Running a Bookkeeping Business

There is an old saying that “a poor plan well executed is better than a good plan poorly executed.” This saying applies very well to running a bookkeeping business. The reason most people fail when they start this type of business is usually not due to a lack of vision or intelligence. People simply fail to execute their plans.

There are a lot of bookkeeping business plans available on the Internet. Most of these plans involve learning basic bookkeeping skills and then finding clients. It’s a pretty straightforward plan, albeit difficult.

There are several ways to learn basic bookkeeping skills. One of them is to attend a University and earn a degree in accounting. Accounting majors graduate with a solid understanding of basic accounting principles. Most accountants don’t like to think of themselves as bookkeepers, but the truth is they understand the principles behind bookkeeping very well.

Many people with a degree in accounting have no idea how to set up an accounting system for a small business. This is something that comes with practice and experience. In school, accountants are taught the principles of accounting, but they aren’t generally taught how to step into a business and set up that business’ accounting system.

If you don’t want to drop four years earning a degree in accounting just to start up your own bookkeeping business, there are other ways to obtain the knowledge you seek. A quick search on Google will reveal some of the quicker courses you can take online or with a community college. These courses tend to be much more practical and they give you advice on how to use accounting software (something else that isn’t really taught in the big Universities). Most of these courses will cost you some money, but many are very affordable.

After you have the basic training down, it’s time to get your first client. Finding the first client can sometimes be the most difficult. At this point you probably don’t have any experience behind you and most people don’t want to outsource their bookkeeping to someone who has never done bookkeeping before. To overcome this obstacle there are several options:
(1) Try teaming up with somebody who does have some experience. After you’ve done a few jobs, then you can go out on your own.
(2) Try to find a friend or family member who is willing to take a chance on you.
(3) Try offering your services at a discounted rate, or even free, until you pick up that first customer.

On your first job, put everything you have into it. Really do a good job and you will find that your first client will refer other clients to you. The best way to find new clients is from existing clients. A simple, “Do you know anybody else who might benefit from my services?” will get you a surprising amount of customers.

The blueprint for starting a bookkeeping business is not rocket science. You simply need to understand basic bookkeeping skills and find clients. However, most people fail to execute this simple plan.

How to Start a Bookkeeping Business – Selecting Your Rate

If you are thinking about starting a bookkeeping business, at some stage you will ponder what to charge your clients. You might look at a fixed fee for your services or an hourly fee for services. Either way you will need to be sure that it is the right rate for your business.

I have been very fortunate as I have been in the position to talk to hundreds of bookkeepers across the country as part of my one day seminar. Some of those bookkeepers are already in their own business and some are thinking about starting. This has been a very interesting experience and a great opportunity to find out from many bookkeepers how they not only choose their rate but what they are charging per hour, or per hour equivalent.

What I have found fascinating is the difference in rate between established bookkeepers and those new to the industry and the perception of those new to industry to the rate charged. On average, people new to the bookkeeping industry select their hourly rate $15 per hour lower than those in business.

I found this very interested and decided to discuss and analyse this further as it was at every location that this occurred, not just an anomaly. People starting out were consistently charging a much lower rate than those in business, and often it was one third lower than established bookkeepers.

Through discussions, I found out that there were a few common reasons for this difference;

o Some people new to industry were not aware of the rates others were charging and did not know what a reasonable figure to select was;
o Some were lacking in confidence and felt they were not worthy of a higher rate;
o Some felt they did not have the skill set to charge a higher rate

What I found interesting was the common theme of either lacking in skills, experience or confidence and lack of knowledge of rates in general.

If you are setting up a bookkeeping business, when you do start thinking of rates, remember you are running a business and you need to be profitable. As a business owner there will be a number of expenses you need to cover which might have been paid as an employee. Additionally, you are providing a skill set which others do not necessarily have and there is a value on those services.

With a bit of research and thought into your specific expertise and skill set you will be well on your way to selecting a fair rate for service which will assist you in the growth and development of your own bookkeeping business.

7 Best Bookkeeping Business Services

If you’re a small business owner considering outsourcing your bookkeeping, keep in mind that bookkeeping business services include much more than just keeping track of your finances. If you hook up with a true professional service they can become much more than an accounting service, they can become important partners helping you optimize not only your cash flow but planning your financial strategies. Here’s a short list of benefits and services you can expect from a full service bookkeeper.

1. Time

Actually this may be the most productive benefit of all the services an outsourced bookkeeper can provide. By taking over the responsibility of accounting, the bookkeeper service effectively gives you more time to do what you do best and that’s run the business. Accounting is an absolutely necessary part of a business but it is not a profit center and it plays no part in driving sales and revenue. Any time you devote to that function is time taken from engaging in an activity that can generate sales or profit.

2. Financial forecasting

Using your firm’s financial history an experienced bookkeeping service can develop financial models that will allow you to play “what if” games that can predict your financial performance in the future. For example a business owner can ask what if sales increase 8% in the next quarter or what if the marketing budget is increased by 10% what kind of sales can be expected. This is a complex model that requires the knowledge of experts and would not be readily available to the owner unless he outsourced the function.

3. Tax planning

Running your business to take advantage of opportunity to minimize tax liability can be the difference between taking a loss and making a profit. The same goes for licensing and other local fees. A knowledgeable service will not only prepare your returns but show you ways to reduce your tax bill.

4. Real time reporting

Gone are the days of receiving monthly reports from your accounting service. In today’s business environment you need to know where you are financially right now and that’s what a professional bookkeeping service can provide. Thanks to ASP technology you can log onto your account using an ultra secure server and access all of your reports at any time and from any where you have an internet connection.

5. Customized reports

Your bookkeeping service will work with you to build reports that make sense for your particular business. Profit and loss statements, sales reports, receivables reports, all can be designed so they present the information in a way that you can best evaluate your position.

6. Assistance with lenders

A sign of just how tough and competitive the economic times are is the expansion of bookkeeping business services into areas that they previously did not participate in. Assistance with loan applications or even introductions to lenders is an example of the “new” services being offered by many firms. Loan applications can be intimidating and confusing to many business owners and the accounting service can offer valuable assistance in insuring that the right, and best, financial information is included in the application.

7. QuickBooks Consulting

Even if you don’t hire a bookkeeping service and you use QuickBooks in house to do your bookkeeping, you may find that the service can help you do it better. QuickBooks has added so many features and has become so much more than an accounting platform that it has created an entirely new support industry. If a QuickBooks customer wants optimal performance from his system, it’s likely he or she will need the advice of a certified QuickBooks consultant and the bookkeeping service is a ready, qualified resource.

A combination of rapidly improving technology along with an increasingly competitive market has caused bookkeeping business services to evolve into something greater than the traditional accounting services. Smart businesses will take advantage of these services to remain competitive and optimize earnings.