Beginning a bookkeeping business involves knowing basic accounting principles as well as knowing how much to charge for your services. Retaining a client is sometimes more work than the actual bookkeeper. Once you have a prospective client’s attention, discuss competitive rates without pricing yourself out of the market. The best approach to billing for services is to offer a flat monthly fee rather than an hourly rate. Clients don’t want a huge surprise of a hefty invoice at the end of the month. Estimate how much time of your time per month you’ll need to dedicate to the client and bill them at the end of a completed month.
Schedule a time to meet with the prospective client, either on the phone or in person.
Discuss the nature of the client’s business practices. Try to get an idea of the volume of bills that are received and paid each month. Also see if you can determine how many invoices get submitted to customers each month. Do a quick calculation of $.50 per transaction for these items.
Ask if they will need their bank account reconciled. This typically takes about an hour at most to do for small businesses. In this case, charge your hourly rate. On average bookkeepers charge an hourly rate of $20 to $55 per hour. Do some checking around in your area if you can to see what other bookkeepers are charging. Try to stay within the average range. Start on the high side if you’re good at negotiating. Starting too high, though, may scare them away and cost you the business. It would be best to start at the middle of the range and then as you gain clients, raise your rates for newer clients.
Find out if there will be other financial reports that you will be required to produce. Typically the bookkeeper will prepare the Profit & Loss statement, a Balance Sheet and Statement of Cash Flow. If you are using automated software these are quite simple to produce and take a nominal amount of time. For all three reports it should take less than an hour to print and send. Add on your hourly rate.
Adopt, explain and implement a policy of a three month review of your time and rates. This will allow you to raise your rates after doing the client’s books for three months if you feel as though perhaps you were given initial misinformation about the number of transactions, reports, or the condition of the accounts. The upside for the client with this policy is that there may be a reduction in the rates if the account is easier than you initially thought. Offering a credit is not advisable, but lowering your monthly fee is a good show of faith that your client will appreciate.
Send an invoice out at the end of each month. Use a professional form that includes your name, address, telephone number and email. Indicate the total monthly fee. Details about your time aren’t necessary on the invoice. Keep it simple. If you’ve chosen to bill an hourly rate, rather than a flat monthly fee, you’ll need to indicate the number of hours worked, the rate, and of course the total. Most accounting software programs have templates for invoices.