Here’s How To Start Bookkeeping Business – Profitable Business Plan
In the era of products and its growing features, service-oriented businesses are also highly praised by many young entrepreneurs. It is found that equal importance has been showered by the public to both product and service-oriented businesses.
Businesses started are not always for the benefit of the direct consumers. There is one category of business known as B2B which represents all the organisations that work for another organisation. This means, the organisation which takes the service of the other organisation is considered as the consumer.
Little confusing, but an extremely simple concept. You will get an idea of it as we move to other sub-topics of the business. one amazing advantage of this business is that it involves very less investment. I would say, the investment for this business should be your knowledge in the field of accounting and records. On an average, you can plan an investment of $30000.
This is more than enough if your business holds only two or three other members to assist you. If you are planning to start it big with more than 100 employees, then the investment for the same could outweigh the formerly mentioned amount.
But book keeping business is well maintained or is good in terms of profits when the size of the business is small. I personally feel, this type of work should be done on contract basis and is more about working with few people.
What is the demand?
To talk about the demand, let us understand the concept of outsourcing. Outsourcing has become the widely adopted measure in today’s business world. People are very clear about the way they spend their investment in a business.
Outsourcing is a method where a company attempts to get any work done by approaching other companies. This means, getting one particular service alone form foreign organisation for an accepted compensation.
Compensation is the income for entrepreneurs like you all who are planning to make an entry in this book keeping business. To maintain the records of a company, there is a need for more investment, more staff, more space and more time.
Thus, these companies search for service providers of book keeping. Now, book keeping companies like yours come to the scene here by maintaining the records of these client organisations. By this, you get to maintain the records of a number of organisations for which an extremely good pay is offered.
License for the business
Like any other business, a book keeping business also requires a license. Here the case is even more serious as you are an outsourced service provider dealing with the monetary details of client companies.
Education is one factor which has a huge impact in the recognition of you as a book keeper. Companies approaching you will make decisions of selecting you only with the educational background you have got.
In this business, you are to be certified as a professional book keeper. You should be trained and tested by a recognised firm to call yourself as a professional book keeper. Two special certifications define you as an established book keeper.
- Certified Public Book keeper
- Certified Payroll Specialist
The first one (CPB) denotes the certification of a book keeper who is eligible to carry out accounting and book keeping operations. The certification assures your client organisations that you are a nationally recognised book keeper.
The second one (CPS) is about planning for payroll. Not all the book keepers are given with the authority of planning the payroll of an organisation. Thus, get trained in being a payroll specialist. Only with this certification you are allowed to advertise your service for payroll work.
How to obtain the certificates?
These certifications are obtained by getting training and passing the exams as prescribed by the National Association of Certified Public Book keepers (NACPB). The website of this organisation clearly provides all the information about getting yourself certified.
Starting from training, till the phase of obtaining a license the website directs you. There is another organisation called the American Institute of Professional Book keepers (AIPB) which is analogous to NACPB. AIPB is to be approached for a Certified Book keeper (CB) license, which is the preliminary step toward obtaining other special certifications in the domain of book keeping.
Locations of this business is not really an influencing factor. Any location is found appropriate for a book keeping business. Unlike product-oriented businesses, you have the liberty to make random selection of location. You don’t have to be located near the market or near consumers.
Your consumers are organisations. They are the target areas and to reach them, you will have to make efforts to own the business in an area surrounded by many organisations, retail stores etc. Research and pick the areas which has the maximum potential to get access to companies which are in need of an outsourced book keeping.
Office space is an important part of this business where excess planning is required. You are owning a business that contains important records and documents of different organisations.
Thus, there is an inevitable condition that you do not make errors in keeping all the different records organised. Organising them is an art and it is impossible without a proper layout. For example, you have two clients A and B.
