@Kris - I agree, there is a grey line between bookkeepers and accountants.
To be blunt, from the business owners perspective I believe they think bookkeepers do data entry/VAT returns for £15 to £20 an hour and accountants do accounts/tax at circa £100 an hour.
As regards our target market, it can be sole-traders but the key is that they want to do better. One way we help them is by showing them how to make better use of the latest technology in all areas of their business.
Can I ask what annual revenue a bookkeeper could generate working a standard working week using your business model?
Working 37 hours a week (billing 25) over a 48 week year they could turnover around 50k-60k a year.
I currently work part time hours, which as I've said before suit me due to the ages of my children. My average hourly rate equivelant for bookkeeping is about £35 per hour and for self assessments it's about £55. Obviously there's a range of services in between. For example payroll earns me about £5 a minute, but I don't have a lot of it. My invoicing service makes me about 70p per minute, but like payroll I'd like more of it.
Rather than write lots of replies here's six answers all in one.
(1) Define bookkeeper (which is how this thread started). put ten of us in a room and you wouldn't come out with two that did exactly the same thing in exactly the same way.
(2) I'm not telling you what I make but I'm VAT registered so that should tell you enough. Then again, some comes from bookkeeping, some from accountancy, some from consultancy, some from project management, some from systems design and development work.
(3) How do you know that the system that you feel is the best is the best for your client if you don't sit down with them one to one and chat about their wants and needs rather than what Crunchers wants to sell them? Thats not saying that Crunchers are any different to traditional accountancy practices that enforce Sage on clients that don't want or need it. You are basically simply guiding the client to where you want them to be.
(4) I think that you missed Kris's point in a previous post Bob. You assume that business wants to do better but the reality is that many of those we deal with simply want to survive. They want to concentrate on their core business and they want a cost effective sollution to compliance. Clients do not want to be spending more time than absolutely necessary keeping their books and records in order to make our lives easier. As for saving the client costs and giving business advice, all accountants and many bookkeepers do that. Its not some alternate way of thinking.
(5) A chartereed freind of mine wants to know where to find these clients that think that she gets £100 per hour as all of hers seem to know exactly how much accountants charge which is closer to the £35 to £45 per hour.
(6) Just want to say that there is no such thing as an alternate accountant. Its a Crunchers marketing construct intended to devalue a profession that it hangs on the coat tails of.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
@Kris - thanks for being so open and your answer reminds me of the phrase "time is money" which was really about the opportunity cost of applying resources and why we are moving away from bookkeeping.
Your capability with SA work based on full-time work can generate nearly 60% more sales and (if you employed someone on £25,000) 140% more gross profit, compared to bookkeeping work.
Crunchers bookkeepers is a totally different business model and proposition to Crunchers accountants. To be honest, most franchisees where not worried about the margin on bookkeeping because they were accountants and made it on the back-end.
Crunchers accountants is based on what we did with MORE. It is too early to say what we will achieve but the MORE recovery rates is £125 an hour. The idea of offering Crunchers is that our business system is better than what accountants can do. The average partner share is £75,000 and we will working to £100,000 from full-time.
Your invoicing service sounds VERY interesting, have you thought about targeting that work?
@Shaun - my replies:
1) what matters is what business owners think bookkeepers.
2) noted you generate fees above the VAT threshold.
3) Crunchers do a one-to-one financial systems review and if our supported systems MORE/Xero are not right we don't offer our service. We do not force anyone to do the wrong thing.
4) I believe business owners go into business to do more than survive, although I accept times are tough and they want more security.
5) I attended a seminar 20 plus years ago with Chris Frederiksen of 2020. One of the accountants said he charged a similar rate to your friend and Chris said he was undermining the profession. I agree .
6) I know you may not like it but Alternative Accountants do exist and I intent to grow how many there are by playing off the weakness of the traditional accountant.
Don't give up Shaun.............the truth is out there..........
I am in no way having a dig at Bob as i don't see myself educated nor experienced enough to get into a serious debate.
