The Freelance Bookkeeper

I’d like to ask you an important question: In your business, are you a perfectionist or a pursuer of excellence?

Many bookkeepers tend to be perfectionists. It makes sense really, when you think about it. We are very good at organizing and processing lots of small details, and getting them booked into business financial records accurately. An admirable skill that many simply do not possess.

But being a perfectionist does not mean that you are pursuing excellence.

The reason? Perfectionists have a tendency to focus on the wrong priorities.

Haven’t you found yourself spending way too much time fussing over details? I know I am always at risk of getting sucked into making every little detail on my clients’ books exactly perfect. If you haven’t had this experience, well, you’re probably not a perfectionist! (But read the rest of the article anyway. You’ll learn how to pursue excellence with a simple system even non-perfectionists can use effectively.)

Perfectionists can easily waste a lot of time and energy (that they ultimately cannot bill out to their clients) trying to do certain tasks exactly right. Sure, we tell ourselves that we are providing top-notch client services. However, the truth may be, doing those tasks “perfectly” may not be necessary or even valuable to our clients.

Interestingly, this is often the difference between bookkeepers and accountants as well. Accountants tend to look at the big picture and make adjustments accordingly. Bookkeepers have the tendency to want every little transaction booked exactly right.

Who generally makes more money?
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The difference between Perfectionism and the Pursuit of Excellence
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Perfectionism: A disposition to feel that anything less than perfect is unacceptable — Princeton University website

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It’s easy to see how being a perfectionist can be a double-edged sword when it comes to running your own business. Perfection, of course, is not possible in an imperfect world, so it is an unrealistic expectation.

The good news is, perfectionism, with a little tweaking, can be directed toward the pursuit of excellence, with amazing results.
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Excellence: Achieving a high level of performance; exemplary performance; exceeding normal expectations of performance or meeting the highest expectations of what can be achieved; performing well in excess of the norm; outperforming most. — University of Southern Queensland website

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How can you pursue excellence while letting go of perfectionism?

Rewards help.

It’s a lot like how I learned to become a Scrabble® champion (among family and friends). I learned this lesson from my Lithuanian immigrant grandmother.

When we would play, I used to come up with fantastic words using nearly all my allotted letter tiles all at once. But I never seemed to make many points. My English-as-a-second-language grandmother, however, had this knack for dropping a single letter on the board and raking in mega points – usually from my big fancy words! That used to really burn me, and it just didn’t seem fair. I was doing all the work, but she was getting all the points!

But then I figured out her strategy. She was paying attention to different priorities than I was. She was focused on points, looking for opportunities to put her letters on the Double and Triple Word Score boxes. I was just trying to use as many letters as possible by coming up with long and thoughtful words. Her priorities were in the right place. I needed to pay more attention to WHERE I was placing those big brilliant words.

Once I started putting my words in the right places, I virtually become unbeatable! I even dethroned my grandmother from her long-standing family champion position. (No one wants to play with me anymore.)

This is exactly how perfectionists can learn to pursue excellence and build a highly profitable business as a result. It takes a little practice and discipline, but once you apply the tenacity of perfectionism to the pursuit of excellence, you will be reaping extremely powerful benefits for both you and your clients.

Focus and Priorities

Simply put, you must keep the end result of what is most important clearly in focus at all times. Then set definite deadlines for reaching those results.

In practical terms, I do this on a daily and weekly basis with priority lists. I keep deadline-driven project priorities visible at all times. I also block out specific time periods on my calendar for the week’s top priorities.

Each of my clients’ files also have outcome-based priority lists. These are reviewed and revised whenever I work on my clients’ books.

When time runs short, I know exactly what needs to be accomplished and when. I evaluate which details matter and which ones don’t. Then work in high gear only on the tasks that matter and let go of any other details so projects are delivered on time. This results in truly excellent service that is ALL billable.

How will being an excellence-focused perfectionist affect your bottom line?

By channeling your skills as a perfectionist toward the pursuit of excellence, you will see a dramatic increase to your bottom line! You will be concentrating your efforts in a way that will not only boost your self-esteem, but also your profits and reputation.

What action will you take starting this week to use your skills as a perfectionist to build a freelance bookkeeping service focused on excellence?

I want to hear from YOU! Commit to a healthier bottom line (by making a comment below)

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~Gabrielle

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Inspiration for Excellence

In a discussion about the vast distinctions between Perfectionism and Excellence, Jeff Baas of One Stop Web Support penned these inspiring contrasts which I’ve excerpted below to help us all stay on the road to excellence without getting tangled up in perfectionism:

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PERFECTIONISM is the fear of being wrong.
THE PURSUIT OF EXCELLENCE is the willingness to be wrong and to learn from it.

