Freelance Bookkeeping Rates: Hourly Rate vs. Flat Rate

When it comes to accounting, a flat rate model is the most common option. This generally means that you are paid for your work in a certain amount of hours and not based on how much time you spend on the job. Hourly rates typically mean that employees get paid per hour they work whether or not they completed their assigned tasks. Freelance bookkeeping rates vary depending on location and experience level but an hourly wage can be anywhere from $20-50/hour while flat fees are usually around $100-$150/day if all goes well with project scope, complexity, and deadlines).

Freelance bookkeeping rates are typically hourly. Hourly rate is the most common type of freelance bookkeeping rate. Flat rate is a less common type of freelance bookkeeping rate, which means that there is no hourly wage. Read more in detail here: part time bookkeeper hourly rate.

The majority of freelance bookkeepers continue to charge their customers on an hourly basis. The flat-rate system, on the other hand, is gaining popularity. We’ll go through how flat-rate billing works, compare and contrast hourly vs. flat-rate billing, and talk about how variables like geographical location might affect the freelance bookkeeping rates you can charge your customers in this tutorial.

If you’re a new freelancer, you’ll have to stick to the status quo and charge your customers by the hour. This will assist you in keeping things simple when you choose what services you want to provide your clientele. There are a number of criteria that influence how much you may charge your customers, and we’ll go through each one individually next.

FreshBooks makes billing your customers on an hourly basis simple. You may send invoices to your clients and accept payments online. You’ll get paid sooner, and you’ll be able to send reminders, compute taxes automatically, input your tracked time and costs, and more all from one platform. You may try it out for free for 30 days to determine whether it’s perfect for your company. To get started, go here.

Go to FreshBooks.com.

Freelance Bookkeeper Rates are Influenced by a Variety of Factors

Whether you offer consumers an hourly rate or a flat price, there are six important elements that will influence how much you charge for your services: your geographic area, degree of education, certifications held, experience, kinds of services provided, and duration of client relationship.

The six major elements that influence how much you may charge for accounting services are listed below.

1. Location Geographically

According to a poll conducted by Zip Recruiter, the national average wage for a freelance bookkeeper is $23 per hour, however costs vary by state. You might think that states like Nevada, Montana, North Dakota, Wyoming, and Idaho would have a lower average than California; however, the average national hourly rate for a freelance bookkeeper in these five states is $19.47, compared to $19.93 in California, a difference of only 46 cents per hour.

One reason you may still earn a reasonable hourly rate in rural places is because there aren’t as many people vying for business as there are in states with huge metropolitan hubs like California and New York.

Hourly Rates for a Freelance Bookkeeper

*Data based on millions of available freelance bookkeeping positions throughout the United States from a Zip Recruiter poll.

The five states in the table above are the most populated in the country. The remaining 45 states and the District of Columbia have a collective hourly wage of $18.47, with rates ranging from $16.62 to $21.14 per hour.

2. Your Educational Background

While bookkeepers who work for an employer may get their foot in the door with just a high school diploma, it’s unlikely that you’ll be able to get customers as a freelance bookkeeper without a degree, bookkeeper certification, or job experience.

Your best chance is to look for an entry-level employment as a bookkeeper to get the necessary expertise. Learn more about where to discover bookkeeper positions, as well as the typical hourly salary, in our Bookkeeper Salary guide. Continue reading to find out more about the bookkeeper certification programs that we suggest.

3. Your Certifications as a Bookkeeper

The The American Institute of Professional Bookkeepers is an association of professional bookkeepers in the United States. (AIPB), the The National Association of Certified Public Bookkeepers (NACPB) is an organization of certified public bookkeepers (NACPB), and the QuickBooks ProAdvisor certification are the three kinds of certifications we suggest for bookkeepers. Thousands of bookkeepers have finished one or more of these programs (including self-study), boosting their earning potential and putting their resumes ahead of the competition.

