If you’ve a head for numbers, have some bookkeeping or accounting experience, or even if you’re a part (or fully) qualified accountant who is looking to go it alone, then starting a bookkeeping business might be just the business opportunity for you. Doing the bookkeeping for a small business is not something that most entrepreneurs or small business owners enjoy, therefore it’s often one of the first things they will outsource, making bookkeeping a relatively safe business even in uncertain times.
The bookkeeping business doesn’t require a significant level of start-up capital, just enough to buy:
- A computer
- Accounting software
- Stationary
- Marketing material
- A phone link
- Insurance
All of which can probably be brought for between £1,000 and £2,000.
How to start a bookkeeping business
When it comes to setting up a bookkeeping business I would suggest you read my article How Do I Start A Business, in which you’ll find a general description of the steps involved in starting a business. However I would suggest that you don’t need to test the business idea – it’s well proven. Instead you might like to test the local level of demand and the level of competition. To do so I’d suggest making use of the phonebook/yellow pages, Google Local and some local networking events. I’d also suggest that you start a bookkeeping business on a part time basis until you have managed to create an initial client list. As most small business clients will do their bookkeeping in the evenings/on weekends you should be able to fit this around an existing job.
When it comes to finding clients you don’t need a degree in marketing, simply get out there and start networking with other businesses (speak to your local Business Link, FSB and Chambers of Commerce to find out what events are being run). I would suggest you focus on new start-ups and growing businesses who may not yet have a bookkeeper. I’d also talk to the local accountants and other local bookkeepers as some of them will have enquiries that they can not handle, but that they may be willing to pass on to you. You might also find it worthwhile to use direct mail to reach list of local businesses.
If you don’t fancy going through the process of creating the business from scratch and would rather hit the deck running it might be worth looking for/asking around about any local bookkeeping businesses for sale. Buying an established business is a great way to start off with a client list, or to expand your client list once you’re up and running.
Some useful books on how to start a bookkeeping business:
Start and Run a Bookkeeping Business – might have an American bias but could prove useful if you’re new to running your own business.
This blog is about business opportunities and ideas that I spot, think of or hear about and think are useful and interesting. It is intended to provide ideas and inspriation for you to help you find the right business idea for you to then grow it into a successful business.
A good article on a solid business that is always needed.
I would like to firstly emphasise the “have some bookkeeping or accounting experience”.
To provide such services professionally, and for clients that may be in a variety of industries knowledge and experience will be very important.
Even short courses can help with the understanding of the basic principles of double entry and accrual accounting but some experience alongside this would be most useful.
If business owners, possibly friends or family, are willing to ive you the chance to prove yourself whilst you pick up that hands-on experience it will be much easier when offering these services professional.
John also mentions accounting software in his list of costs. This is not necessarily needed, not as a cost to you anyway.
Microsoft Accounting Professional is available as free desktop software if you register with the Microsoft Professional Accountants’ Network – https://accountants.microsoft.com/MPAN/UK/default.aspx
and we also have a free subscription to e-conomic online accounting for our members (also free) – http://www.accountantscircle.co.uk/PartnerOffers/OnlineAccountingSystem/tabid/579/Default.aspx
Excellent introduction from John and comment from David but can I just throw an element of prudence into this debate.
Be warned that these are dangerous waters in which the amateur should be very wary to tread.
If you give advice then you have to be prepared for the repercussions should such advice however well intentioned prove negligent.
If you don’t know what you’re doing in this field then it really is a minefield.
Accountancy software is only any good to you if you know why it’s giving you the answer that it is.
For example, if a client sells something for £100 VAT inclusive then 17.5% VAT is not £17.50 but rather £14.89 (at 15% this is £13.04). Also, how do you explain to your client the difference is between zero VAT and VAT excempt?
These are very simple cases but if you get them wrong for your client and they in turn get taken over the coals by HMRC then they will come back on you for recompense (refer to the Supply of Goods and Services act 1982 under which your services would be regulated).
At the very least you need insurance. Professional Indemnity insurance will only be available to you once you have relevant qualifications.
As a UK bookkeeper consider the Institute of Certified Bookkeepers http://WWW.BOOK-KEEPERS.ORG as once past level two you will be able to apply for a practicing certificate and that opens up the ability to get Professional Indemnity Insurance.
An alternate (but more expensive) route would be taking the Open University course B680. The certificate in accountancy which not only gives excemption from the ICB exams but also from the initial levels of the exams with the Association of Chartered Certified Accountants (ACCA) and Certified Institute of Management Accountants (CIMA).
I would suggest the ACCA or CIMA routes as once your business grows you could look at selling your client base into a local accountancy practice in exchange for being taken on as a trainee accountant which would be the next career step on this path (before setting up an accountancy practice).
Hope that this helps. Good luck, have fun and just be careful out there.
P.S. If your interested, the calculation for VAT at 17.5% is multiply by 7 divide by 47. To check the result just subtract the result from the original figure then multiply by 1.175. Simples.
(At 15% its times 3 divide by 23).
P.S.2 if you weren’t interested then bookkeeping and accountancy are not careers for you.
I am ACCA qualified and currently on maternity leave. I have 12 years experience in industry & banking, but none in practice. I am exploring the opportunity to set up my own bookkeeping business, by learning/revising a book-keeping course, mainly as I have no practical experience in it. As far as I am aware, ACCA do not require me to gain any more quals, but I definitely want to do a book-keeping course of some sort. My question is, which course should I do, and with which provider?
It’s been surprisingly easy finding clients for my bookkeeping services. I had a look at the local market and it seemed to me that there was a break for any bookkeeper that could travel and work at clients workplace, so that’s what I did. I have a nice website and sent out some marketing flyers and hey presto, 10 months on and doing pretty good.
So I would advice it to anyone.
Thanks … Bev