The importance of bookkeeping

A

alangeh

New member
Hi all,

I’m a tax accountant and run into several small businesses and want to give you a real world example of why you need to keep your books straight. This is not self promotion, I sincerely do not want your crumbed up receipts you found in the glovebox.

Client of mine hasn’t filed taxes since 2016 and cash also hasn’t been reconciled since then in quickbooks. Im about to charge $15,000 to correct these mistakes.

If the business owner had kept up with the books, the annual bookkeeping expense would be about $600 and the tax returns would be about $800. $2,400 for bookkeeping, $3,200 for tax returns, or $5,600 total. This business owner lost almost $10,000 because of accounting negligence, that’s before paying the taxes, penalties, and interest due. I estimate this will be another $50k+. $15k of which are in penalties and interest.

Moral of the story. Don’t be like this client. Keep your books straight, save (a lot) of money down the road.

Edit: Since Q&A sub, what is preventing you from finding a bookkeeper/ reconciling your books?
 
@alangeh Have them pay you before you do the work. I'm a CPA and clients with multiple years of work don't really like to pay their bills on time.
 
@surrenderingtogod I agree. EL just means you get to incur a boat load of expense to litigate and attempt to collect. My clients pay a retainer and the final work product is not released until final invoice is paid.
 
@alangeh $600 a year for bookkeeping? I’m a bookkeeper, and $50/month seems very low. A good bookkeeper is more important than a lot of small businesses realize.
 
@paulrhys My best friend is a bookkeeper and she does my books for $50/month, but that's steeply discounted. She charges her other small clients a minimum of $300/month, larger businesses pay over $1000/month.
 
@paulrhys I agree, $50 a month isn’t realistic for bookkeeping. That’s my hourly fee, not monthly, and I know many bookkeepers have a minimum that’s usually several times that. Keeping the books current will still save a ton of money, but that annual bookkeeping number needs to be multiplied several times to be accurate.
 
@paulrhys Lol no it’s not just you! That’s not to say that there aren’t clients that could be $50/month, especially if your fee is lower and they really are a ‘micro client’ who needs only a small amount of simple work per month, but usually I find it’s at least in the 100s, but usually 200-300s (at least for small businesses, anyhow).
 
@werfel Yeah, i've phoned around to hear $150 is basically the go to at 90%. I just don't have the volume to get me a book keeper yet. Once I am at 3-4 full days worth of work I will hire one, but it honestly takes me 3-4 hours a month for billing and sorting receipts.
 
@paulrhys Yes, for this client based on volume of transactions, I probably would charge $25 /hour and it’d take me probably 2 hours per month excluding payroll. Yes, businesses need accounting systems and someone who can get the job done if they can’t do it themselves.
 
@alangeh That's really not much, I've always seen it suggested freelancers should start at $35 so that you are making like $25 after taxes.

Edit: Need to add thats for starting freelancers without all the skills needed. Based on this thread it sounds like you are more skilled in your industry beyond that starting rate.
 
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