How Much Can A Bookkeeping Business Make?
I know that you have a lot of questions about possibly starting up a bookkeeping business of your own. When thinking about it, one of the biggest questions you probably have is going to be, how much can a bookkeeping business make? Just like any other job that you would apply for, you are going to need to know what you can expect.
In fact, this is probably the #1 question I get. The answer is simple… it’s completely up to you and the type of bookkeeper that you want to be. Are you simply looking at becoming a number cruncher (95% of the bookkeepers out there)? If so, you can expect to earn around $20-$30 an hour.
While that’s not too shabby, how much can becoming a marketing bookkeeper earn you? Would you believe it if I said $80 an hour is what you could expect? Did your eyes just bug out of your head in disbelief a little bit? Are you thinking that I am completely full of it? It’s true!
So what is the difference between the two? What can you do to earn the $80 an hour and not the $20 an hour? In reality, it’s not nearly as difficult as you think. What you need to shoot for is to become your client’s most trusted advisor.
What Is A Most Trusted Advisor?
Simply put, becoming a most trusted advisor simply means that you are the one that your clients come to when they have a marketing. This could be bookkeeping-related (obviously), but it could also do with things outside of the realm of bookkeeping.
Maybe they have a tax question or it could even be a question about getting advice on what college their oldest child should attend in the fall. See, becoming a most trusted advisor means that your clients feel comfortable coming to you for advice on other things that aren’t bookkeeping-related.
This doesn’t mean that you always have to have the answers but if you don’t, you can point them in the right direction or are willing to do a little research on their behalf. Obviously, you’re not gonna research different colleges that their kid should attend. That type of question is about them being comfortable with you as their bookkeeper. In this case, they are more just having a conversation…. so listen!
But, a question regarding taxes or maybe retirement would be a good opportunity not only to offer up your trusted expertise on the subject but it would also be a good idea to do a little research to maybe find a good tax guy (or retirement guy). By doing the little extra things like this on occasion, you are going to increase your value to your clients and take another step closer to that most trusted advisor role.
Keep in mind that this isn’t something that happens overnight. It takes time to become the most trusted advisor. By going above and beyond as their bookkeeper, and establishing trust, you can easily justify a much higher rate of pay.
Don’t Just Be A Number Cruncher!
Before you can even move into that most trusted advisor realm, you need to be the best bookkeeper possible. But how do you accomplish that? Isn’t it just a matter of making sure the numbers add up?
I’ll put it this way. If you want to stop at their numbers matching up then welcome to the $20-$30 an hour club. But, to earn a premium wage you need to do more. You have to provide more value by going above and beyond but how do you go about doing this?
The one thing that the best bookkeepers learn to do is to help their clients save money. You will naturally begin to see ways that they can cut back on certain expenses that they, in most cases, won’t even realize that they’re doing. Depending on the size of the business, this could easily be thousands of dollars a month or maybe even tens of thousands of dollars that you can save them.
Do you think that a small business owner is going to mind paying you $300 a month for your expert bookkeeping services if you are able to find $5000 a month in savings that their business is simply throwing out the window? Are you beginning to realize now how you are able to ask for $80 an hour?
What About Pushback?
Let’s say that a small business owner comes to you asking about your bookkeeping services. They are interested but when it comes down to the price they stop everything and begin to push back because they can’t justify paying that kind of money. what do you do? How do you handle this?
The short and easy answer is to simply move on. In a lot of these types of cases, these aren’t going to be the type of clients that you want to work with in the first place. The one thing that you don’t want to deal with is a client that is a constant headache. Your business is supposed to be something that you love, not something that you dread.
Now you play a major role in this process as well. It is going to be your job to let them know what they are getting as their bookkeeper. Let them know that you are going to go above and beyond in the marketing process and this will eliminate many of the objections they may have.
Let’s Crunch Some Numbers!
Now the fun part! Once you have an established client, you can expect to spend roughly 4 hours a month doing their books. If you charge $80 an hour, that is $320 a month.
So, how much could you earn if your goal was to work a typical 8 hour day? $80 x 8 = $640 a day! If we multiply that out to a typical 5 day 40 hour work week, you would earn $3200! Multiply that by 4 to see what you would earn in a month and that comes to a whopping $12,800!
Sounds great right? But Nate, (I’m Nate by the way) how many clients would I need to earn that $12,800 a month? The answer is 40. I know that sounds like a lot… and it is. Let’s look at it from a long-term goal point of view.
Let’s say your goal is to land a new client once a month. That means that in 3 years and 4 months you would hit this goal (in reality, this can happen much quicker but more on that in a second)! If you do the math, this comes down to $153,600 a year!
I know that this may be a bit of an extreme example so let’s back it down a bit. What if you were simply looking to replace the income that you earn from your J-O-B? Let’s pretend you make $20 an hour which is $800 a week and you just want to simply replace that income so that you have the freedom instead of the money.
After all, having free time for some people is much more important than making a lot of money. When we do the math, you would only need 10 clients to replace your full-time job ($20 an hour x 160 hours a month =$3200 / $320 that you charge per month per client =10 clients)!
Stick with me here, this is the really cool part. How many hours a month would you spend doing the books for those 10 clients? Well, we know that, on average, you spend about 4 hours a month on each client. With 10 clients, that is 40 hours of work… PER MONTH! That equals 10 hours a week! Could you imagine quitting your job and having your very own bookkeeping business and only having to work 10 hours a week on average?
Let’s say your goal is to get 20 clients. That’s $6400 a month and $76,800 a year! 30… $9,600 a month and $115,200 a year! Imagine making $115,200 a year and only working 30 hours a week!
I should also quickly add that you can also add tax services to your bookkeeping. Now you are really looking at some serious money! If you were able to secure doing both your clients’ business and personal taxes you can expect to add another $600-$1,100 per year, per client!
I don’t really want to get too much off subject but I do want to show you all the potential you would have as a bookkeeping business owner. Heck, you could even hire other bookkeepers to help you do the work which allows you to bring in more clients which, of course, leads to more income for you!
How Can You Learn To Become A Bookkeeper?
Obviously, the above examples are very cut and dry but there are a lot of other factors that go into running a bookkeeping business. I just wanted to kind of get your wheels spinning so that you can see the potential of having your very own bookkeeping business.
If this has sparked your curiosity, then you need to head over to my full review of the absolute best bookkeeping course online. Here you will learn how you can have an up and running bookkeeping business in 3 short months!
No need to pull out your credit card, just an opportunity to learn all the ins and outs of having a bookkeeping business of your own. In my review, you will have the chance to watch 3 different training videos that go into great detail on what it takes and what it entails. If this is something that you may be interested in, I highly suggest checking them out.
But, first things first. Check out the review to get an overview and go from there! Now that you have learned how much can a bookkeeping business make? It’s time to look into making this a reality!
Got questions? Don’t hesitate to drop them below in the comments and I will be sure to get back to you as soon as possible!