The three kinds of certificates we propose for bookkeepers are shown below.

American Institute of Professional Bookkeepers

The AIPB certification program is suitable for anybody who has never had any formal accounting training. Nonmembers pay $574 for the certification test and materials, while AIPB members pay $479. You will acquire the title of Certified Bookkeeper (CB) after completing all certification criteria, which you may display on your business cards and marketing materials.

National Association of Certified Public Bookkeepers

Individuals having an associate or bachelor’s degree in accounting will benefit from the NACPB certification program. Non-members pay $600 for the certification test, while NACPB members pay $400. You will acquire the title Certified Professional Bookkeeper (CPB) after you have completed all certification criteria, which you may use on your business cards and marketing materials.

Certification as a QuickBooks ProAdvisor

We propose that you obtain certified in QuickBooks in addition to the AIPB or NACPB certifications. For freelance bookkeepers, the QuickBooks ProAdvisor certification program is great since it enables you to get certified for free with no strings attached. Learn how to become a QuickBooks ProAdvisor by reading our tutorial.

Check out our Bookkeeper Certification guide to discover more about the advantages and how to get started with the AIPB or NACPB certifications.

4. Your Bookkeeping Work Experience

While a degree and/or bookkeeping certification will provide you with the necessary skills to get your foot in the door, I think that “experience is the greatest teacher.” The more genuine accounting experience you have, the more confidence you will be in your abilities, which will transfer into better billable rates.

Here are three pointers to help you make more money as a freelance bookkeeper.

Wages may rise as a result of increased confidence.

Because you don’t know what you’re worth, you’ll set your charges too cheap if you don’t believe you can accomplish the job. The more job experience you have, the more confident you will become, and you will soon be able to charge a customer what you believe you are worth.

You are more valuable the more experience you have.

Your services go beyond the books to provide real value to your clients. Your customer may anticipate a lower tax bill as a consequence of correct records, save fines and interest, and have confidence that they will pass an audit since they will be in compliance due to you.

Consider Becoming an Expert in Your Field

After a year as a freelancer, you may notice that the majority of your customers are in the same or comparable businesses. You may inquire if your customers are members of any organizations where you could deliver a brief talk on the significance of financial management in their businesses. This might position you as the go-to bookkeeper for businesses in that field, such as real estate agents and restaurants.

5. What Kinds of Bookkeeping Services Are Offered?

Bookkeeping services involve monitoring all parts of accounts payable and receivable, balancing bank and credit card accounts, and preparing monthly financial reports, among other things. Offering payroll and tax preparation services in addition to accounting services might help you improve your billable rate if you have the necessary skills.

Taking on all three services — accounting, payroll, and tax preparation — would be perfect not only for your company’s income, but also for a small business’s financials to be handled by the same organization. I propose that you do an evaluation during your first session with a new customer to guarantee that you offer a competitive price to your client.

Before you deliver your stated pricing to the customer, the assessment will consist of collecting information that will assist you calculate the length of time and degree of complexity necessary to satisfy the client’s demands. The following information will be included in the evaluation:

• Customers must be invoiced, bills must be paid, payroll must be paid, and taxes must be paid.
• A list of all bank and credit card balances that must be reconciled.
• Whether the operation is automated or has to be completed manually
• The time it will take to perform each activity is estimated.
• You charge an hourly fee for each work.
• Total expected hours and billing amount to client

To help you, we’ve designed a New Client Assessment that you may customize to match your specific requirements. Here you may get a copy of this article as well as your free New Client Assessment. There are two worksheets in this Excel file. The first worksheet is a blank template that you may fill up with your customer’s information, while the second worksheet is a finished worksheet for a hypothetical client.

After you’ve finished the assessment, you’ll get an estimate of the total number of billable hours and total cost of services you’ll need to satisfy your client’s demands. This information may be transferred to an estimate or quotation, which you can then present to your prospective new customer for approval.

