookkeeping is more of an art than anything when it comes to portraying your value and being able to charge a good fee. The biggest thing is that if the client needs clean up work to charge them upfront on retainer before taking on the work as you'll find out what type of client they are if they're not willing to do so.

We also ACH all monthly bookkeeping clients on the 1st or 15th of each month. If they're not willing to sign up for ACH then they're not a good fit because monthly retainers are the backbone of my business outside of tax season and I don't want to have to chase down the clients to pay their bill.

I really like all of this. Great model, imo (and experience)