How to Start a Bookkeeping Business From Home

Starting a bookkeeping business from home is always an attractive option for those who would like to enjoy the benefit of flexible working hours and yet earning a comfortable living. It is particular suitable for stay at home moms and experienced bookkeepers who are tired of working 9 to 5 in the office. So, how to start a bookkeeping business from home? Here is briefly some actionable advice that you might want to consider before proceeding further.

Be a member of the institute of bookkeepers

While it is not necessary to be a certified bookkeeper to open your bookkeeping business, it is definitely more advantages to be a member of the institute of bookkeepers than those who are not. By joining the institute, it gives you the opportunity to network with other freelance bookkeepers and possibly to secure bookkeeping jobs by supporting business of other members. Besides, it gives your potential clients the impression that you are competent in your work as the institute of bookkeepers require minimum criteria to be met before admitting you as a member.

Tools required for your bookkeeping business

Before you start a bookkeeping business from home, you are required to invest in things like bookkeeping software, payroll software, a laptop with internet connection and other supporting equipments such as fax machine and printers. Work out what is the preliminary capital required for your bookkeeping business and figure out the likely sources of finance.

It is not difficult to start a bookkeeping business from home if you are already earning your living as a bookkeeper. For stay at mom who is interested in starting the business but don’t have the experience in doing bookkeeping, it is highly advised to take up part time bookkeeping assignments first in order to equip themselves with the necessary knowledge and exposure.

Bookkeeping Business Tips For Developing Reliable Financial Projections

Financial forecasting reminds me of the weather – you make your forecast at a moment in time based upon the information currently available. You draw a conclusion and state your financial forecast. But then, the information changes, now it’s raining, and you’re caught without your umbrella!

Financial forecasting, unlike the weather, isn’t a science but it’s not pure guess work either. It is a combination of:

o knowing your business;
o understanding your marketplace;
o setting goals; and
o using common sense.

As a business coach, I know that every small business needs to make reliable financial projections at one time or another. Forecasting is critical during the following stages of a company’s life span:

o when seeking financing
o gauging the profitability of a new product or service
o determining the impact of staff expansion or cutback
o assessing other business decisions

The many components of forecasting boil down to the following five bookkeeping business tips that for years I’ve shared with business coaching clients:

Bookkeeping Business Tip #1: Review Actual Year-To-Date Results

Start by looking at where you’ve been. If you use an accounting program like QuickBooks you can print out a Profit & Loss statement showing year-to-date results. Check the statement for all financial transactions that occurred up to the date of the report. Reconcile the report to your bank statements. (If you don’t use an accounting program or bookkeeping service, then take the difference of the total year-to-date cash receipts and total expenditures. This should equal your profit or loss.) Examine each line item to make sure that it makes sense – is your year-to-date revenue figure where you anticipated, or has it fallen short? Are expenses higher than expected?

Bookkeeping Business Tip #2: Establish Goals and Incorporate into Your Forecast

What do you wish to accomplish by year’s end? Do you want to introduce a new product or service, increase revenue on existing products or services, decrease spending, hire a new employee, outsource a bookkeeping service, or launch a marketing campaign that will position the company for the beginning of next year?

Write out your objectives and then choose three to five which are the most important to accomplish by the end of the year. Determine the needed steps to achieve the objectives. Which Profit & Loss line items will be impacted? Adjust your forecast accordingly. For example, your goal may be to increase revenue 10% by year’s end or to launch a marketing campaign now so its benefits will be felt in the first quarter of 2009.

Bookkeeping Business Tip #3: Forecast Variable Costs

Variable costs are costs that change in step with revenue change. For example, you are selling more widgets; therefore, your labor costs and materials costs will increase in relation to the revenue increase.

Using the concept that Forecast = Projections + Predictions, combined with the knowledge that variable costs change in step with revenues, forecast each month’s variable costs. Forecast each line item separately. Look for opportunities to reduce costs, and be aware of likely future influences on each cost.

Bookkeeping Business Tip #4: Forecast Fixed Expenses

Fixed costs are relatively stable costs that recur every month. Examples of fixed costs are rent, telephone and bookkeeping service fees. Forecast the month’s fixed expenses by using the same concept used to forecast variable costs (Forecast = Projections + Predictions) and the knowledge that fixed expenses tend to be relatively stable and do not change in step with revenues. Again, forecast each line item separately, looking for opportunities to reduce costs, while keeping in mind any likely future influences.

Bookkeeping Business Tip #5: Forecast Net Profit

The final step is to evaluate your forecast for net profit. Is the profit forecast is reasonable and acceptable? If not, re-evaluate each line item including revenues and make appropriate adjustments. Also, anticipate non-operating income and expense items, and include them in your forecast.

Your financial projections may not be perfect at first, but we didn’t learn to walk without falling down. As a business coach I’ve seen others get a few bumps along the way. But I guarantee that if you follow these bookkeeping business tips, set your financial projections on paper and revisit them frequently, you will achieve your goals faster.

How to Start a Bookkeeping Business – Is There a Market For a Virtual Service?

If you are in the process of starting a bookkeeping business, you might consider providing a virtual service, either working at home with their source documents or wholly electronically. With changes in technology there are new opportunities for bookkeepers that want to start their own business to provide a service a little different to the normal mobile service, which visits client sites.

Previously, bookkeepers would travel to a client and work on their premises with their source documents on their record keeping package and then leave. With new technology it is possible to work at your own home rather than going to the client.

If the client has source documents that are required by the bookkeeper, courier or post can be used. Many records can be supplied electronically these days by uploading into the accounting package, or sending as a file as an attachment. For basic clients with small volume transactions this may be appropriate.

If the client has QuickBooks or MYOB, it is an easy task now days to access data files remotely or by storing them with a service that is accessible online. Additionally, you might find many small clients who do not wish to access their data files regularly, who are happy to send paper work to your premises and maintain their data file. If this is the case you will not need to worry about data files being moved back and forth. Additionally these software packages either have, or are in the process of developing online versions of their software.

If the client does not yet have software, you might be able to start them on a virtual software package, which is only accessed, online, such as Xero. This means no data file transfers to and from the clients. Not only is this a very secure option, it means there is no confusion about which is the live data file.

The advantage of online software means at any stage, you or the client can log in and view the data or reports and have up to date accurate information. It is then possible for both you and the client to have the same report displayed on your screen and discuss results or transactions. This type of service may suit a more complex client or one who is interested at being involved in the bookkeeping process.

As with any service, not all clients will want a virtual or remote service, but if that is the business model that suits your bookkeeping business, as technology changes, you will see a greater desire for this service. Not only will it allow more people to work at home, it will be easier for small business clients who just want a reliable service to undertake bookkeeping with out needing to find room for the bookkeeper once a month at their office.