6. Client Relationship Length

When determining what to charge for accounting services, you should also consider the amount of time you will give services to a customer. Some consumers may be one-time customers, while others will need services on a monthly, quarterly, or yearly basis.

Clients whose books you examine often should, in theory, have a lower rate than those who you only visit once or twice a year. Because you check their records more often, monthly and quarterly customers need less work than those you meet once a year, in my experience.

Clients that hire bookkeepers usually fall into one of four categories:

• One-time service: Businesses that hire you to set up QuickBooks and train them to keep their own books; preparing tax returns can also be a one-time service; company file setups and annual tax return prep will most likely take longer because you are unfamiliar with the client and must get up to speed quickly; the rate you charge for this service should be higher than the rate your recurring clients pay.
• Monthly service: These are often accounting and/or payroll customers who will be billed once a month for services rendered throughout the month. Monthly customers will need much less effort than one-time or yearly clients, so you might consider providing them a cheaper pricing.
• Quarterly service: This refers to clients for whom you file quarterly payroll and estimated taxes, as well as prepare any applicable tax returns; in general, you are familiar with these clients because you see them every three months or so; this rate should be similar to what monthly clients pay, but adjusted for the type of work done, such as tax preparation vs. bookkeeping vs. payroll.
• Annual service clients typically bring you a shoebox of receipts so you can prepare their tax returns once a year; similar to one-time service clients, you will need to invest some time to get this client’s books in order; the hourly rate you charge should be similar to what you charge for a one-time service client.

Pro Tip: Have a professional website designed by marketing experts to support your rates (Flat or Hourly)

After you’ve considered these variables and determined the best price for your services, make sure prospective clients can simply locate you and rapidly access pricing information to decide whether or not to employ your services. Consider enlisting the help of financial marketing professionals Solutions for CPA Sites to create a unique website for your company. They’ll contact you right away to get information like as content, photographs, location, and price, and then build a customized website that will attract high-quality visitors and turn that traffic into leads. For 60 days, you may try it for free.

CPA Site Solutions

When Should You Charge Hourly Rates for a Freelance Bookkeeper?

The majority of freelance bookkeepers charge their customers on an hourly basis. Furthermore, invoicing by the hour makes more sense in certain cases than charging a flat cost. I’ve offered three circumstances where I would propose hourly billing versus flat-rate pricing to assist you decide whether freelance bookkeeper hourly rates are ideal for your accounting firm.

The following are three circumstances in which hourly charging is preferred over flat-rate pricing:

1. New Self-Employed Bookkeepers

You’ve only been a freelance bookkeeper for a few months and are unsure how long it will take you to execute fundamental accounting duties such as invoicing clients and paying invoices. Because calculating a flat cost without an estimate of the number of hours it would take you to perform the service is problematic, hourly rate billing is the best option in this case.

2. Consultations with a single client

Clients that choose to call you on a regular basis with inquiries or to have you examine their QuickBooks file to verify they are following the rules should be invoiced by the hour.

3. Clients who use our services on an annual basis

Hourly rate billing would be excellent for those customers who you only meet once a year, between January and April, to finish their tax return or possibly take their shoebox of receipts and input the data into an accounting software program, since you do not work for them throughout the year.

Hourly Rate Billing for Freelance Bookkeepers: Advantages and Disadvantages

While charging consumers by the hour has a lot of advantages, it also has a number of disadvantages. On the plus side, if a task goes longer than expected, you will be compensated for all hours done. In terms of disadvantages, the only method to boost hourly wage is to work longer hours or raise your hourly rate.