The layout should be in such a way that records of A and B is maintained in separate areas and is retrievable whenever needed. Some of the areas, where you can concentrate to keep things organised are,
- Lockers for confidential information
- Ordered shelves
- Computerised data
- Separate rooms for completed or past work
- File room for all the documents
- Work room for ongoing projects
Insurances for the business
A lot of business firms go wrong by not insuring the business. Investments are planned only for the growth of the business and not to defend yourself and the business when there is an issue. I would definitely not recommend anybody to cut down costs of a business by eliminating insurance obligations.
Let us learn how insurance works for a book keeping business. A professional indemnity coverage is to be obtained in order to protect yourself at times of unavoidable circumstances. For instance, let us consider a client who has filed a case against your service to him.
Post this, you will have to handle a number of legal obligations for which the insurance will stand as a support. This insurance will cover the legal expenses and the compensation that you will have to pay to the client who has filed a case against you. Apart from this, there are two other important insurances which are to be applied for.
- Contents cover
- Cyber cover
Contents cover is to cover any damage that happens to the physical products of your firm. You might have all your records as hard copies and unexpected accidents can ruin all of these. A Content cover insurance will resolve the issue and recover all of it. these are not only for documents, but also for furniture, computer etc.
As the name suggests, this is one type of insurance which gives you cyber support. If your firm makes use of technology to do every day operations and the data faces any cyber issue, cyber cover indemnifies the loss.
Services offered by book keepers
It is important to have all the services included in your company like other book keeping firms. You should no way be less than the others in terms of the number of services offered or the quality as well. Thus, it is better to have a checklist of services which will help you assess if your business is capable of doing all those. The services are,
- Accounts receivables services
- Purchase reports
- Accounting setup services
- Books balanced and reconciled quarterly
- Balance sheet services
- Credit card reconciliation services
- VAT returns
- Inventory services
- Ageing reports and summaries
- Trial balance services
These are not the only services, but are the ones without which a book keeping business is incomplete.
Improvising the business
Any business stands in the market for its brand and quality. A book keeping business is not any different from the mentioned condition. Brand, a very important factor that spreads your firm’s name to all the parts of the country you work in.
Quality, the most specific desire of your client organisations. Maintaining these two at the highest grades is a complex and difficult task, but that is what is going to keep your business positioned in the industry.
To create a brand, your business needs to show uniqueness in the services. you should provide a little more than what is expected by your clients. If you are rigid about providing the exact service asked, then there is no doubt that you and your competitor are analogous to each other. It is important that you bring in additional services that keeps the clients connected to you all the time. Some of the additional services are,
- Break up of Expenses
- Reports on customer actions
- Reports on employee expenses
- Event analysis
The mentioned services are self-explanatory and these services can hike the number of clients you have in a very short span of time. You can also take the help of technology to enhance these services.
Instead of going with the conventional method of delivering the service via posts, hard copies and most basic soft copy methods, you can adopt the web services. On-time report submission to clients in the form of applications and messages can make your service special. The following are some of the modes of sending reports.
- Server based Book keeping process
- Remote access book keeping
- Application Service providers
Pricing the services
This is one of the important areas where your planning process should be delicate and efficient. The price for your service should be not be fixed on a random basis, instead should have a standard way or criteria which will be applicable to all the clients. Two important things are to be taken as parameters for fixing the price,
- Number of transactions
- Complexity of service
One more category is the period of payment. You can fix your prices for the service on a monthly or yearly basis. The frequency of report submission also increases the price for the service.
With these in mind, the prices can be fixed from $500 to $2500. These average prices show that the business has really got a promising career that can bring generous cashflows. An added advantage here is that you can manage more than 50 companies at a time since you are just a service provider. You do not need any additional place or equipment to expand your business.
Having said all these, I personally find this business to be very successful and productive for all those who are interested in financial management. I have explained a number of topics that comes under the pursuit of a book keeping business. But there are certain points that are to be kept in mind other than these intense areas.