However, all i read from the post was " He said that's what you should be charging, so that's what you should be charging"
As for anything to do with salary expectations written on the web, they have always and will always be as reliable and believable as the man in the moon.
If you check out job adverts for bookkeepers in the Greater Manchester area you will find quite a few offering just above minimum wage. I actually found one that really wanted an Accountant. They were offering 7.25 p/h. My brother works part time at a local supermarket (he's a single parent and trying to work around the kids, but i still take the Michael out of him lol) earning just short of 9.00 p/h tidying up.
As the Americans say....go figure.
Edited as my son's seem only to be able to count in hundreds lol.
-- Edited by Spamkebab on Tuesday 25th of September 2012 10:48:20 AM
£35 to £45 per hour may be the absolute maximum you can charge in certain areas. If that's all you can charge, how is it undermining the profession?
I don't suppose we should all relocate to Windsor should we?
My Accountant sometimes earns £100 per hour, sometimes he earns £10 per hour, learning curves and "swings n roundabouts". I know for a fact if he quoted labour rates at £100 per hour, my Accountant would be my window cleaner (who probably then would earn £100 per hour tax free lol)
I just looked on the Internet and one of the links was http://careers.icaew.com/university-students-graduates/careers-and-salary.
My take is that if a business owner employs a Chartered Accountant they are looking at £82,400 in salary or pro-rata. Bearing in mind employing someone comes with secondary costs the hourly cost would probably work out to be £75 or more. I think Chris' point is that if someone charges half that it reduces the brand equity of Chartered Accountants. It's like a bookkeeper offering their service for £5 an hour when the NMW is higher.
Usually, the only reason people offer themselves out at low rates is poor marketing. Most people are able to generate different levels of recovery rate. Good marketing helps you win the work so you to maximise your profitability, by winning the right clients/work. In Kris' example, the difference between 100% invoicing work and 100% bookkeeping is £300k a year.
Perhaps there is an opportunity to set up a business that just does invoicing for people?
The site doesn't detail how much ACA's are likely to make in practice which as Neil indicated can vary wildly dependent upon where in the country one is located.
Lets take the non practice accountant example given. Assuming 4 weeks holiday and working to an unrealistic 40 hour week (you know as well as I that in the real world mid level accountants in consultancy firms are first in and last to leave and half of them have no idea what a weekend is and only take Christmas off because it's forced on them). So, 40 hours a week (yer right) or 1920 hours a year equates to £42.92 per hour.
People in practice often try to get into industry because they have seen the bottom line available but miss the expectation on the commitment necessary to get that money.
Lets now look at accountants in practice.
When one has quality staff your billable hours are not restricted to 8 hours a day. Only when one is client facing does the client know who is actually doing the work so hypothetically the person that I was talking about may well be charging 36+ hours per day for her time where she may only actually be involved in the client facing and supervision roles.
The larger your practice, the more billable hours that are available to you but of course you still need to fill them with paying clients.
In billable time though clients in this area pay in the band of £35 to £45 per hour even though the reality is that she may be making a lot more than that as when one thinks hours they tend to think consecutive rather than concurrent. However, your statement was that clients are charged £100 per hour which as Neil says, we don't all live and work in Windsor.
We can all quote the odd hour that we have been paid an exceptional rate (doubt if anyone will match my consultancy fee for Christmas day 1997) but it's all a matter of averaging and underlying rates. Not quoting an exceptional desperation rate as the norm.
That said I know that there are firms whose partners make that and more but they are the exception rather than to be quoted as the norm.... As the original statement stood it was a bit like saying that Wayne Rooney gets £250,000 per week in salary therefore all premier league footballers get £250,000 per week in salary or even every premier league footballer should be making £250k per week and if your not then your obviously not charging enough.
OMG, never thought that I would use a football analogy. I'm turning into Peasie!
Hope that helps clear up the confusion over chartered accountants charge rates and client expectations over such rates.
kind regards,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
depreciation, amortisation, provisions, capital allowances.... I've forgotten what the truth actually is Neil... But at least now that I know what I'm doing the lies are consistent :)
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Child asks their accountant father. "Daddy, what's two plus two".