Benefits of Hourly Rates Billing for Freelance Bookkeepers

Three advantages of charging an hourly fee are listed below:

• Payment for all hours done: If a project or task is delayed, you will be paid for all hours worked to finish the project or job, however for a flat-rate contract, extra hours must be authorized, otherwise you will have to bear the additional expense.
• Simple customer invoicing: If you’re a new freelancer, it’s a simple approach to charge customers; all you need to put in an invoice is a short summary of the job that was accomplished, the total hours worked multiplied by the hourly rate, and the final invoice amount.
• It’s easy to keep track of several billing rates: Clients are divided into four categories: one-time, yearly, monthly, and quarterly; if you opt to have four separate billing rates — one for each category — it will be rather simple to handle these rates since you will just charge the client according to their category.

Cons of Hourly Rates Billing for Freelance Bookkeepers

Three disadvantages of charging an hourly fee are listed below:

• The amount of money you can make is limited: Too much emphasis is placed on “billable hours,” which restricts your earning potential to the amount of hours you work; the only option to earn more money is to work longer hours or raise your hourly rate.
• It does not encourage efficiency: Hourly rates do not encourage efficiency among your hourly contractors since if they accomplish a work in two hours instead of four, they are paid less and your billable hours are reduced.
• Clients find it difficult to budget for expenses: Your customer may not know how much their invoice will cost until they get it, depending on how much the billable hours change; with flat-rate pricing, clients know exactly how much they will pay and there are no surprises.

When Should You Charge Flat Fees for Freelance Bookkeeping?

Flat-rate pricing, sometimes known as value-based pricing, has grown in popularity among independent bookkeepers. You charge them a set amount based on the value you provide beyond the number crunching, rather than an hourly rate. This includes detecting inaccuracies on bank/credit card statements and assisting them in reducing their tax burden by correctly documenting all spending.

Here are three scenarios in which flat freelance accounting prices are appropriate:

1. Freelance Bookkeepers with a lot of experience

You’ve been working as a freelance bookkeeper for at least a year and have a steady customer base. You’ve also kept track of hours spent per customer or project using a time and billing system like FreshBooks throughout this time. Because you have a solid record of how long it takes you to finish client work, calculating a flat charge based on the sort of work you do for each customer will be simple.

2. You serve the same customer base on a regular basis.

Giving recurring services to a specific clientele, such as accounting, payroll, or tax services, generates the majority of your income, as opposed to providing services to a large number of one-time customers. Value-based pricing works well for clients with whom you do work throughout the year.

3. You provide services that are subject to shifts in hours.

You give a service with a lot of shifts in hours. Let’s imagine you give remote help to your QuickBooks customers and in one month, you generated $600 in revenue from six troubleshooting sessions. Then you only had three troubleshooting sessions the following month, resulting in $300 in income.

Despite providing the same quality of service, you earned less money in one month than the next because you worked fewer hours. You would charge the same monthly cost regardless of the amount of hours performed using value-based pricing. Clients benefit since they know how much their cost will be ahead of time and can budget appropriately. Furthermore, your company’s revenue will not be affected.

The Benefits and Drawbacks of a Flat-Rate Bookkeeping Fee Structure

Flat-rate pricing, like hourly rate billing, has advantages and disadvantages. On the plus side, you and your client can plan ahead since you know how much money you’ll make and your customer knows how much money they’ll need to budget for. On the downside, if a task takes longer than expected, you may have to “eat” the extra expenditures that are not included in the original price.

The Benefits of a Flat-Rate Fee Structure for Bookkeeping

Three advantages of employing a flat-rate accounting charge structure are listed below:

• When the bill comes, there will be no surprises: Clients appreciate flat-rate pricing because there are no surprises; they know what their expenses will be up front, and their charge will not vary until the scope of work changes.
• Allows for improved cash flow planning: With flat-rate pricing, you’ll charge customers upfront on a recurrent basis, such as the first of each month, so you’ll know how much money is coming in and when.
• Enhances productivity: Flat-rate pricing shifts the emphasis away from billable hours, allowing hourly contractors and employees to concentrate on the quality of their work rather than the number.