PERFECTIONISM is seeing any effort that doesn’t turn out exactly as planned as failure.
THE PURSUIT OF EXCELLENCE is seeing any effort that doesn’t turn out exactly as planned as a valuable opportunity to refine the plan and make it better.

PERFECTIONISM is fear that others might think you don’t measure up.
THE PURSUIT OF EXCELLENCE is a desire to be the best you can be.

PERFECTIONISM is staying stuck in anger and frustration.
THE PURSUIT OF EXCELLENCE is growing beyond where you ever expected to grow.

PERFECTIONISM is confining.
THE PURSUIT OF EXCELLENCE is freeing.

PERFECTIONISM is conformity to presuppositions.
THE PURSUIT OF EXCELLENCE is exploring new possibilities.

PERFECTIONISM is self-doubt.
THE PURSUIT OF EXCELLENCE is confidence.

PERFECTIONISM is closing yourself off.
THE PURSUIT OF EXCELLENCE is opening yourself up.

PERFECTIONISM is remaining right where you’ve always been.
THE PURSUIT OF EXCELLENCE is a journey of discovery.

PERFECTIONISM is fear.
THE PURSUIT OF EXCELLENCE is trust.

PERFECTIONISM is the fear that something unpleasant will come from our efforts.
THE PURSUIT OF EXCELLENCE is an excitement over the improvements that we will help discover.

Jeff Baas is a website guru and Internet marketer who knows the challenges new business owners face (with perfectionism being only one of them). He has a new special report for anyone starting a business who wants to avoid the #1 business-killing mistake so many of us make. It’s free. So if you’re just starting out with your freelance bookkeeping service, you’ll want to get your hands on this helpful information right away.

Click Here to get your free copy now ==> Going From Employee to Entrepreneur

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Many freelance bookkeepers also do taxes for their clients. That’s probably why I so often hear the question, “Is it necessary to be a tax preparer in order to run a successful freelance bookkeeping service?”

The answer I usually give is…it depends.

Successful Bookkeepers and Taxes

There are many ways to be successful in the bookkeeping field. While tax preparation services can be a good source of seasonal income, it is NOT necessary of offer this service to do well. In fact, there are situations where NOT offering tax services may even be an advantage, depending on how you position yourself.

For instance, if you don’t have experience with tax preparation and don’t want to offer that service, it may be easier to build complimentary relationships with CPAs. They won’t be worried that you’re a threat to their tax clients, who are often their bread and butter. You can position yourself as a strategic ally by referring clients who need tax services, while they refer clients who need help with their bookkeeping to you. This works as a mutually beneficial relationship, especially at year end.

Taxes and Bookkeeping are Not the Same

Bookkeeping and taxes are two different things entirely. True, the information found in a client’s bookkeeping records is used to prepare the tax returns, but that’s where the similarities end.

If one knows only how to prepare individual tax returns, that does not mean that that person can handle bookkeeping. In fact, I know of a CPA who struggles with this very issue with his staff during the off season. His staff primarily knows tax prep. But when he needs them to work on adjusting a trial balance for his business clients, they are helpless.

The reverse is also true. Just because you understand double-entry bookkeeping does not mean you can breeze through tax return preparation. You need to be adequately educated to offer either service if you want to offer that skill to your clients.

Should You Offer Tax Services?

So my first bit of advice is, if you already have income tax preparation experience, and you enjoy it, then by all means consider adding it to your service offerings. It provides a one-stop-shopping convenience for your existing and future clients who may be in need of professional tax preparation.

However, I do NOT suggest that you attempt to “steal” tax clients away from their current preparer, especially if that person is their CPA. A strategic relationship with your local accountants is far more valuable than the preparation of an annual tax return or two. You always want to be building strategic alliances, not promoting adversarial competition.

If you offer tax services, be sure to keep your knowledge up to date. The tax laws change every year, so this is not a service you should offer if you are not willing to invest in ongoing education. Lack of knowledge in the tax arena can come back to bite you hard. The IRS is actively raising the bar for tax preparers and will continue to do so over the next few years. You’ve been warned.

Tax Laws ALL Bookkeepers Need to Know

Up to this point, we have been talking about income taxes. While including income tax preparation to your service offerings is not a necessity, there are some types of taxes you really do need to know about, at least on a basic level.

Most, if not all of your clients will need your guidance when it comes to payroll taxes, state and local sales and use taxes, and possibly meals and/or lodging taxes.

If you don’t already know the ins and outs of these types of business taxes, then you need to educate yourself so you can handle them responsibly. Usually the information needed can be found directly from the taxing authorities at the federal, state and local levels; checking their websites is the easiest option. I’ve included some of the most common resource links at the end of this article.

