What's a Bookkeeper Worth?
Bookkeeping fees are dependent upon the volume of transactions, whether you have employees and how complex your industry is (whether you need job costing or inventory management, for example). While there are many factors that can influence your bookkeeping charges, generally there are two ways bookkeepers set their fee: Hourly Rate or Flat Fee with many requesting all or a portion of the fees paid upfront through a deposit or retainer. Regardless of the fee structure a bookkeeper uses, as a business owner, it is much more useful to use a “value” billing approach that contemplates what this work is actually worth.
Bookkeeping is a fairly consistent activity but there are busier times – usually in January/February when T4’s have to be prepared, at your fiscal year end, and other times that your business may have natural cycles, making hourly billing a little tricky. It is much easier to forecast cash flow if you know what you are going to pay each month. It is also easier for the bookkeeper to deal with cash flow if they know how much they are going to receive – less billing headaches and a consistent flow of cash – a win for everyone.
A flat fee, or fixed monthly charge is usually based on a combination of so much per number of transactions plus a fixed amount to cover preparation of financial statements and a monthly (or quarterly) meeting with you to discuss your financial results. It usually works out to a minimum charge in the $125 to $175 range for bookkeepers who use a fixed fee structure, for a very basic business with minimal transactions...
... But the advice they can provide, if you let them, by having an ongoing relationship with them, usually repays your fee in actual dollar savings and use of your time (if you feel your time is actually valuable and worthy of placing a dollar value on.)
Let’s take an example: what if you were to pay $1,000 per month for a bookkeeper? Does that sound like a lot? That works out to $12,000 per year, all in all, less than an employee, but maybe more than you wanted to spend. But what if you get an amazing person that takes accountability seriously and who really gets how numbers work? What if your experience with your tax accountant is both much timelier and much less stressful? What if the fees for preparation of your taxes, both corporate and personal, actually go down? What if you never had to worry about finding another bookkeeper again (no transition pains)? Would it then be worth $1,000 per month? What about $500 per month? What price makes sense when you actually get the headache of bookkeeping off your plate in a competent and useful way?
Value billing lets you know that you’re getting what you’re paying for and frees you from worrying about how many hours someone is working and what their rate may be. Try this out with your contractors and see how it works. Understand that you will be billed separately for extraordinary activities, but that the regular work just is what it is. And enjoy the feeling that you can actually call your advisors once in a while without pausing to think about how it impacts your monthly bill. Now that’s simplicity!