How to Make a Six-Figure Salary With a Bookkeeping BizOct 16, 2023
Did you read that title and go, “Um, no way?” Yeah, I don’t blame you. But it’s true—it’s absolutely possible to give yourself a six-figure salary with a bookkeeping business.
You can make $10,000 per month in profit with your bookkeeping biz, and you can do it while paying a team, while paying off your business expenses, and while only working part-time…and I’m going to walk you through how to make this happen.
The math doesn’t lie, and I can prove it. Grab my free mock P&L sheet and follow along as I explain how to create a six-figure salary yourself!
It is absolutely doable to hire a team, keep your hours low, keep your presence high, and still have your bookkeeping business be wildly profitable…as in, five-figure months and six-figure salary years profitable.
I'm not talking about six-figure salary years and five-figure months in sales. I'm talking about six-figure salary years and five-figure months of profit, and I'm going to be super transparent in terms of what's realistic and reasonable.
The limit really doesn't exist in terms of your bookkeeping business. And just to prove it, I made that mock P&L sheet to make it easy to follow along with my math here.
So in order to net $10,000 worth of profit and add up to a six-figure salary per year, you’ll be looking at a variety of sales. In this example, we’ll say you actually have twenty-eight total clients, but there’s some variety between them.
In my example, I have three CFO clients at $777 a month. That means the CFO offer adds up to three clients and $2,331 of sales.
Next, I put down that I have twenty-one bookkeeping clients ranging between $300 and $450 a month. This is going to vary based on the complexity of the client, but it will also vary in terms of what you're comfortable charging.
I always tell people they can charge higher than they think that they can when they first start out. Because what tends to happen when people charge on the lower end—$250, $300, $350—is they quickly realize that in today's world, those numbers are almost too low to operate at.
However, the only way beginning bookkeepers figure that out is really by signing clients. So just in case, I’ve stacked these client rates as if you signed some clients cheap, then realized it was too cheap. You're going to continue to honor that price for a little bit, so I left them there, but you should continue to sign clients at a better price once you have that realization.
For example, there are twenty-one regular monthly bookkeeping clients, and it breaks down like this: you have three clients at $300 a month, three clients at $350 a month, and five clients at $400 a month.
By the time you have eleven clients, you see that you’re getting a lot of leads, and that you can’t keep signing at that price and keep it sustainable. So you bump up your price to $450, and you get ten clients signed at $450 per month.
That puts us at $8,450 for monthly clients.
Next, let’s say that you have a few clients with smaller business that you put into a quarterly package…let’s say four quarterly clients at $250 per month. We tend to bill them monthly for a quarterly package, which means you’re making another $1,000 off of quarterly clients.
Next, I added in sales for three DIY templates at $127 each. I actually sell more than that, and I just increased my price, so it should be doable for you to make $381 in spreadsheet sales per month.
With all of those things combined, your net sales are $12,162 per month. And when we add it up to get that six-figure salary, it adds up to $145,944 net sales per year.
Now let’s break down how many hours learning that six-figure salary should take per month. These are obviously estimates, but I think the averages are fair.
First, I have monthly client calls with my three CFO clients. It’s an hour per call.
Then you have your monthly clients; let's estimate that they take three hours each. There are twenty-four clients whose books you need to do each month when you combine the CFO clients and the regular monthly clients, so that's about seventy-two hours on the monthly bookkeeping side.
For the quarterly clients, even though you’re not consistently working on their books every month, you’ll still need to finish them up before the end of the quarter. I averaged that out at about half an hour per month per client, so that adds up to another two hours.
Altogether, that's seventy-seven hours of client work that has to get done per month.
Could you do seventy-seven hours yourself? That's up to you to answer.
Personally, I would feel a little stretched. It’s important to me to be present in my life and have the ability to be spontaneous, so I don't want to take on seventy-seven hours’ worth of client-facing work by myself.
Even if you have the capacity, you have to consider the unexpected. You could get sick. You could have a family emergency. You could have so many things happen that could really disrupt you if you're the only person managing seventy-seven hours.
It might seem small—after all, it’s less than twenty hours per week. It might be doable for you, and if it is, your profits will be even higher. But I want to show you how you can do this while living the lifestyle that I preach and teach, which relies on making sure that you're working as part-time as possible.
To whittle these hours down even more, you can hire two other bookkeepers to act as your team, assign them each about twenty-five hours worth of bookkeeping per month, and pay them about $25 per hour.
You start with seventy-seven hours of client work. You hire out fifty-one of them. That leaves you with only twenty-six hours of work per month to earn a six-figure salary by the end of the year.
(This should include your three CFO calls, the seven monthly clients you handle yourself, and your four quarterly clients.)
Lastly, let’s add up the expenses you’ll need to tackle per month for your business before finalizing that six-figure salary.
You'll receive a total of $12,162 per month. You’re going to have bank fees if you want to get paid in a way that's easy (which I highly recommend) and that's going to be based on a percentage, usually around 3%.
That adds up to about $365 in bank fees per month.
Next, you have your hourly cost for your bookkeepers. I suggest $25 an hour on average. I like to pay them a fair wage. At fifty-one hours per month, it’ll run you about $1,275 for the bookkeepers on your team.
I include the cost of Google Suite, which is a non-negotiable in my business. That’s $6 per user multiplied by three users, including yourself, which is going to be $18 a month.
I also included the cost of ADP time tracking, which is $5 per month. I don’t track my own time, so I only pay for my employees.
I even included the cost of joining Life By The Books here. My program is $197 a month, and you can continue to grow and be able to strategize and get support through all stages in your business.
I annualized Dropbox, because I pay for that annually. That’s $150 per user per year, and if you divide that by twelve, then multiply by three (for three users), you end up paying $37.50 a month for that.
I then included Kajabi, which I also annualized. If you pay per year, that brings it down to $119 a month.
All in all, that brings my expenses to $2,016.36. And again, that's generous, because I am including the cost of Life By The Books and Kajabi, which you don't necessarily need.
Those expenses bring you down to $10,145.64 per month, and again, that’s with you only doing twenty-six hours of work per month bookkeeping and your calls. This ends with you making a six-figure salary per year of $121,747.68!
Check My Math!
I hope this showed you how you can stay profitable and part-time while still making a six-figure salary that can actually surpass a full-time corporate position! And if you’re still not sure how that math shakes out, grab that P&L sheet and track it as you go through again—I promise you, the numbers don’t lie!
Grab my FREE mock P&L sheet now and follow along as you listen: https://www.katieferro.com/10k
Find the on demand digital products workshop HERE - https://www.katieferro.com/offers/CLfj5LmF/checkout
Episode on Digital Products (or DIY templates) Episode 92 - https://podcasts.apple.com/us/podcast/offering-a-diy-template-how-to-profit-from-in/id1547656872?i=1000571048220
If you're looking for more tips for bookkeeping, insight on how to become a bookkeeper, and how to say hello to a more confident business model, enroll in Become A Bookkeeper (BABs).
To learn about the programs and get a peek behind the curtain, head to www.katieferro.com/6-secrets.
Learn how to take your bookkeeping skills and turn them into a business that allows you to replace (or surpass) your corporate salary, be present for your life, and profoundly impact your clients without selling your life in the process by joining Life by the Books (LIBBY).
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