How to Start a Bookkeeping Business – Do You Need a Business Plan?

When you think about setting up a bookkeeping business, one of the most important aspects is the creation of your business plan. It is amazing however that many people often miss this vital step.

Generally, the cost of starting a bookkeeping business is quite low, in comparison with other small business options, so often people feel that it is not required and go into their business with a hit or miss approach. This is not the best way t start any long term profitable business, as early planning can reveal many aspects about the business that you might not have considered.

For example, a business plan for your bookkeeping business will help you see where you are going and give you the road map of how to get there. As part of this process you will be forced to think about components of your business such as your rates, costs, options for premises, staffing, cash flow, budget, marketing needs and marketing strategies.

By thoroughly thinking through the different aspects of your business prior to starting, it will give you a better chance of success. A prime example of this is when you are setting your rate. Many people pick a low hourly rate to start with and find they have severely under estimated the true hourly rate they need for their business to survive.

There are major differences between being an employee and suddenly being responsible for your own business. In this change over, it is easy to forget that in setting your rate you need to factor in many costs that were previously paid by an employer or costs that were not necessary. Sometimes people select a low starting rate due to lack of knowledge, experience or even confidence. This however can not be used to cloud your business judgment as your rates are at the heart of your bookkeeping business.

It is vital to plan your starting rate and see if it is compatible with a long term future for your business. By creating a budget and cash flow forecast for your bookkeeping business, you will clearly see if your rate will create a profit quickly or if you will be struggling for months to keep ahead of additional costs in running your business.

If you research the components of your business plan thoroughly, it will be easier to see if you have a long term sustainable business model for your bookkeeping business. The more planning and information you can accumulate prior to commencing your business the more successful you will be in the long run.

BAS Agent Registration & Your Bookkeeping Business

Anyone who has a bookkeeping business or is thinking about starting their own bookkeeping business in Australia needs to be aware of the changes to legislation to have registered BAS Agents who are then eligible to provide Business Activity Statement (BAS) services for a fee. The legislation is in the final stages and once it has been passed it will mean any bookkeeper wanting to provide BAS services for a fee, must be registered as a BAS agent or working under the supervision of a tax or BAS agent. This is causing some concern for bookkeepers who want to include BAS services as part of their standard bookkeeping services as most small business owners expect the bookkeeper to do all BAS related functions.

To comply with the legislation changes and become a registered BAS agent, a bookkeeper who has 1400 hours experience and a minimum qualification of a certificate IV Financial Services (Accounting) or a certificate IV Financial Services (Bookkeeping) can apply for registration.

For a bookkeeper in public practice, this is not a very high level of experience required to become registered. I also feel the added requirements of registration will improve the industry and make it more regulated to ensure a more professional standard of service to clients.

If you are a bookkeeper who does not meet the education requirements, do not be worried. There are other avenues for you to consider enabling your BAS agent registration. If you have your own bookkeeping business and do not have the minimum education qualification, there is a service provided by educational institutions and also the National Institute of Accountants which may be of use to you.

Recognition of prior Learning (RPL) is the process where by you submit examples of you work to meet the specific outcomes of a course. If you can prove with the examples that you have sufficient knowledge of the subject matter and meet the course outcomes, you can be awarded the qualification.

The RPL process means many bookkeepers in public practice with BAS and bookkeeping experience can apply for recognition of prior learning for the entire Certificate IV Financial Services (Accounting) or (Bookkeeping). If you can meet the course requirements you can gain the qualification without needing to undertake any study.

If you have your own bookkeeping business and do not have the relevant qualifications, utilizing this process can give you the qualification you need to become a registered BAS agent, which will ultimately assist you in running and growing your bookkeeping business.

How to Start a Bookkeeping Business – Do You Need Professional Indemnity Insurance?

If you are in the process of starting a bookkeeping business there are many aspects which you will need to consider. One of the most important insurances you will need to consider for your business is professional indemnity insurance. With out it you might be risking the long term future of your business.

As a service based business, you will be promoting your own professional services and know how to clients. If there is a time where your clients accuse you of substandard work which causes them a loss of some description, professional indemnity insurance is there to help you with this problem.

Historically, professional indemnity insurance for bookkeepers was quite expensive as this type of career choice was seen to be a risky profession. Additionally there was not a lot of choice in the market place for insurers who would even offer professional indemnity insurance and this also meant higher premiums. Consequently, many public practice bookkeepers did not either consider it, or after investigation, they ascertained it was too expensive for their small business.

Fortunately as times have changed and bookkeeping has become a recognized mainstream career choice, it is getting easier to obtain not only a cheaper premium, but there are also more insurers to choose from. In Australia in particular, with the introduction of goods and services tax (GST) in 2000, bookkeeping became widely recognized as many small business people looked for an in house bookkeeper for the first time. With this influx of requests for bookkeepers and more people seeing an opportunity with the relevant skills to start their own small bookkeeping business, professional indemnity insurance has seen a rise of interest and a reduction of premium cost.

If you are starting your own bookkeeping business, professional indemnity insurance can save your business from ruin if there is ever an issue or a time where you may need to make a claim. Since it is such a vital part of any bookkeeping business, it is important to look at different options to source a quote.

If you are a member of a professional association, and I mist admit I highly recommend this for many reasons, your professional body will most likely be able to offer a premium for its members. Many professional associations can provide low premiums due to bulk purchasing power and discounts offered by insurers for obtaining the associations business. If you are not a member of a professional association, you can always research which organizations they use and obtain an independent quote.

Be sure to obtain a number of quotes and look at each policy and assess them against your own needs. Policy prices these days are quite affordable and like any insurance will pay for itself many times over should you ever need to use it.