In the realm of small business operations, determining the appropriate pricing for outsourced bookkeeping services can be a complex task. This guide aims to demystify the process, offering a straightforward approach that ensures profitability for accountants while providing entrepreneurs with the assurance of a fair deal. By examining industry standards and leveraging technological advancements, small businesses can optimize their financial management without incurring excessive costs.
For small business owners, it's crucial to recognize the full expense associated with employing an in-house bookkeeper. Beyond the base salary, the total cost, or "burden rate," includes taxes, benefits, office space, and equipment. On average, for every dollar spent on a bookkeeper's salary, the actual cost to the business is approximately $2.56 1. This burden rate can significantly impact a company's bottom line.
Moreover, the opportunity cost of managing bookkeeping in-house can be substantial. Entrepreneurs often find themselves diverted from core business activities that generate wealth, as they are consumed by the administrative demands of financial record-keeping.
For accountants, the appeal of offering competitively priced services lies in efficiency gains through technology. By adopting systems like Paperless Overnight, accounting staff can condense a full day's work into just a few hours. This efficiency not only benefits the accountant's profitability but also translates into cost savings for the client.
Accounting firms can further reduce costs by employing part-time contractors, such as retired CPAs or individuals seeking work-from-home opportunities. These contractors typically command lower hourly rates compared to full-time in-house bookkeepers, who may have a burden rate of around $36 per hour 2. By only billing for actual hours worked, part-time contractors offer a flexible and economical solution.
When reaching out to local businesses with 5 to 100 employees, accounting firms emphasize the cost savings and enhanced service quality achievable through outsourcing. The sales letter from 8020 Accounting LLC, based in Casper, Wyoming, illustrates this point by highlighting the benefits of their service model.
The firm does not assign a single bookkeeper to a client. Instead, a team approach is used, where tasks are distributed based on complexity and required expertise. This method involves:
The firm's billing strategy is straightforward: they charge double their payroll cost to the client. For example, if a transaction entry costs the firm $10, the client is charged $20. This pricing model is justified by the efficiency of the Paperless Overnight system and the reduced labor burden rate.
Business owners interested in outsourcing their bookkeeping can:
In conclusion, by leveraging technology and a structured team approach, accounting firms can offer small businesses a cost-effective alternative to in-house bookkeeping. This not only reduces the financial burden on the business but also allows entrepreneurs to focus on growth and wealth creation.
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