If you have bookkeeping experience, you can use that knowledge to work for yourself rather than for a boss. Many small businesses, entrepreneurs, and freelancers outsource their bookkeeping tasks. Landing just a few regular clients can be the start of a thriving bookkeeping business.
- What To Consider When Starting a Bookkeeping Business
- The Earning Potential For Self-Employed Bookkeepers
- Future Business Prospects
What To Consider When Starting a Bookkeeping Business
Starting a small business shouldn’t be entered into haphazardly. Think about your reasons for starting your own business. Do you want a more flexible lifestyle, greater earning potential, or is it to supplement your household income?
Bear in mind that self-employment requires self-discipline, good time management, and organisational skills. There’s no one to manage you, so being a self-starter is vital. Working from home can also be lonely and doesn’t suit everyone.
If you’ve thought it through and feel that you are ready to join the self-employed club, here’s what you need to take into consideration when starting a bookkeeping business.
1. Choose a Business Name
If you plan to remain solo or only run the business part-time, you can get by with just your personal name. For a more professional approach, think of a name for the business, e.g. Books and Balances, or include your first name in the business name, e.g. Taylor’s Bookkeeping Services. This nifty business name generator can help get the creative juices flowing.
2. Decide on a Business Structure
If you are the only person representing the business, then your choice is simple — register as a sole trader. If there are two of you in the business, set it up as a partnership. There are also two other types of business structures in the UK: limited liability company (LLC) and limited liability partnership (LLP). You can read up on how each type of business structure works here.
3. Join an Appropriate Bookkeeping Association
Being a member of industry associations can add credibility to your business. These two associations are recommended for UK bookkeepers:
➢ Institute of Certified Bookkeepers (ICB)
In the UK, self-employed bookkeepers are legally required to have a supervising body in accordance with the Money Laundering Regulations 2017. The Institute of Certified Bookkeepers (ICB) is one such supervisory body.
➢ International Association of Bookkeepers (IAB)
Members of the International Association of Bookkeepers have access to updates on regulation and training courses. There’s a member portal packed with information and tools, a technical helpline to assist with queries, plus you’ll receive a quarterly magazine.
4. Choose The Right Accounting Software
Choosing the right software for your bookkeeping business can make your job easier. Today’s accounting software is more integrated and streamlined than older programs. QuickBooks Online Accountant is ideal for self-employed bookkeepers. Managing multiple clients is easy and it allows you to work in real-time with your clients. You can also add QuickBook’s payroll software that makes payroll administration a breeze.
5. Take Out Business Insurance
Business insurance is crucial for bookkeepers. Even the most meticulous bookkeepers can make an occasional mistake. If your error caused financial loss to a client, they could hit you with a crushing lawsuit that can cripple or even kill your business. Don’t take the risk.
The ICB requires that all self-employed bookkeepers have at least £50,000 professional indemnity (PI) insurance. PI insurance protects you against lawsuits claiming that you were negligent or made a mistake in your work.
The Earning Potential For Self-Employed Bookkeepers
According to Payscale, bookkeepers employed by companies in the UK earn anywhere from £8 to £17 per hour, averaging at £11. This translates to £16,000 to £32,000 per annum. The good news is that self-employed bookkeepers can earn much more.
To decide on a rate, you’ll have to crunch the numbers. Have a monthly income goal in mind and work back from that. If you want to earn £1,600 per month working 100 hours per month, you’d need to charge £16 per hour. That’s already much higher than the national average of £11. Always charge fair rates. Research the local market to avoid over or undercharging. For example, bookkeepers in London earn 31% more while those in Birmingham earn 17% less.
Future Business Prospects
The great thing about starting a bookkeeping business is that you don’t need a formal qualification, but there is room for further learning. One way to grow your skills is to move up the ladder to an accountant. It’s a move that can explode your business prospects and earning potential.
Most bookkeepers work with accountants. Bookkeepers keep accurate records of daily transactions that accountants anaylse. Accountants hold degrees and because they have a more analytical role, command higher rates. You’re already a whiz at numbers, getting a degree in accounting will be easy.
Businesses will always need someone to manage their books and accounting processes. Finding clients becomes easier as your business becomes more established, thanks to word-of-mouth. It won’t be long before you’ve secured regular monthly contracts and are running a lucrative home business.