Accountant responds. "Son, what would you like it to be".
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Strangest that I every encountered on salaries was in my first job.
I worked my way up into a junior management position with a very large Payroll bureau (pretty sure that it was the countries largest at the time) and had half a dozen trainee's under me. After a while it became apparent from overhearing their discussions that I was actually paid less after six years working for the company than someone on day one, straight form Uni with absolutely no experience or knowledge of the job.
I brought this up with a office manager who pointed out that there were different pay scales for those from Uni and those straight from school and there was nothing that they could do about it.
I went away, did a few interviews and accepted a job as an entry level management consultant. When I handed my notice in they offered me more than the salary that I had been after there and then but as far as I was concerned if an employed treats you like that then it is already too late for them and I moved on.
Best move I ever made... Multiplied my salary by five inside three years and the payroll company that I had been with closed down... Actually, after I left the consultancy they closed down... Then I worked as a consultant with several consultancy companies and after I left they all ceased to exist... Then I worked in banking and look what happened to that... OMG I'm a human plague of locusts.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I am a relatively new to being a self employed bookkeeping but from my first few clients a possible definition of a bookkeeper is someone that can do all the accounts a business owner could do themselves if they had the time, ability or inclination. This includes all the day to day accounts, payroll, VAT, self-assessment all the things HMRC consider tax payers can do for themselves. Still lots of grey areas! I have some very small clients whos bookkeeping/SA is relatively easy but they say that keeping the books stops them running their business. One example a new client tried to get her accounts done before she did any more marketing - neither job got done, until I agreed to do her books.
I think you've had the cream of the crop, sylvia. Some of my previous clients couldn't put a nut in a monkeys mouth let alone find their way round VAT. Many would also put all their clothes though their business accounts. Maybe I've been unlucky.
Kris
Had this conversation with my old man last week Timbo, kind of told him that sole traders don't need an accountant.......stupid i know.
He was all for doing his own books again until i reminded him that while he pays the accountant the equivalent of £10 per week for probably an hours work the accountant is saving him...ohhh.. lets say a good half a day a week at roughly 30 quid an hour.
I don't think that there is an off topic in this thread Tim.
The original poster seemed to light the blue touch paper and retire. Sure he'll be back soon though if nothing else from morbid curiosity to see who the survivors were.
Considering the posters in this one, depending on where you join in though it may be a good idea to venture in with a tin hat and rifle in hand.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Had this conversation with my old man last week Timbo, kind of told him that sole traders don't need an accountant.......stupid i know.
Hi Neil,
The likelyhood of mistakes must increase taking on all of the tasks outlined by Sylvia. In that scenario, a once-over with PAYE and VAT audit might be a good idea.
He was all for doing his own books again until i reminded him that while he pays the accountant the equivalent of £10 per week for probably an hours work the accountant is saving him...ohhh.. lets say a good half a day a week at roughly 30 quid an hour.
The way you're going you'll chip away at the tasks left at the year end, but £500 doesn't seem extravagant. Mind you, I think we're talking Sage here. lol
Slightly off topic but Sylvia touched on a nice marketing tag-line: "....say that keeping the books stops them running their business. "
I'm sure we could all paraphrase it to suit :-
"DIY in 50 hours or Pay me £15p/h for 20 hours" or "concentrate on doing what you're good at" etc
Regards, Tim
Reminds me of a few clients who insist on torturing themselves by doing their own payroll, takes them hours when it would take us minutes.
Incidentally, missed the replies earlier in this thread, but had a stark reminder yesterday of the effects of the DIY approach. New client, subbie, last tax return done by auntie (unfortunately now ill, which is why he came to us). Within minutes of walking through the door, noticed that she'd claimed mileage at 40p/25p - AND the capital cost of a new van. Luckily, he's more concerned that it's right!
I think there are certainly grey areas between accountants and bookkeepers and I also think that some clients often don't really know what they need. If possible I think it's best to offer as wide a range of services as possible to succeed in this competitive market.
