Are you thinking of starting a bookkeeping business, but do not know where to look for advice? We have produced a guide to give advice and tips on how to gain clients and set up your bookkeeping company.
There are many benefits of starting a bookkeeping business: most bookkeepers work from home and have very low overheads. You can receive a regular monthly income from a consistent set of clients, and with proper planning, it is reasonably easy to manage.
How to start a home-based bookkeeping business
Do your homework
Forming your company
You will need to consider whether you want to set your bookkeeping business up as a Limited Liability Company, a sole trader, or even a partnership with another bookkeeper. Before you start, ensure you have the correct business insurance in place.
Have a read through our Starting a Small Business section for further information.
Researching your competition
When starting a bookkeeping business, it is useful to find out who your competitors are. Call them up and find out about their services and rates. Do they sound professional on the phone? Look through the local newspapers. Are there many bookkeepers offering their services in your area?
Ask yourself what you can do that is different, or better, than your competitors. What value can you provide to your customers that your competitors do not?
Starting a bookkeeping business – Finding a good accountant
Even if you do not need an accountant for your accounts, it can be very beneficial to be able to offer the services of an accountant. Being able to help a Limited company the opportunity to deal with all their year-end accounts and any queries that may arise will take the pressure off the client.
Accountants can also offer good tax advice and help with any questions you may have. Speak to a few accountants to find the best one to suit your needs. Remember, the cheapest firm may not be the best. They can also advise on starting a bookkeeping business.
Starting a bookkeeping business – How much can I charge?
When starting a bookkeeping business, the rate you can charge will depend on your experience and the services you can offer. You will be able to charge more if you can add value to a company. It can include advising as to how they can save money and complete their accounts, to provide management reports and deal with year-end. If you are doing data input, you are not so likely to be able to charge higher rates.
Try to find the going bookkeeping rate in your area as this will change from place to place.
When starting, ensure the rates you charge are enough for you to earn an income to make it worthwhile. Don’t forget when calculating your fee you need to include all the taxes which will be due.
Starting a bookkeeping business – Do I charge an hourly, daily or offer fixed rates?
It will depend on the customer. Most customers prefer a fixed fee so that they know the costs and can budget for it. Working for a fixed rate can be challenging to estimate how long the work takes. Ensure you have an agreement in place to review the price, especially if the workloads change.
If you charge an hourly rate; you may still need to estimate the cost. A customer may not settle a large bill when they have not been given a quote for time and costs involved. If you find that the work is taking longer, let the customer know as soon as possible so that you can agree.
Ensure that you keep a note of all the hours worked, so they are included in your invoice.
Starting a bookkeeping business – How many hours can I work?
When starting a bookkeeping business, you need to work out the number of hours you can work. Deduct time for completing your accounts, meetings for potential clients and research time.
Ensure that you do not overload your work at certain times of the year. You may have clients who require accounts preparation each month, quarter or annually. If everyone is after work completing at the same time, you will have problems with balancing your time. It is better to turn work away than having to work a 24 hour day or not completing work on time.
Plan time for your holidays or time off that you may need to look after children. Find another bookkeeper in your area who could cover some of your work.
Starting a bookkeeping business – Do I need a computer?
Unless you are planning to work at a customer’s site, you will need to own a computer. A laptop is useful as you can take it to customer meetings with all the correct information. If they have any queries, you will be able to look the answers up, but this is not essential.
If you do need a new computer, PC World is a great place to look. They have a good selection at reasonable prices, and they offer
credit and leasing to new businesses. The TechGuys technical support team can be found in all PC World stores and can get you up and running with your new computer either in-store or at home.
Starting a bookkeeping business – Which software to choose?
Have a look at our software guide. It is better to choose the software package that you have experience with rather than trying to learn new software.
Look at the accounts software website which you have chosen, many of them run partner programs and offer accountants and bookkeepers support. It may include getting your company registered on their directory, free software and support for an annual fee.
Many businesses looking for a bookkeeper do not have accounting software, and you can earn additional income by selling accounting software to your customers.
You can also earn additional money helping companies who want to run their accounts but want help setting up their accounting software package.
Online Bookkeeping Business
With the technology available, it is possible to run your whole bookkeeping business online and never meet the client. All paperwork can either upload directly to the accounting software, post from the client or sent over the internet.
Sharing via the cloud and emails will ensure that the client receives the reports and paperwork.
It is an ideal solution especially if you are working from home or different hours.
I am a part-qualified or fully qualified accountant – do I need to register with my accounting body when starting a bookkeeping business?
Each of the accounting bodies expects members in practice to register. There are advantages in registering, which can include:
- Using the accounting bodies logo
- Additional workshops
- Cheaper insurance
- Your details added to their database for practising members
- Technical information – this may be a team of specialists or forums
Anti Money Laundering
As a bookkeeper running your own business, you will need to be covered by the Anti Money Laundry regulations – Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017). Most accounting bodies can offer supervision, or you can go direct to HMRC.
Insurance is an essential part of any business, and it is vital to get the correct insurance in place before you start. The first place to look is with your accounting body; most can offer a discount. If you are not part of an accounting body, then complete a search on the internet. You will need Professional Indemnity Insurance, but depending on the business set up, there may be other insurance that you need as well.
Starting a bookkeeping business – but have no qualifications?
If you have experience in bookkeeping, you can still run your own bookkeeping business, but companies may prefer a qualified bookkeeper. It may be useful to advertise the knowledge you have on a website.
Home learning courses are available that lead to qualifications which are accepted by accounting bodies such as the International Association of Bookkeepers or the Association of Accounting Technicians. Look on the internet as there are also home-based courses available.
Starting a bookkeeping business – Writing a business plan
Once you’ve done your research, it is time to write your business plan. It doesn’t need to be a detailed document but does need to establish your targets for the company and outline how you plan to achieve them. Write a cash-flow forecast to make sure you can survive the first few months, and above all – be realistic!
There are some free-cash-flow templates on the Microsoft website. Click here
Business Bookkeeper – How to get Established
Starting to establish any new company takes time. Don’t expect to have lots of paid work from day one. It typically takes 6-8 months from starting a bookkeeping business before you get to the point where you can expect to generate a reasonable income for yourself.
We have written a guide on finding customers, which includes how to find new customers, marketing and networking.
In the meantime, you’ll need to get your name known and starting to win new business.
Starting a bookkeeping business – How to get Bookkeeping Clients
When taking on new customers, there will be a fair amount of up-front work as you get up to speed with your new client. Learn about their company and understand their existing accounting methods. You should budget this extra time when taking on your new customer. It can often be worth asking for an upfront payment before starting this work.
Starting a bookkeeping business – Learning some basic selling skills
Selling skills can take many years to perfect. The chances are that you are not a trained salesperson. However, it is worth learning some selling skills; this includes your first meeting, writing a proposal, how to win the business.
Unfortunately, some businesses do not take on a bookkeeper until their company is in trouble. They may already be having cash-flow problems, problems with the bank or are late on the filing of accounts.
In many cases, these businesses have already gone beyond the point of no return. Working with these businesses as their bookkeeper is fraught with problems. You’ll end up tracking down missing paperwork, working hard to get their accounts completed. Quite often end up not getting paid if the company folds.
If you are concerned about the financial state of your prospective customer, do not be afraid to ask for bank and trade references. It may be worth requesting payment in stages, which would help both the customer and yourself. Don’t be afraid of turning down customers if there is a question mark about their viability.
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