My Bookkeeper is Too Expensive

​My bookkeeper charges too much - can you recommend a cheaper one?
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​The answer is probably ‘yes’, there is always someone cheaper. On any given weekend you can spot a hand-written postcard on a notice board in the local supermarket, or an ad on Craigslist where someone is offering bookkeeping, including for what seems to be an impossible fee.

​They will claim to provide all your accounting and bookkeeping needs for a low fee and have all the necessary skills and abilities listed below but not limited to:

• Record and categorize Income and expenses
• Prepare and record Journal Entries to proper entities and GL accounts
• Set up income, expense or bank accounts as necessary
• Reconcile bank/credit card statements
• Generate weekly, biweekly or monthly Profit and Loss spreadsheet and report
• Financial monthly/year-end reporting
• Maintain 100% accuracy

• Payroll processing
• Payroll/payroll tax deposits/quarterly reports
• Sales tax/sales tax deposits/quarterly reports
• Monthly/year-end closing
• Tax preparation
• 1099's
• A/P and A/R Aging analysis, payment and collection
• Cash Flow/Budgeting
• Job Costing
• Check Runs
• Database Management
• QuickBooks set up
• Assist in determining profit margins
• Insurance compliance
• Data analysis, budgeting
• Maintain overall books
• and other duties as requested

Monthly services, all for a low fixed fee. 

Is it possible that ‘too good to be true’ applies?  Their cheap (inexpensive) postcard or Craigslist offer may have you wondering how a part-time bookkeeper or accountant can get it all done? Especially, if at tax time your advisor told you it is very important that you hire a bookkeeper? (While pointing out the weaknesses in your current system.) 

• Or you are behind with your bookkeeping and filed a tax extension.
• They don’t yet know you have trouble maintaining your own books.

Bookkeeping fees are dependent upon the volume of transactions, whether you have employees, how complex your industry is, whether you need job costing. There are many factors that can influence bookkeeping fees. 

​Experienced?

Experience can be reflected in number of years, but if they are not up-to-date with industry trends, laws, and technology their long-term experience may also be an indication they are out of step with new barriers and opportunities. Length of time on the job is not reflective of expertise.

Hourly vs Fixed Fee

What appears less expensive as an Hourly Rate can easily become a big surprise and expensive.  Fixed Price Value Billing is beginning to gain in popularity as it limits the surprises but a bookkeeper hungry for business may offer a low price that is not sustainable. Many bookkeepers request all or a portion of the fees paid upfront through a deposit or retainer. An upfront fee can send a signal of ‘expensive’ though it is not initially an additional expense.

Hourly

Some bookkeepers charge an hourly fee for their bookkeeping service which can include a set minimum charge. Hourly billing is not the recommended billing method in the bookkeeping industry as it provides price instability for the client/customer. Hourly billing does not provide the client/customer control over what they are purchasing and does not help to develop a relationship.
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Regardless, there are many bookkeepers who continue to bill based on an hourly fee. Fees can vary based on experience, niche expertise and credentials. An Intuit survey in 2015 shows the average rate for general bookkeeping services was $50 per hour or less. This was down from the 2011 Intuit survey of $56/hour that was up from the 2009 Intuit survey at $35/hour.

If you hear of a ‘too good to be true’ bookkeeper who charges well below the average bookkeeping rate (i.e. billing at $20/hour), you should at the least arrange for them to take a bookkeeping test to evaluate their skills and run a background check. Your business could be at risk if poor bookkeeping practices are followed.

Fixed Fee

The method bookkeepers use more frequently is Fixed Fee. The fixed monthly fee is agreed upon in advance. This 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.

A bookkeeper you develop a relationship with, who can provide insights and basic advice, can pay off with reduced costs and new opportunities.  
With so many possible scenarios, it is more difficult to pin down a benchmark for pricing. Each business has its own unique characteristics, team, system (and problems as shown previously).
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After your bookkeeper has an opportunity to review your business, and potential problems, ask for a fixed price agreement quote specific to your business and its challenges. It is in everyone’s best interest for them to interview you prior to presenting the agreement. The quote should include consulting time so you have somewhere to go to ask your questions without the ‘meter’ running.  A fixed fee agreement gives you the following benefit:

1. There is some risk to the bookkeeper to deliver which keeps them motivated.
2. You will have an opportunity to establish a relationship with your bookkeeper since the clock isn't running with every conversation.
3. You get the benefit of price stability and will be able to budget appropriately.
4. You have a clear choice on what services you want or don't want.
   • Some may upsell to services which are nice-to-have but not essential.
5. Ask about any guarantees.

It’s not you, it’s me

The reason bookkeepers can be expensive may have less to do with them and more to do with the client’s business. When an experienced bookkeeper does an assessment, and finds the following conditions in a business, they understand a higher commitment level is needed and that will be reflected in the fees.  If these apply to your business, expect to pay a higher fee:

• You and your team are very disorganized.
• You and your team do not understand your reporting requirements.
  
• Government monies collected in trust are spent to cover business cash shortfalls or to support a personal lifestyle.
• Money is not set aside to pay your income tax at year-end.
• There is an abundant amount of data entry because business and personal expenses are not separated.
• Your team has low skills and make a lot of errors that need correcting.
• The information provided cannot be relied upon. Poor systems equal time-consuming mistakes.

If a large amount of time is needed to check the accuracy of your records, this can be an expensive service.

On the surface, one business appears to have the same need as another for bookkeeping but there are many hidden issues. An experienced bookkeeper does not judge but will instead help to solve these (and other) issues.

The non-specialist

A bookkeeper who does not specialize, who ‘does all bookkeeping for anyone’ may appear to be less expensive but they may miss industry related issues. Bookkeeping for contractors is not the same as bookkeeping for a retail store.  Missed opportunities or surprises become an unexpected expense.

The unethical

While difficult to believe, there are accountants who claimed bookkeepers are too expensive, who then try to convince a prospective client how they can offer the service for less and then inflate their other accounting costs to cover the bookkeeping fees shortfall. These accountants might sell the concept that a bookkeeper just codes bank statements which can be done cheaper by using the bank feeds available along with auto-coding rules. When the client attempts to compare to others, the real value of a bookkeeper and the services become unclear and lost. 

In reality

A bookkeeper provides the skills and expertise to take care of the day-to-day efficiency of the business, making sure everything is running as it should and preventing problems that can keep the business owners from operating at peak performance.
Are bookkeepers charging too much for the service they offer? Based on the hand-written card or ad on Craigslist, it might appear to be so. But when you consider the risks and rewards of hiring a bookkeeper and how you hope to not just function but to improve your business, be wary of cheap.

Is your bookkeeper too expensive?

Is your bookkeeper too expensive?  Have you been hesitant to hire a bookkeeper because of rumors and myths?  Start a conversation with Eric Moore, ASP Practice Leader, to learn how a part-time, vetted, experienced bookkeeper can be an asset… and not too expensive.