Contract for Bookkeeping Services: What You Need to Know
A contract for bookkeeping services formalizes the relationship between a bookkeeper and the business with which they are working.3 min read
A contract for bookkeeping services formalizes the relationship between a bookkeeper and the business with which they are working. These contracts can define what services the business will receive and what payment the bookkeeper will receive.
What Are Bookkeeping Contracts?
Bookkeeping contracts are an arrangement between an individual or businesses and a bookkeeper. These contracts go by several different names:
- Bookkeeping Contract Agreement.
- Bookkeeping Services Contract.
- Bookkeeping Agreement.
A bookkeeping contract is very beneficial because it can define the services that you will receive from your bookkeeper and can also protect your rights. This contract is also important for bookkeepers, as it will inform them of their precise responsibility. For example, when hired by a business, a bookkeeper needs to know if they will be responsible for handling one person's taxes or if they will be responsible for maintaining the entire business's financial records and taxes.
Whether you are hiring a bookkeeper or are an accountant offering bookkeeping services, a strong bookkeeping contract should include several important pieces of information:
- The bookkeeper's and the client's name and address.
- Documentation of the bookkeeper's license.
- The duration of the agreement.
- Services that the bookkeeper will and will not provide.
- How much and when the bookkeeper will be paid.
- How the parties can end the agreement and any state laws that apply.
When Should You Use a Bookkeeping Contract
There are a variety of circumstances where a bookkeeping contract would be appropriate. For instance, if you are a bookkeeper that is establishing a relationship with a new client, you should define this relationship with a bookkeeping contract before your services begin. Similarly, accounting firms hired on by a new client should use a bookkeeping contract.
Both businesses and individuals that need accounting services should insist on a bookkeeping contract. Businesses absolutely need these contracts, as they will define what financial aspects of the business the bookkeeper will be responsible for handling.
How Much Does Bookkeeping Cost?
When seeking bookkeeping services, most people want to know how much these services will cost. As you might imagine, a number of factors can influence the cost of bookkeeping services. For instance, larger businesses can expect to pay much more than small businesses for effective bookkeeping.
For a business, there are many issues that will impact the price of their bookkeeping:
- The size of the company.
- How many transactions the company handles on a monthly basis.
- The number of company employees and expense accounts.
- How many invoices the business must send, bills the company must pay, and balance sheets that need reconciliation.
Bookkeeping costs can also be impacted by the counting systems that a company uses and the financial procedures that the company has in place. Financial reporting requirements can also have an impact on the cost of bookkeeping services.
Full vs. Basic Bookkeeping Services
When a small business first opens its doors, its main focus should be on compliance. This means making sure the business is following federal and state regulations, is properly paying bills and tracking transactions, and is making sure that its payroll is accurate. In these early stages, basic bookkeeping services will usually suffice.
As a business grows, however, it will need to emphasize financial reports that are accurate and timely. When a business reaches this point, it will need more advanced bookkeeping service, including managerial accounting. Full bookkeeping services will be much more expensive than basic services. Choosing advanced bookkeeping, however, can result in a big return on investment.
What Do Bookkeepers Do?
A bookkeeper can provide a variety of services to your small business, including maintaining your books on a day-to-day basis. Data entry is an important responsibility of a bookkeeper, and bookkeepers can record company data in either a physical ledger or in accounting software.
Bookkeepers keep track of a business's financial transactions by carefully monitoring and maintaining records and by constructing financial reports. While a bookkeeper may not have an accounting degree, they should have at least some formal training and possess an attention to detail.
Some bookkeepers can help a business with its taxes by completing tax documents and generating financial reports. Other bookkeepers will simply gather and organize financial records so that they can be used by the business's Certified Public Accountant (CPA).
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