The Drawbacks of a Flat-Rate Accounting Fee Structure

Three disadvantages of employing a flat-rate accounting charge structure are listed below:

• Flat-rate billing is riskier than hourly rate billing because if you underestimate the amount of time you need to complete a client job, you will typically have to “eat” the additional costs because you have already told the client how much it will cost; however, if the client significantly changes the scope of the job, you will need to talk to your client about the additional costs to ensure you are paid for the work.
• Overcharging customers may result from an inaccurate estimate: You may overestimate how long a job will take, which may result in overcharging a client. While this may sound like a good thing, overcharging clients is not good business, and it may result in a client’s loss if they find someone else to do the work for much less.
• Some customers may insist on being billed on an hourly basis: Because hourly rate billing has been around much longer than flat-rate pricing, you may face resistance from existing clients who are used to being billed by the hour; as part of our research, we spoke with several bookkeeping firms; read on to learn how one of our experts, Candy Johnson Bellau, handled this situation in her firm.

How to Transition to Value-Based Pricing from Hourly Billing

I chatted with Candy Johnson Bellau, owner of Kramerica Business Solutions, LLC, to better understand the advantages of switching from hourly rate billing to value-based pricing and how one business has done it effectively. Her company specializes in outsourced controller and chief financial officer services, as well as business counseling and hiring, and it has successfully switched the bulk of its customers from hourly to flat-rate pricing.

Why did you make the decision to go from hourly rate pricing to value-based billing?

Bellau: I began to see that our firm’s billing hours were decreasing but our expenditures were increasing. What I discovered was that I had begun to invest in a variety of technologies that would assist my crew in working more effectively.

For example, we began utilizing Hubdoc, an app that would get bank and credit card statements for each of my clients’ accounts so that we don’t have to do it manually. It cost us money to utilize that program, and we spent less time tracking down papers, thus our billable hours fell. So, why should we be punished for delivering the same level of service in less time, I reasoned?

What advantages have you seen as a consequence of switching to value-based pricing?

Bellau: Wow, there have been so many advantages for us. For example, I was able to convert the majority of my employees from hourly to salaried status. As a consequence, they are less concerned with the amount of hours they charge each customer and are more concerned with ensuring that they are doing all possible for the client. This has resulted in the detection of inaccuracies on client bank and credit card accounts, as well as the identification of duplicate vendor invoices, saving our customers a significant amount of money.

Furthermore, consumers can now budget for our services since they know exactly how much they will pay and when it will be withdrawn from their bank or credit card account. On the other hand, we know how much money is coming in and when it will arrive, which helps us satisfy our responsibilities to our workers, contractors, and vendors.

What is the “magic formula” for determining a client’s flat-rate price?

Bellau: There are many factors that go into determining a client’s flat-rate charge. Existing customers are simpler to transfer than new clients since we have previous data on billing history and the amount of time we spend on their books.

When onboarding a new customer, however, we must first “look under the hood” to determine the state of the books before calculating a flat-rate pricing. We’ll look at the following as part of our client evaluation process:

• Examine the year-to-date (YTD) balance sheet report for any problems.
• Determine if the client’s cheques are printed or scrawled by hand; Handwritten information will need manual input on our side.
• Examine how clients are invoiced and how payments are processed in the accounts receivable process.
• Examine how suppliers are paid by looking at the accounts payable process.
• Are bank reconciliations for all bank and credit card accounts complete?
• What financial institution does the customer bank with? If we can’t merge the bank and credit card accounts with QuickBooks Online (our accounting software), we’ll have to manually enter the data.
• Is the customer in need of payroll assistance?
• Is the customer in need of tax assistance?

The trick is to calculate how many hours it will take you to finish the client’s assignment. Manual operations, such as decoding handwritten checks so they can be input into QuickBooks Online, will take significantly longer than automated ones, such as obtaining bank information.

What have you learnt from converting customers to flat-rate pricing from hourly billing?