Pay Attention to Payroll Taxes

Probably the stickiest of business taxes are for payroll. Penalties and interest on mishandled payroll taxes are very stiff. So don’t fake it when it comes to handling your clients’ payroll services. Get help if you need it.

If you are not comfortable with handling payroll taxes yourself, you may want to insist that your clients hire an outside payroll service. These providers are well worth their fees.

Payroll companies not only prepare payroll checks, but they will also prepare and timely file payroll tax returns, seeing to it that your client’s liability deposits are made when due. That is of key importance.

Personally, despite the fact that I have experience handling payroll, I HATE it. So I insist that my clients use an outside payroll service. This keeps my clients out of hot water with the authorities, and lets me focus on the services I truly enjoy providing.

That being said, if you actually enjoy doing payroll, it is a valuable service that can provide a source of steady revenue, if you aren’t already offering it to your clients. The QuickBooks ProAdvisor program has a nice package at a reasonable price for those who provide payroll services to their clients.

It All Depends on What You Want

As is clear from this discussion, there are lots of choices when it comes to taxes and bookkeeping. In reality, you get to choose which combination of service offering will best support what you envision for yourself and your business. Just realize that there are advantages and disadvantages to each situation.

Make Your Choice and Stick With It

Once you’ve decided which service combo is right for you, keep up to date with the education requirements. Provide the best service possible for your clients. After all, that’s why they hire us – for our expertise.

Top quality service will fetch you the best fees and keep your business growing. Happy clients are your best source of new referrals. That holds true no matter what the economy is doing.

So “should” you offer tax services? That’s entirely up to you. It just all depends on your current (or desired) skill set, how you envision your business, and the services you enjoy providing the most.

Resources

National Tax Training School

National Association of Tax Professionals

Federal Income Taxes – Tax Professional Resources

Federal Employment Tax Resources

US Sales Tax Information

Sales Tax Rates Quick Reference List

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WANT TO USE THIS ARTICLE IN YOUR OWN BLOG OR E-ZINE? You have permission to re-publish it, as long as you include the author’s bio paragraph and links below:

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Gabrielle Fontaine, PB is a freelance Professional Bookkeeper and Advanced Certified QuickBooks ProAdvisor. She publishes the free online newsletter, The Freelance Bookkeeper, and is co-author of the new book, “How to Start A Successful Home-Based Freelance Bookkeeping and Tax Preparation Business,” available at Amazon.com

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Have you wondered about this question? Right after being asked about how much to charge for bookkeeping services, usually I hear this one. And of course, the short answer is, it depends.

It depends on which method you are most comfortable with. It also depends on whether you can run your business more profitably charging one way or the other. And finally, it depends on what your clients will accept.

Which method do clients want?

There is a reason prospective clients ask, “How much do your charge?” But it isn’t really because they are price shopping. (Though, admittedly, some are.) They are more interested in value….and how much it will cost them bottom line to get their books done, or to get the help they need with QuickBooks.

If you quote them a simple per hour rate, say, $40 an hour, the very next question you will most often hear is, “How many hours will it take you to get the work done?”

So the question they are really asking is, “How much is this going to cost me and is it worth it?” For that reason, you will often hear a sigh of relief from prospective new clients when you quote them a fixed fee. Now that they know what it costs, they’ll want to see what they will get for their money (value).

We’ll talk about how you can demonstrate the value of your services BEFORE the engagement ever starts in a future article. For now, let’s stick with the flat rate vs. hourly fee question.

Which method is better for you?

Hands down, most bookkeepers and QuickBooks consultants prefer to charge by the hour. And it’s true. You run a very real risk of underestimating the amount of work needed for a new client. And if you do, you’ll have to eat the difference. Ouch! No one likes working without fair compensation.

So charging fixed fees do put more risk on your shoulders. Of course, that’s part of the reason clients generally like fixed rates better.

But estimating is an art and can actually turn out to be more profitable, when done right. To make that happen, you must learn how to estimate in such a way that you will be well compensated. That skill usually comes with experience. So if you want to build this skill, start slowly with small projects only.

To come up with an estimate, plan out the project as completely as possible BEFORE giving your client a firm estimate. That means gathering as much information as possible. You may also want to stress that it is ONLY an estimate, subject to revision. If the project turn out to require  more work than anticipated, agree ahead of time how that will be handled.

The key is to define all the parameters and expectations BEFORE you start work for the client. You will also want the agreement in writing.

Which is best for you? If you just want to keep it simple (and safer), charge by the hour. If you want to make it easier for the client to say yes, as well as build a skill that can dramatically boost your bottom line in the long run, try your hand at flat fees. Just remember that it takes some practice to get it right.

Making it Work for Both You and Your Client?

As I’ve suggested before, using a win-win approach will usually yield the best results. So if your clients prefer fixed fees, but you prefer charging by the hour, why not strike a compromise?

