So I've got a problem and thought the great minds on this site could help me out with my bookkeeping issue.
Our business is starting to grow to the point that keeping the books is taking more time than I want to spend on it. This year we'll be doing more than double the number of projects we did last year which is going to break me with the bookkeeping. So I went out and started looking into hiring one.
My accountant and other builders in the area all had recommendations for bookkeepers, but they all charge $100/ hour. I even found one that charges only $60/ hour. I don't like to think of myself as excessively cheap. I am willing to pay people what their skills are worth. The level of bookkeeping I'm looking for includes making an accurate QuickBooks entry and scanning a receipt to put in a dropbox folder. I'm not looking for a CPA who is going to structure my entities and give me tax advice.
What is a reasonable amount to pay a good bookkeeper? $100/hour is $200,000 a year, more than most executive incomes. I find that rather disturbing as it doesn't strike me as a skill that requires specialized education like a CPA, Lawyer, or engineer. Is bookkeeping so traumatic that no one will do it and you just have to pay that much?
Does anyone have a bookkeeper that charges by the transaction instead of the hour?
This post has been removed.
Originally posted by Steven Hamilton II:Why not post in this thread and share with us all?
Shoot me a message and I'll give your some tips for finding a decent bookkeeper.
I hire my CPA's assistant who comes in once (soon to be more) a month and does this stuff for me. I handle some of it in between like cutting checks when needed and making some quickbook entries. It usually costs me $200 a month for the one visit and she spends about 4 hours in my office. That amounts to $50 an hour and I am fine with that.
I didn't want to publicly broadcast what my firm charges.
That said: You can try finding one from craigslist that has reliable references. Ask your Accountant if he has a recommendation. Find a family member who knows basic bookkeeping or who can learn.
Ask around at some small businesses.
There's a big difference in pay between a front office data entry employee and a freelance bookkeeper. Most businesses only need a freelance bookkeeper a few hours a week so even if you're paying $100 an hour, it's nowhere near the $200k annual salary you mentioned.
Don't underestimate the value of skilled, diligent bookkeeper. Bookkeeping may seem easy, but wait until you have one make a mess of your books. It can cause troubles for years.
Thanks everyone for the quick responses.
@Will Barnard , how many transactions do you have in your books after a month? This seems like the perfect metric to use to determine the value of your bookkeeper. Our projects are usually 16-20 weeks in duration and have on average of 200 to 300 transactions for the whole project that need to be categorized.
According to the BLS, it's $16.36/hr on average. http://www.bls.gov/ooh/office-and-administrative-support/bookkeeping-accounting-and-auditing-clerks.htm
One of my property managers does book work for me once per month has helped me out a lot I just pay her what her hourly rate is with over time. She is salary at less then 40k per year with a free vehicle.
Of course you have to have income property to be able to do this and she is not a cpa. How ever most "good" property managers understand how taxes work in regards to real estate. The documents and receipts she puts together for the cpa firm that send out k-1's to partners have never been problematic.
Can you pay a part time employee to organize documents then have cpa firm handle it from there? Just a thought to reduce the 50 to 200 dollar per hour labor we are speaking of.
If you can find someone for 17 to 20 per hour that is good, thats worth it in my opinion.
@William Bannister that is my plan. I don't need a full time bookkeeper and need an intermediary solution that doesn't cost $100/hour. Your experience will certainly give me some context so I don't pay too much. Thanks.
In Northern CA you can find good freelance bookkeepers for $25-30 per hour. You need to look around a bit more.
There are several virtual bookkeeping services out there. We're using one for two condo development projects and the active partner involved there is happy with them. First I was a bit skeptical, but the accountant looks over transactions periodically and the company is reputable. You can search online for one with your particular type of investing expertise, or maybe another colleague is using one.
I think you want someone local to you that can work from your location. I posted to Craigslist a year ago and recieved around 25 resumes within a week in Denver. I may have gotten lucky but have a good one at $20.00/hr. I did not post an hourly rate, but at that time I had several willing to work in the $15-25/hr. range. My cashflows for fundings are not simple bookkeeping, and I did go through two before settling with this one. For real estate or funding businesses I think you want an above average bookkeeper; so depending on your local market may want to pay above these prices, but $60-100/hour is not necessary.
