The ultimate guide to starting up a bookkeeping business
Business owners see bookkeeping as a service which will pay for itself. Having someone to look after their books means they can free up their time to focus on the running of the business, save money by reducing their tax liability and avoiding human error, and streamline everyday processes to increase their profit margins.
If you want to start up your own bookkeeping business you know your services will always be in demand. But what questions should you ask before you start and which three factors are key to making it a success?
The questions to ask to before setting up a bookkeeping business
1) In which area shall we specialise?
It might be tempting in the early days while you’re building up your bookkeeping business to say yes to every bit of work that comes in. However, in the long run it will be better to build up a reputation for doing great work in one area – for example the agricultural sector or specialising in VAT advice.
2) What’s the competition like?
Do a bit of market research and find out who local companies are using to do their books and why. Is there something you can offer which makes you stand out from the competition? For example you may have empathy and the expertise which will appeal to mums setting up businesses from home, or maybe most of the companies in the area come across as formal and traditional, and you can inject a bit more personality into your website and social media channels.
3) Who are our potential clients?
Do you want to work with large corporates or would you prefer lots of small, local businesses? Either way, can you guarantee a steady flow of work from these types of clients? Think: If my main client were to end our contract tomorrow and take someone on in-house, would I be able to quickly find someone to take their place?
4) Am I happy with an increased level of risk?
Many people who set up a bookkeeping business have backgrounds in the accounts departments for large businesses, where they get paid on time each month without question and don’t have to worry about generating new business.
Setting up your own bookkeeping business means you will need to be comfortable with the extra risk that comes with going it alone. But if things go well, you will also be able to increase your income at a faster rate than if you were relying on someone else to set your salary.
Which three factors will make my bookkeeping business a success?
1) Having the right personality traits
Clients will have high expectations of you! They will look for a bookkeeper who is:
Trustworthy. You will be dealing with highly confidential information and should be sensitive to the internal politics for the organisations with whom you are working. Conversations about salary will need to be carried out in private and you should keep information about other clients to yourself.
Up to date with legislation. Each time a new budget is set, new rules and regulations come in concerning taxes and benefits for individuals and businesses. You need to be someone who likes reading the small print so you can reduce your clients’ tax liability and be aware of any changes that come in, however big or small.
Great at time management. You’ll need to school your clients so they send you all the information you need to submit their tax returns well ahead of deadline. You’ll also be juggling lots of different clients, so this will help with your own workload if there is a deadline looming.
2) Having a steady flow of clients
A common mistake is to put all your eggs in one basket and work for just one or two longstanding clients. The risk is that as they successfully grow as a business (in part down to you and your outstanding bookkeeping support!) they will eventually need to take someone on internally to look after the books.
So you need to try networking in the area where you want to pick up business. Look for local business networks or conferences and for people in the sector in which you specialise. You may be able to write a regular column for their website or magazine.
Personal recommendations are really valuable in helping you generate new business. Can you develop a relationship with a complementary service provider – such as a lawyer, graphic designer, or marketing agency – who can recommend you to their clients?
Or try social media to connect with businesses in the area, or highly targeted advertising through Facebook or Google AdWords. Set the budget low at first, then increase it when you can identify the words and phrases that get the right clients knocking on the door.
3) Good accounting software
If you are a bookkeeper yourself, clients will expect your own accounts to be 100% professional. If you send out invoices late and they are filled with errors, they won’t have much confidence in you to look after their own books.
So it’s important to get good accounting software in place from day one.
Cloud-based software such as Sage One has lots of benefits if you are setting up your own bookkeeping business:
Remote working means that you can be more flexible in your working hours and won’t have to rely on visiting your client’s premises during usual working hours.
Pass on expertise to your clients through understanding market-leading online accounts software that they are probably using themselves.
Stay organised with multiple clients and keep their records up to date.
Stay compliant with the Revenue’s Business and Self-Assesment requirements by completing your own tax returns correctly and on time.
Easy reporting tools. In which areas are you earning the most income? Do you have enough cash coming in to be able to outsource any of the work yourself, such as admin or marketing?
Speed up your own accounting through quicker bank reconciliation and connecting to the bank to download transactions and pay your tax returns.
Access from anywhere. Manage your personal accounts from your desk, a train or wherever you are that day visiting clients, as long as you have an internet connection.
Checklist: what to look for in bookkeeping software
1) Cloud-based so you can access it from anywhere
2) Connects to your bank
3) Generates automatic and on-demand reports
4) Automates transactions and incoming
5) Generates invoices and quotes
6) Offers online payments
7) Integrates with payroll software, should you need it
8) Secure, to protect your data
Try Sage One free for 30 days, or skip the trial and save 20%!