You can quote your hourly rate and estimate how many hours it will take, and then sell your client a prepaid block of time to get the job done. That way, it feels like a fixed rate to the client, while you get your hourly rate AND you get your money right away. (No risk of A/R woes after the fact!) You may even wish to give your clients an incentive to work with you on this basis by giving a discount, say 10%, for buying 10 or more hours at a time.

Whenever estimating for a job, though, ALWAYS include extra padding to cover any unexpected work that may be necessary. If you don’t end up using all the time when the job is complete, you can always use it against future services.

Ultimately, you will need to find the combination that works best for you. Know how much you NEED to make and then match that with the method that will give you what you need, while still making your clients feel comfortable working with you and getting good value for their money. Think win-win or no deal.

What methods have you found that work in your business? Let’s compare notes! Leave your comment just  below the Resource links.

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Gabrielle
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RESOURCES

Intuit Rates Survey 2007 (The 2008 survey has not yet been published)

NACPB 2008 Survey

How Much Do You Charge? [related article]

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One of the most common questions I hear about becoming a freelance bookkeeper is, ‘What credentials do I need?’

The real answer to that question has more to do with the type of freelance business you want to build. But for the purposes of this article, we will assume that you are focusing on handling the month-to-month bookkeeping of your clients as their sole bookkeeper.

You’ve Got Choices

I’ve found that most freelance bookkeepers are concerned with the technical skills needed to provide quality service. Of course, that is a good place to start.

So, if you’re starting from zero, the first step is to learn the ropes academically. Here are a few choices to consider:

the basics you need may be available locally in a classroom setting. Check a nearby community college or continuing education programs to see if there are any live classes offered for bookkeeping certificate programs.

If that is not available in your area, or you can’t fit classroom training into your schedule, you may want to consider self-study training courses available online. Penn Foster Career School offers a couple of choices for self-paced training that are good quality.  You can either get a Certificate in Accounting or take their Bookkeeping program.

Universal Accounting’s Professional Bookkeeper training is another option.
This training is a self-study program that takes the traditional paper-and-pencil approach. It is a course that centers on small business bookkeeping, designed and taught by a CPA. It also includes a module on practical steps for starting your freelance business.

Are You Certifiable?

If you already have a good understanding of bookkeeping principles, but want the credibility (and confidence) that comes with a few letters you can add after your name…

AIPB’s Certified Bookkeeper training which provides the CB (Certified Bookkeeper) certification is probably your most economical and recognized option for a professional bookkeeping designation. This is a thorough self-study, traditional debits-and-credits approach from the oldest industry association for our profession. I suggest that you pursue this after you already have a good, basic understanding of bookkeeping under your belt. You will also need some on-the-job experience in order to qualify for the certification.

NACPB’s Certified Professional Bookkeeper training provides the CPB (Certified Public Bookkeeper) designation. This is another self-study training option geared toward those who wish to start their own bookkeeping business, created by a CPA.

Of course, the best training, after you have the academics down, is real-world experience. But you can only get that kind of “training” by actually doing client work.

There are a variety of ways to get that hands-on experience, which range from offering to do the books for a friend or two who own businesses, to subcontracting from an established freelance bookkeeper, to working directly for an accounting firm. Working as an accounting temp may also give you the opportunity for varied experience, if you can land gigs with small businesses. (Experience with large corporations will be of little help in running your freelance bookkeeping business.)

Of course, it goes without saying (though I’m saying it here), you will also want to set up your own set of books and keep good records to apply what you’ve been learning AND see how it feels to be a business owner!

Finally, when you’ve got the bookkeeping principles and practices firmly ingrained, there will be one other major learning curve to tackle in the freelance bookkeeping puzzle. You must learn to use QuickBooks. The vast majority of small businesses use this software, and you will need to learn to use it correctly and well. Just knowing accounting principles does not mean you know how to use this “user-friendly” software accurately.

There are many bookkeepers (as well as CPAs!) who think they can just “fake it” with QuickBooks. That is certainly not the case, and those who do, often cause their clients frustrating problems rather than providing quality services.

So in my next article we’ll tackle this topic – Which QuickBooks credentials and training do freelance bookkeepers REALLY need?

In the meantime, if you need to brush up on your bookkeeping know-how, or start pursuing a certification program, for credibility and confidence before starting your business (or to enhance your existing services), then check out the options above and take action this week. Then let us hear about your success!

Remember, in tough economic times, small business need to have clean books more than they do in fat economic times. Opportunities abound in any economy for qualified freelance bookkeepers.

Of course, if you have questions or experiences you want to discuss about bookkeeper credentials, go ahead and click on the Comment link on the right side below my name below! I’d love to hear your thoughts on this (sometimes controversial) topic as well!

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Gabrielle

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