How to start up a bookkeeping business
Now that more and more people are choosing to quit the rat race and set up their own business, so the need for trained bookkeepers is increasing. The UK government is encouraging this rise in entrepreneurial spirit, which spells good news for anyone wishing to set themselves up as a bookkeeper.
Running a business like bookkeeping has relatively low start-up costs and ongoing overheads, especially if you decide to run your new venture from home. You don’t need much space, as the digitisation of paperwork, financial records and so on means that online receipt scanning software like as Receipt Bank helps bookkeeping businesses reduce the amount of physical storage required. So, how do you get started?
Do your homework
First of all, make sure that there is sufficient demand for the type of bookkeeping services you are planning to offer soyoucan make a decent living. Find out what kind of support your potential clients will be searching for and make sure that you really can deliver what you say you can – and to a high enough standard. Get up to date with any and all relevant bookkeeping legislation and tax implications, both for your own business and those of your clients. Do you know the difference between what a bookkeeper does and what an accountant is responsible for?
Finally, ensure you know how and when to register your new business with HMRC so that you don’t fall foul of any tax rules or legalities around running a commercial venture. You will also require a money laundering licence – more information is available about this from HMRC online.
Check your knowledge
Once you have done your background research, make sure that your specific industry-related expertise is up-to-date and well-rounded. You may wish to brush up on your knowledge and skills in areas, such as the following:
- automated data entry and receipt scanning using accounting and/or bookkeeping software
- raising invoices and paying suppliers
- chasing late payments
- bank reconciliations
- VAT returns and tax assessment procedures
- handling payroll admin, such as PAYE and preparing wages
- GDPR compliance and how to handle and hold your clients’ personal data
- end-of-year accounting and auditing.
Set up a website to promote your services online. It needn’t be complex, just a useful place to advertise your services and to highlight your contact details, prices and local areas, or industries covered. Don’t forget to sign up for a dedicated email address so that people can get in touch with you quickly and easily.
Seek sector-specific support
It is always wise, whatever business industry or sector you are working in, to reach out to others for mutual support. This can vary from making alliances with other bookkeepers in your local area, to forging links with accountants and joining your area’s business groups, such as your local Chamber of Commerce.
You may also wish to pursue one or more formal bookkeeping qualifications, for example those offered by the International Association of Bookkeepers (IAB), the Institute of Certified Bookkeepers (ICB) or the Association of Accounting Technicians (AAT). Not only will all of this activity help boost your reputation as a respected bookkeeper and authority on matters financial, but it will give you a valuable network to go to for support or advice when required.
Work out your pricing structure so that you can be confident in answering sales queries when they come in. Will you offer a fixed price or operate on an hourly rate? Often, smaller businesses and sole traders prefer the former option, as it allows them to budget more accurately for your costs. Larger companies may be more likely to offer you an hourly rate, as this allows them greater flexibility to alter the amount, scope or frequency of your bookkeeping support. When fixing your prices, don’t forget to factor in business running costs, such as:
- professional indemnity insurance and data protection
- money laundering licence fees
- licences and/or subscriptions for bookkeeping programmes and scanning tools such as Receipt Bank
- rent or utility bills
- website hosting and maintenance
- and last, but not least enough money to pay your salary.
Look for some clients
Once you have everything in place, have decided on your services, brushed up on your knowledge and started developing useful industry links, it’s time to go out and find some work. A good place to start is to establish in your mind who your ideal client might be. This will give your sales and marketing activity greater direction and purpose and will help you identify the kinds of individuals and businesses that might be interested in working with you.
Do you want to target sole traders with simpler requirements, or work with limited companies who could call on you for more complex HR and payroll support? Will you approach a specialist bookkeeping agency to help you find work or rely on your own contacts and thus prevent having to pay commission?
Next, work out how you are going to market your services. Having a website is great, but you need to encourage people to find it. Social media offers a highly effective – and free – avenue for raising awareness. You could draft a press release about your new business and send it to local newspapers and radio stations to see if they would be willing to run a story on your new launch.
Other ideas include getting some low-cost flyers printed and distributed around local businesses, or attending local networking events with a pile of business cards in your hand. Finally, never underestimate the power of word of mouth. Once you have secured your first few clients, ask them to recommend you to their own contacts to help your bookkeeping business thrive and grow.