John, check out bookkeeper zoo. http://www.bookkeeperzoo.com/pricing
I haven't used them, but the model looks intriguing.
you are next to one of the biggest universities in the US (even the world). why dont you go to UT and post some fliers for students to apply? talk to some professors to see what they;d recommend?
having said that, paying more than $20/hr for this stuff is ridiculous. he is not looking for tax advice. he is looking for an organized person that can do the same task for a few hrs a week/month.
how much would a firm pay that kind of person? more than 25-30k/year? i dont think so.
Our 'new guy' does my wife's S-Corp payroll etc for $21 a month, big reduction from Paychex. We had always done our own books but we are going to get the new guy to do it as it's getting to be too time consuming. The cost initially quoted was no more than$75 a month.
The tax returns etc he did for all corps & family members were so reasonable I can't remember the costs. But combined the cost didn't exceed the 'previous accountants' cost of doing one S-Corp return that was 5 months late, with the extension charged to us.
The amazing thing is the 'previous accountant' charges seminar fees for idiots to listen to her tax advice, but she couldn't get her staff of 9 data entry people to get it right ever !!! & in a face to face meeting kept denying our 179 write-offs that were absolutely valid.
She lasted that one year but had come highly recommended by other RE Investors & was NOT taking on more clients as she was too busy????.
Needless to say in 30 years we have been through a lot of accountants, bank managers & attorney's.
Retired from 9-5 at an early age I always did my own books & did the tax returns for all LLC's etc.
However, after THAT 3 day IRS audit, I somewhat survived, the wife insists I go to her accountant from now on to relieve her stress.
Doing your books monthly gives you a wake up call to financial issues that many let slide & I personally want to stay in tune with the intricacies of RE investment tax issues. The offshore ones are even more challenging !!!
Remember the saying. " You get what you pay for".
I learned a long time ago that a great bookkeeper / tax account who manages both my ledger and my stradegy is worth every cent. There's too much at risk to cheap out on bookkeeping.
Thanks for all of your recommendations everyone. I think we'll end up using a hybrid of providers. I'm convinced now that what I need for our bookkeeping is not anything that complicated. We still have our CPAs to do the heavy lifting, but right now we just need someone to scan receipts and make QB entries with the right price codes.
John (and others),
While not a regular poster to this site, I came across this discussion and thought I'd weigh in on John's question about the costs of bookkeeping, since this is an area I have experience in. That said, I have to disclaim that I run a firm that provides entrepreneurs access to flexible accounting resources....including bookkeeping services.
So, in response to John's comments:
1. $100/hr for bookkeeping is far too high. So is $60/hr. I'm hoping that your accountant and other builders may have thought you needed something more than just bookkeeping and maybe more like a Controller. A Controller is performing a more sophisticated role that often requires a strong understanding of Generally Accepted Accounting Principals, uses high-level financial reporting and analytical skills, and often complex accounting systems.
2. You're correct that bookkeeping is not a highly technical nor specialized function. In fact, it's more akin to data entry. So you should not pay equivalent rates like you would to a CPA, attorney, or another professional with deep technical experience.
A few of additional thoughts and opinions (for what it's worth):
1. There is huge volatility in the quality level of bookkeepers. Because most bookkeepers are self-employed or contractors there are hidden gems and then there are some real stinkers. Make sure you perform solid due-diligence on these individuals as they'll often have access to all of your business assets (bank accounts, credit cards, etc) and the instances of fraud in small businesses occur far more frequently than the large company scandals that we read about on the pages of the Wall Street Journal.
2. Because the question about costs was framed up in a rate per hour context, I'll initially respond that I'd seek to be paying around $20 - $40/hour for bookkeeping. That said, when you're paying for a largely transactional/data entry role, I believe an hourly rate model has misaligned incentives. That bookkeeper will not be incented to work efficiently or use automation tools if they can make more income by being slower and more manual. I think bookkeeping can be done on a fixed price basis.
3. This view will likely make me unpopular with some people posting here, but I do not think your tax preparer should also be your bookkeeper. Tax preparation, planning, and strategy is a specialized skill that requires technical expertise and, therefore, you should be prepared to pay more than you would for bookkeeping. Not only that, your books should be accounted for with an eye toward producing financial information for you as the owner, your investors, or your lenders...and not just to make filing tax returns easiest for your CPA.
Thanks for letting me post here and I hope that my comments may prove helpful to some of you. Also, thanks for being patient with my long post....I'm passionate about helping entrepreneurs with their accounting function so I can get a bit carried away! :)
Do not be cheap on bookkeeping that determines the information to your accountant to prepare your tax return. Bad bookkeeping can be a nightmare to deal with later on.