Bellau: I’ve had consumers with whom we overstated the expense. As a consequence, they were overcharged, as were customers for whom we misjudged the cost of preparing their accounts, resulting in a loss of revenue.

However, there have been a few occasions when I’ve had to explain to a customer that our charge would have to raise since the first estimate was wrong by a significant amount. Clients are often understanding, and if you do outstanding job, they will pay the check since they don’t want to lose you. The idea is to always be transparent and honest with your customers.

How to Begin Working as a Self-Employed Bookkeeper

There are a few crucial things to consider if you are simply conducting your study to determine whether you want to become a freelance bookkeeper. First and foremost, you must determine if this will be a part-time or full-time endeavor. We’ve put up a complete guide on how to establish a bookkeeping firm to assist you with this process.

The eight stages covered in our accounting guide are listed below:

1. Obtain certification as a bookkeeper.
2. Make a business strategy.
3. Organize Your Bookkeeping Company
4. Create a business plan for your bookkeeping firm.
5. Get the Best Accounting Software Available
6. How to Start a Bookkeeping Business
7. Create a Home Office for Your Bookkeeping Company
8. Promote Your Bookkeeping Service

We’ve got some terrific advice on how to gain additional customers if you already have a bookkeeping firm up and running. See our list of the best employment sites for freelance bookkeepers in Where to Find Freelance Bookkeeping Jobs. Upwork, as well as a few others, made the cut.

Hourly Rate of a Freelance Bookkeeper vs. Flat-Rate Most Commonly Asked Questions (FAQs)

We’ve answered some of the most often asked questions concerning hourly vs. flat-rate pricing for freelance bookkeepers.

How do you inform clients that you’re switching from hourly billing to flat-rate billing as a freelance bookkeeper?

The first point of contact with customers should be conversational. Schedule a call with your customer to explain why you’ve chosen to move from hourly billing to flat-rate billing, as well as the new billing price and when it’ll go into effect. It’s also crucial to convey the advantages that this shift will bring to your consumer.

How do you deal with a client that insists on billing on an hourly basis?

Candy Johnson Bellau noted during our conversation that she had a customer who insisted on hourly charging. “Even when I showed him that the flat-rate pricing bill would be less than what we charge on an hourly basis, he insisted on being billed per the hour,” Bellau said. If you find yourself in this scenario, I recommend following Bellau’s example. Give the customer what they want if the client is lucrative for your company.

How do you make sure a client’s flat-rate pricing is up to date?

It’s a good idea to have staff keep track of the hours they spend on each project once you’ve switched your customers to flat-rate invoicing. This data may be examined on a regular basis to verify that your firm’s defined flat fee for a customer is current and lucrative.

How can I increase the number of bookkeeping clients I have?

More accounting customers may be obtained in a variety of methods. Upwork, which lists millions of tasks for freelance bookkeepers and other professions in the United States and overseas, allows you to join up for a free account. We also have a few of wonderful resources, including freelance bookkeeping professionals’ ideas on how to acquire new customers and our guide on how to attract accounting clients, which offers creative strategies to advertise your company to find new clients.

Final Thoughts

Now that you know the distinctions between hourly rate and flat-rate billing, you can choose which is best for you. The good news is that you may start by moving one customer to flat-rate pricing and iron out the issues before implementing this billing approach throughout your whole client roster.

Check out our guide to finding freelance accounting employment if you’re trying to grow your customer base. The top eight freelance accounting employment sites that we suggest to freelancers like you are included in this list.

Freelance bookkeepers charge different rates for hourly work and flat rate work.
Hourly work is usually more expensive because it can be difficult to predict how long a project will take. Flat rate work is cheaper because there are no hidden fees or surprise expenses. Reference: how much should i charge for my bookkeeping services.

Related Tags

• how much does a bookkeeper charge per hour
• how much does a bookkeeper charge per month
• freelance accountant hourly rate 2021
• how much does a bookkeeper cost for a small business
• flat rate bookkeeping services