Maintaining confidentiality is the most important one. Always keep in mind that you have been given a work that has pivotal importance in any organisation. Monetary issues are highly complex and if found, it makes your firm less rated. Do not disclose the details of one company to the other at any cause.
Also, make sure that you do not handle these with negligence as the documents provided to you are the main sources of providing the service. If you misplace them, there is no compensation that you can provide to your client. Next is the service limit that you have to maintain.
In case you have any suggestion for your clients, make it subtle. Limit yourself from being the decision maker of the client organisation. You should be purely advisory so that your clients do not feel your intervention in their decisions.
Lastly, be a perfectionist in what you have to do. The way you submit your reports, also makes a great impact on the rating you have in the market. Make it easily understandable and precise.
To start a bookkeeping business, you should have a basic understanding of accounting principles and be familiar with accounting software programs and spreadsheets. You don’t necessarily need to have a degree or certification in accounting, but it is helpful. Depending on the services you’re offering, you may also need to be a certified bookkeeper or a certified public accountant. You should also have several years of experience in the bookkeeping field to back up your skills.
A bookkeeping business typically charges an hourly rate, a flat fee, or a combination of both for its services. Bookkeepers can offer basic bookkeeping services such as accounts receivable and payable, payroll processing, reconciliation of bank accounts, along with other services such as budgeting, financial planning, financial audit consulting, and cash flow management. The fees you charge will depend on the services you provide and the complexity of the work.
You can get new clients for your bookkeeping business by networking. Attend accounting or business-related events and meet other professionals in that field. Join professional organizations in your area and introduce yourself. Develop relationships with local professionals such as tax professionals and accountants who might refer new clients to you. You should also create a website and post regularly on social media to promote your bookkeeping business.
There are a number of popular bookkeeping software programs available on the market. Consider using an online bookkeeping software solution so you have the flexibility to access client data from anywhere. Popular software programs include QuickBooks, Xero, Freshbooks, and Sage, each of which offer different features, so you should evaluate your business needs before choosing a software. Additionally, consider features such as data security, scalability, customer support, and ease of use when deciding.
You can offer a number of services to your bookkeeping clients, such as accounts receivable and payable, bank account reconciliation, payroll processing, budgeting, forecasting, financial audit consulting, and cash flow management. You should also research potential clients’ needs before preparing a list of the services you offer so you can tailor the services to each client’s individual needs.
To ensure accuracy and confidentiality when keeping client records, you should have written policies and procedures in place that outline how you will handle client data and records. This includes details such as what data will be shared, how you will secure confidential information, and the procedures to follow if there’s any breach. You can also consider using encryption and other security measures to protect private information.
There are a number of deductions available to bookkeeping businesses, such as office supplies, internet access, office space, and employee costs. You should consult with a tax professional to determine what specific deductions are available to your business. Additionally, you may be eligible for certain credits or tax credits, so make sure you research these as well.
You should review and update your bookkeeping system on a regular basis. On a weekly basis, review your transactions and ensure they are posted in the correct accounts. Also examine your bank and credit card statements to ensure accuracy and stay aware of recent trends in the bookkeeping industry. Additionally, check in with your clients at least once a month to review their financial records and make any updates that are necessary.
You can stay organized when managing multiple clients by creating an efficient filing system and establishing a consistent schedule for bookkeeping tasks. Make sure you have a separate folder for each of your clients, and create a system for organizing the documents within each folder. Additionally, set deadlines for completing bookkeeping tasks and create a timetable for paying invoices, creating reports, and filing taxes. Sticking to a schedule will help you stay organized and make sure nothing slips through the cracks.
Starting a bookkeeping business requires more than just basic knowledge and software. You should consider other costs such as the cost of the software you’ll be using, as well as the cost of training and professional advice. Additionally, you’ll need to pay for marketing materials and promotional costs. Finally, operating costs like rent, insurance, professional memberships, and taxes should also be taken into consideration.