The Pros And Cons Of Doing Your Own Bookkeeping

Bookkeeping Rate – Are You Paying Enough?

Bookkeeping is important every type and size of business to understand businesses growth, follow tax law, budgeting and so on. It is foundation for generating business reports for your business growth. Therefore it is vital to book every single transaction with expertise and accuracy. It is extremely vital for you to understand monthly bookkeeping fees before you engage with a bookkeeper or bookkeeping service firm.

The bookkeeping professional is selling his or her time and expertise to businesses, so the fee for this service is combination of time, current situation, expertise, etc. Some of the most popular services provided by an bookkeeping service firm are listed just below:

  • Account receivable
  • CPA audit report
  • Bank and credit card reconciliation
  • General accounting
  • Payroll processing

Why hire Bookkeeping services?

Some of the key headaches that businesses experience when it comes to handling their own books are errors because of lack of time, paperwork and filling, the complexities of compliance, anything to do with tax, ever changing regulations. An expert bookkeeper can help you with all these tasks related to the financial aspects of your company. It provides you time to focus on the vital activities like growing your customer base so that you can make all that money in the first place. It may feel at times that you are willing to pay any amount to relieve you of the tension of month and year end figures. But that is no reason to employ the first bookkeeping service you come across.  Instead shop around to get a service that meets your business needs as well as save you money. You can search on google for Bookkeeping services near me and hire someone who can be trusted.

Bookkeeping fees

The fees of bookkeeping are dependent upon the vine of transaction whether you have workers, how complex your industry is, also whether you need job costing, there are several factors that can influence the fee but usually there are some ways Bookkeeping professionals set their price. Hourly rate or flat rate are very common with several requesting all or a portion of the price paid in advanced through a deposit or retainer. Also fixed price value bling is starting to gain in popularity while hourly rate is declining as billing method.

Generally a Bookkeeping rate for a freelance bookkeeping professional can range from $20 to $120 per hour. The bookkeeper that you hire in house would have another rate plus all other advantages that you require to give. Additionally the outsourcing bookkeeper has a different rate depending on how much workload is assigned to that person.

What factors to determine booking fee structure?

Industry background, volume of transactions, reporting requirements, number of employees, curt situation of books, number of bank statement, etc. Do not be afraid to give them a bookkeeping test in order to see if the professional will ne able to perform the work you need competently.  Keep in mind that many business owners are in financial ruin because they trusted their bookkeeper to know rules and find out late during an audit how much that person did not know.

What Is The Difference Between Bookkeeping And Accounting?

To understand pricing, it’s helpful to know the difference between bookkeeping and accounting.  These two terms are often used interchangeably, but there is a significant difference between bookkeeping and accounting services.

Bookkeeping

We have written in detail about what a bookkeeper does in Canada, but the very basic function of a bookkeeper is to record the transactions of a business in a consistent way.  This includes:

  • Recording financial transactions and reconciling accounts at the end of each month or week
  • Recording and paying bills on their due date
  • Creating and issuing invoices
  • Processing and recording payroll
  • Tracking sales taxes (GST / HST / PST etc.), and filing returns

The bookkeeper is in charge of making sure that all transactions are recorded accurately.  The complexity of this job depends on the size of the business, number of transactions to be recorded, and the nature of those transactions.

Accounting

Accounting can be described as processes that use the information recorded by the bookkeeper to produce higher-level information and reports.  Examples of these services include:

  • Preparing adjusting entries to record information such as inventory adjustments, tax estimates, and other accruals (expenses that have occurred but aren’t yet recorded by the bookkeeper)
  • Preparing and analyzing financial statements to help the business owner make decisions
  • Completing income tax returns
  • Tax planning
  • Business advisory

Accountants aim to provide business owners with an understanding of their financial reporting to drive intelligent, informed decision making.  They also play a key role in reducing taxes where possible. At Avalon, we also add empathy and even emotional support to the role of an accountant; it can be a lonely road running a business, and we want to help entrepreneurs thrive however we can.

Although this is a common pricing method, we find a couple of things wrong with it:

  • Fear of asking questions – It creates a situation where clients feel that they shouldn’t ask questions or learn from their bookkeepers and accountants because they will be on the clock as soon as the phone is answered.  We want to foster an environment where clients get to ask questions without worrying about the resulting bill.
  • Surprise bills – It can also cause surprise bill amounts when more work was required than expected.  Surprise bills kill cash flow for businesses and create animosity between accountants and their clients.