Folks - I've had to remove and edit several posts in this thread. Please note -- you may NOT recommend your own services in ANY discussion thread here on the site. The only place appropriate to do that here is in our Marketplace.
It is wholly inappropriate to take a thread asking for advice and trying to sell your services in it -- that's called hijacking and is prohibited here. Don't do it.
Back to the OP's post now . . .
I am in expensive southern california and you CAN find a GOOD bookkeeper for $25/hour. Put an ad out. Check references. Also require experience bookkeeping in same industry to avoid having to spend hours explaining how your business works.
Take the number of hours you have been spending on bookkeeping and divide that by 2. This should give you the number of hours a skilled bookkeeper will take to do your books. If they take longer then that- Kick them to the curb and move on!!!!
This is like anything. Bookkeeping has its levels of competency, credentials, and experience which mean that a person can charge more mattering upon their level. I know CPAs that choose to be a bookkeeper and Certified Bookkeepers who seem to be masterminds with Accounting Programs. It is so relative.
I would expect a $100 / hour bookkeeper to be able to prepare your books for audits, taxes, and have a lot of support which allows them to answer your questions and to solve a lot of your problems before you have to go to a $300 / hour Tax Accountant.
However, you can get a $20 - 50 / hour bookkeeper who is just starting out (3 - 7 years experience) or just has a low estimation of their value due to past working environments. You might get lucky but what I bet you will get is someone who is not as confident, does not act like a business owner, and who is struggling to get the education they need to help their clients. All of which are a huge risk to you. If they do not act like a business owner and decide to claim unemployment insurance on your company, you might lose! Plus if they are not confident or don't have the education/support, they might create such a mess that when you are audited or have your taxes prepared you have to pay up the nose in fees.
As for the advice of dividing the hours it takes you to do your books by 2 and fire a bookkeeper who takes longer - I completely disagree. If you get a good bookkeeper, they will know that there are things that you are not doing that you should be doing with your books. Whether this takes longer or not, well, maybe you could request a transactional fee instead of a per hour based fee. This way it is based on what they have done not how long it takes them.
Personally, I hate per hour based fees for this reason. Instantly I am judged by how long it takes me when what the client normally wants is for the job to be done well and timely. I charge by transaction; for example, QuickBooks Setup equals one rate, one bank reconciliation with 50 or less transactions equals another rate, and entry of each transaction equals another rate.
Well said - Keep in mind that there are experts in each and every field. Let us start by selling, knowing what to say to make that sale; profit, knowing how to estimate, what the market holds; and more. You get it right?
Why do we take courses, attend conference and seminars, socialize at BiggerPockets to increase our knowledge, build relations and make 6-7 figures.
To make those figures you need a team and the same applies to finding a QuickBooks experts in the real estate and property management industry. Not all accountants, bookkeepers and CPA are experts in QB and your industry.
In short it is not about how much you pay, it is about what knowledge they have and can they apply it to QuickBooks. Start with asking them can they get a rent roll or security report (not deposit) and other questions. Can someone give you an answer before you finish the sentence? When you tell someone real estate - first questions is oh yes! you are an agent.
So much for my rambling. All I am saying is that there is a process and a procedure for each segmentation of our industry. Residential, commercial, condo, HOA, flip, wholesale, time share, tax liens .... using QuickBooks.
Last decide how you want to use QuickBooks as a accounting software only or management as well - you got to try to eliminate all your excel sheets and incorporated into ofcourse QB.
Saying that QuickBooks may not be the right fit for everyone.
We use quickbooks, wife, son, and I enter data for handyman business, rentals, and tax liens. Once it is set up even teen can help out. prefer to see the numbers and I have a vested interest in making sure its right.
Hi John -- I've paid $75/hour here in CA, and now pay $33 / hour, and so far, so good!
Thanks @Account Closed
I am testing out 4 new book keepers right now and hopefully one of them will come through. So far I haven't found one that can do the job adequately, but I've got one of the 4 that looks like they may work out. Some aspects of the work can certainly be done remotely, but I think we will need someone in Austin eventually.
I prefer to pay for value where I can. I don't care if you cost $50/hr or $25/hr, but I expect both providers to cost the same to accomplish the job. One should just do it faster.
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