How Does a Bookkeeper Charge
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7 Tips to ... Store receipts Meal receipts Void cheques / invoices Organize receipts Separate accounts Deposit / payment sources |
This method saves me time when providing bookkeeping services. It also provides a good vendor history for the client and ensures no expenses are double booked. It achieves this because when a client pays a bill with a cheque, but never submitted the actual bill with their source documents, the cheque now gets coded to Accounts Payable and not the expense account. Recording the cheque now places the vendor account into a "credit" balance. It alerts me that the original source document needs to be tracked down if the bookkeeping is going to be audit proof. When I receive the supplier invoice, I code it to the expense account. Next, I apply the outstanding "credit" to the supplier invoice to clear it and show it paid.
This method makes it easy to review the Accounts Payable and see what documentation is missing because the Vendor's balance will show a "credit".
If, by the end of the year, a client has not provided the appropriate source document, the amounts are "expensed" to owner's draw as they are not tax deductible without the source document ... so you can see how important organized paperwork is when you have a small business. A lost invoice or receipt means increased taxes ... which means less money in your pocket.
And while I think of it ... when you collect money from a customer, deposit it as soon as possible ... the whole amount received. Don't keep some of the cash for yourself. If you need money, take a draw from your business account. It's much easier for the bookkeeper to match deposits and it will make any future tax audits go more smoothly.
If you expect a bookkeeper to process your quarterly books and GST return with less than two weeks lead time, expect to pay more.
Remember you are not their only client and they need to be able to schedule all their work to meet government compliance deadlines. Giving them lead times allows them to perform high quality work.
As you can see, it's not that easy to give you a figure as to what you could expect to pay for bookkeeping services. Because fees are based on volume of transactions, complexity of your industry, and different services you can opt in or out of, you need to get some quotes or ask your friends who they use.
Once you start asking around for a quote, be sure to ask if year-end preparation is included in their fee quote or if it is an additional charge.
Before you speak with prospective bookkeepers about bookkeeping services, you may want to read What Are Your Responsibilities When You Hire a Bookkeeper?
A Good Bookkeeping Practice
When you pay a bill, get in the habit of writing down on the bill: (yes muck it up! ... because if you get audited three years down the road you will not remember the specifics of that bill.)
- what date you paid it
- from what account or credit card you paid it
- if you wrote a cheque to pay the bill, the cheque number
- the amount you paid if different from the balance
- and anything else relevant .. especially if there is a "story"
If you can staple the paid receipt to the bill, that's good too!
Do the same thing for customer payments received. Write the following on the invoice:
- what date you deposited it
- what account it was deposited to
- the amount you deposited if different from the balance
- the customer's cheque number
- the customer's address on the cheque if it is different than your billing address
- and anything else relevant .. especially if there is a "story"
If you can staple the bank deposit receipt to the customer invoice, that's good too!
This habit may seem silly when you are just starting out and you don't have many transactions ... but once your volume grows, it is just inefficient to be hunting around while doing data entry, trying to figure out where money came from or went to. Remember always keep an audit trail. ;-)
Why would a bookkeeper fire a client?
Get excellent bookkeeping service by being an excellent client.
If you find a good bookkeeper, treat him or her well ... because like a great hair dresser, they can be hard to find. A great bookkeeper can save you money.
And remember this possibility, just as you can "fire" your bookkeeper, they can also "fire" you.
Why would that happen? ...
... Hmmm. Let me count the reasons ... Slow payment for bookkeeping services rendered, continually submitting work late or just in time, or giving it to them in bits and pieces, or there is always something missing ... come immediately to mind.
You are probably wondering what's the big deal with stuff like that. The big deal is that it costs the bookkeeper in time and efficiency ... making the account much more expensive to operate.
- Stopping and starting on a file takes more time than just working on the file once.
- Taking time for collections means the bookkeeper is not providing bookkeeping services to another client.
If it is ongoing and your bookkeeper keeps you as a client, these inefficiencies will probably be built into your pricing ... interpret that as meaning you are paying more for bookkeeping services than the client who is well organized and always on time.
You may at some point wonder, "Does a bookkeeper have the right to hold a client's books until payment is received?". I talk about this issue in Small Business Bookkeeping Questions and Answers.
Let's Chat About ...
One thing you should be aware of ... bookkeepers and accountants are subject to third party civil penalties.
CRA brought in these penalties in 2000 to deter false statements or omissions. The financial penalty can be significant to the professional preparer and advisor ...
... So if you ask your bookkeeper to be willfully blind to obvious errors when preparing your information, they would be justified in withdrawing their bookkeeping services and resigning from the engagement.
In the U.S. tax preparers must register with the IRS, pass competency tests and attend continuing education as a preventive measure against dishonest tax return preparers.
P.S. Bookkeepers - If a client comes to you reporting very little income, it is acceptable to ask how they support themselves ... as a way to protect yourself. They could be supported by financial gifts from relatives or ...
If you aren't satisfied with the answer, I would turn the client away.
Bookkeepers are not non-profit businesses. They provide bookkeeping services because they must work for a living to support themselves and their families just as you do ... consider that if you are thinking of moving the payment of their bill to the bottom of your list.
I'll close with this thought for the slow payers ... Do you enjoy phoning your clients / customers because they haven't paid your account? I'm guessing no. Then why do you think your bookkeeper enjoys this task?
... Just in case you missed what I said earlier ... slow bill payment of bookkeeping services rendered increases the cost of bookkeeping ... because unbillable hours for collections now has to be factored into the bookkeeping service rate.
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