Table of Contents
Learning how to bill administrative fees for interior designers is a key step in making sure your interior design business is profitable. When just starting, it is challenging for a new interior design business to be able to prioritize an added expense like accounting.
Typically, designers will start with a more generalized bookkeeper since the cost will normally be lower than an interior design specialized accountant. With all the launching costs that go into starting your design business, this might be a choice you are obligated to make just to launch.
However, there are better choices! Having your finances and back office in order will set you up for success, which is why we encourage our clients to bill administrative fees for interior designers. The downside is that you get what you pay for, and a more generalized bookkeeper could be costly when you find out that they weren’t filling your sales tax accurately or you missed out on tax deductions.
But what if you could have a specialized interior design bookkeeper as your partner from day one? Imagine having all your systems in place and operating with project management and financial software that offers complete visibility of your business numbers and operations. What if you had the backbone of your interior designer business humming efficiently, smoothly, and ready for scalability from day one?
How to Add Administration Fees to Designer Invoices
We encourage the designers we work with to recover their bookkeeping costs by adding administration fees, which can apply to our time to their design time invoices. You can even embed fees into your design time services and bill your clients for that time too, as we are an extension of your business. With our monthly subscription and bundled rates, many of our designers bill more in admin fees than they pay us. Its win-win.
Especially if you are outsourcing to your bookkeeping team, sending your invoices and proposals, their time to do this work should also be billed back to your client. From our experience, when building a client relationship, it is best for interior designers not to handle collecting payment. Separating your design team from your billing department is an important step in building better client relationships. Especially when you factor in clients who drag their feet on paying, that separation can be beneficial for building a client-centric design firm and encouraging repeat business.
Using Houzz Pro or Ivy for tracking administration fees for interior designers
Many of our clients use Houzz Pro or Ivy to bill administrative fees for interior designers. If using hourly time billing tracking in a project management software like Ivy or Houzz Pro, you can embed fees by adding a service category in your services library titled “Administration Fees”. You can bill at least $100-125 an hour, depending on your hourly rate and the state you are located in. Or adding a flat rate monthly could be a more straightforward solution if you do not have your bookkeeper’s exact hours. Just be sure to add this to your client contract so that all billing terms are clear and your client agrees to the specifics. Bookkeeping fees and administrative fees are part of ensuring your client’s project runs smoothly, and you should embed this in your design fees. If you charge a fixed rate, consider a fair percentage charged to your client to cover your accounting fees.
Since every interior design business is unique, finding the best time billing method to suit your business’s profitability is imperative. Don’t be afraid to change your method if one way no longer works for your business. Ivy & Houzz Pro’s time billing feature, included on the mobile app is an excellent way to track your time on the go. Not only can time be tracked with the click of a button, but time entries will also automatically upload to your Ivy/Houzz Pro Desktop, and generating a time billing invoice is simple.
Common Methods to Bill Administrative Fees for Interior Designers:
- Hourly rate
- Fixed-rate
- Percentage of total costs
- Costs determined by square feet
By integrating bookkeeping fees into your design time, you secure the services of a specialized interior design bookkeeper and gain a trusted partner invested in your business’s success. With their expertise in managing finances and prioritizing your interests, you can confidently navigate the financial aspects of your business while focusing on what you do best – creating stunning designs.
