It’s not always so easy to calculate the exact cost of bookkeeping services for small businesses because of the many factors involved. However, a proper analysis of these factors can provide a general overview that anyone can work with. Whether you are a professional bookkeeper and accountant, or you’re the owner of a thriving small business, you’d still want to know what to expect in relation to the cost of bookkeeping services.
Before you dive into the average cost of accounting services for small businesses, let’s examine the factors that determine these average costs. This is largely because of the economics of demand and supply influenced or controlled by market forces that must be reckoned with to arrive at the proper pricing for goods and services. So let’s check the factors that impact bookkeeping services.
Factors That Control Average Costs For Bookkeeping Services
Here are six factors to consider before setting the price, or accepting the rates, for bookkeeping and accounting services:
Size of client
As a bookkeeping and accounting firm, you are bound to have various sizes of clients – ranging from single individuals to small, medium, and large corporations. It will not be reasonable to have a uniform price list for them all since their business needs and requirements vary. You may want to create a tiered price list for the services you provide for each category of client.
Your location should determine your service pricing. Remember that the price of products and services vary from state to state, and from city to city. The price you charge in central New York cannot be the price you charge in rural Arkansas. Your office location and the largeness of your firm should determine how you charge clients.
The more your professional certifications, the more you may want to increase your product pricing. Relevant certifications demonstrate that you have specialized knowledge, and clients would not mind paying more because they trust your skills and competence. Some of the certifications you may consider include:
- Certified Public Accountant (CPA)
- Certified Management Accountant (CMA)
- Certified Fraud Examiner (CFE)
- Certified Internal Auditor (CIA)
If you are just launching out, it’s best to price your services low until you acquire more clients or gain more reputation. People are willing to pay for reputation since it shows that the firm has been around for a long time. The longer you have been around, the more experience and skills potential clients will be willing to pay for.
Most accounting firms perform a bundle of bookkeeping services, but you may limit yourself to one or three if you wish to market yourself better. Some of these services are invoicing, data entry, taxation, payroll, auditing, credit reporting, account reconciliation, and fraud prevention among others. You can charge clients based on the number of services they require and that which you are skilled at.
Frequency of service
Some clients just want one-off services, and some want periodic reviews. You may charge those that want one-time services more than you charge those who require your services monthly or quarterly.
The Average Cost Of Bookkeeping Services For Small Businesses
Most bookkeeping firms will charge clients on either an hourly or fixed-rate basis. An hourly rate means you are paid an agreed rate per hour, and this is multiplied by the number of hours you work. So if you charge $15 per hour, you get paid $75 if you work 5 hours to complete the client’s job satisfactorily. If you choose a fixed rate, then you get paid something like $2,000 for a job that might take you two weeks to complete satisfactorily.
However, some providers opt to get paid a percentage of the client’s income, or based on the number of bank accounts that must be reconciled, or even on single one-off transactions. But all things being equal, bookkeepers get the following average cost for managing the financial books of small businesses:
- Hourly pay – $25
- Hourly pay for certified professionals – $200-$300
- Hourly pay for certified bookkeepers servicing major corporations – $550+
- Monthly salary for part-time bookkeepers – $500-$800
- Monthly salary for full-time bookkeepers – $2,000-$4,500
It must be pointed out that it may be cheaper to outsource your bookkeeping needs to an accounting firm. This enables you to pay for services rendered – without retaining an employee that must be paid every month. It also helps you to avoid the allowances and benefits and statutory obligations connected with hiring an employee.