How To Start A Bookkeeping Business

When you start your bookkeeping business you want to know what hourly rate you should charge

You’ll learn inexpensive marketing techniques with a higher ROI than traditional [expensive] marketing techniques

What surprises us is that bookkeepers ask us “what’s the going hourly rate?”. Well, hello !! Do you want to just randomly pluck a figure out of the sky, or are you running a business?

Hang about, aren’t you a bookkeeper? Shouldn’t you consider putting together a cashflow forecast and a budget for your own bookkeeping business, or is that just something you do for your clients and doesn’t really apply to you?

“I’ve already got a computer and my office is set up, so I suppose my only outgoings are marketing”, one bookkeeper told us.

Really? Is that the best you can come up with? No telephone, no software, no stationary, motor vehicle, or other expenses?

So what you are saying is that it doesn’t matter how much you charge out your services?

“I think I’d like $30 per hour!” another bookkeeper told us.

Bookkeepers Marketing Program

Bookkeepers who are serious about moving their business forward have joined our coaching / mentoring program. Here they learn more than just randomly picking their hourly rate, or how to find bookkeeping clients.

You’ll learn low cost marketing techniques with a higher return on investment [ROI] compared to traditional marketing techniques.

Maria Writes: I purchased a similar book from another online organisation a while ago before I discovered you. Therefore I would like to bypass having to buy another book and work with your organisation on the mentoring program. Is this ok?

Are you suggesting that the “similar” book didn’t actually help you in finding any clients? So in what way was it “Similar”?

If you haven’t read our book, then you can’t assume that you already know what’s in it – And as a bookkeeper you wouldn’t be assuming anything, right?

For everyone to be successful in our mentoring program they should definitely
read the book – otherwise we find ourselves repeating information unnecessarily

Our mentoring program builds off the foundations laid down in the book “How To Find Bookkeeping Clients“. There’s no pressure to buy the book, it’s just the first stage of the mentoring program

We’ve helped bookkeepers start from virtually nothing to turning over +$60,000pa in less than nine months for a very insignificant investment of around 3.5 %

The great thing is that how you decide to move forward with your business is your choice

Jenny Newgate
BookkeepingTeam Pty Ltd

When is the best time to start a bookkeeping business?

Today’s a great day to start your bookkeeping business!!

If you start thinking too hard about all the obstacles that may be in your way, then you could say there’s never a good time to start!

If you are wanting to wait until all the ducks are lined up in a row, it ain’t never gunna happen.

Since you’ve got this far, you are well on your way to get things happening. You are really not in business until you’ve got a bookkeeping client. For many bookkeepers that have been thinking about it, what stimulates their decision maybe factors that are beyond their control.

“I have been a bookkeeper for many years. After lots of procrastination I decided to start my own business, ” said Kylie, before she joined our program

Perhaps the company that you’ve been working for has a change in business direction and decides that they no longer need your services. Or maybe you’ve had a change in your household financial situation and suddenly you need to look at other sources of income.

In Australia, possibly the worst time to chase new clients is just before the Christmas holiday season. Business owners are focused on finishing projects before Christmas, or have fully committed their resources, or are focused on a well deserved break. So thinking about a bookkeeper or chasing a bookkeeping service is the last thought in their minds around Christmas.

The end of the financial year prompts many self-employed people and business owners to consider reviewing their bookkeeping situation. If you think that’s a good time to start a bookkeeping business, then you may be in for a surprise. That’s like waiting until Christmas eve to start selling Christmas decorations!

Today is a good day to start your bookkeeping business – and the next step to take is getting hold of a copy of our Ebook
How To Find Bookkeeping Clients/. This EBook will SAVE you money, help you Increase Your Income, and make you more money.

How To Find Bookkeeping Clients/ is not just a book about finding more clients, it’s a book about setting up your bookkeeping business from the start, and is crammed full of iinformation to kick start your bookkeeping business.

When starting a bookkeeping business that biggest challenge for many wanna-be freelance bookkeepers is where to gain bookkeeping experience.

Many freelance bookkeepers are sole traders, and have neither the time or the inclination to supervise a junior bookkeeper. Besides that, why should they?

Say we decided to train you up as a bookkeeper, and send you out to work with our clients.

Before long you’ll realise that you don’t need us anymore, so you go out and do the work for yourself. You’ve gained our experience and we’ve gained nothing. Hardly a win-win.

That’s why bookkeepers will more likely sub-contract their clients to other experienced bookkeepers.

Accounting firms have higher fees than bookkeepers, and therefore they have a greater margin to “carry the load” of inexperienced bookkeepers that they may be paying at say $20/hr.

If the accountant charges $150/hr and the bookkeeper takes three or four hours to do the simple job, the accounting firm are still ahead.

If we took on that same inexperienced bookkeeper, it would end up costing us money to train them. And how many bookkeepers are prepared to pay to be trained?

We’ve had four bookkeepers do work for us, and each of these four didn’t do the work correctly – these were so-called experienced bookkeepers – so it ended up costing us money. What we realise is that we have to train every bookkeeper who does work for us. But why should we?

Where To Gain Bookkeeping Experience
Another idea regarding bookkeeping work – charities and community clubs are always looking for volunteers

You could contact them and ask if you can work along-side their bookkeeper to help out with data entry etc – often those bookkeepers are helping out in their spare time and would welcome someone to take the pressure off them

Until you have more experience you probably shouldn’t be doing any of the work on your own – you really need supervision, or at least someone who knows what they are doing and can oversee your work as a bookkeeper.

That’s why there’s no simple solution of where to gain [freelance] bookkeeping experience

As with any business venture, it’s so important to do some research before you start a bookkeeping business

Bookkeeping clients outsource bookkeepers because they want a problem solved

We were recently approached by a Brazilian gentleman who’s been in Australia for around eight years. He came here with virtually no comprehension of the English language.

He purchased a takeaway store that he ran successfully for a number of years which he has now sold. During that time he did his own bookwork, utilising his financial skills and knowledge that he learned in Brazil

Then he decided that he’d become a professional bookkeeper. So he’s done TAFE courses in MYOB and Quickbooks, and even taken the time and investment to obtain a Cert IV in bookkeeping.

That’s all very well, but his English leaves much to be desired. Having the right pieces of paper doesn’t make you ready to start your own bookkeeping business.

He’s struggling to find any clients or any work -simply because his level of English is such that no one can be quite sure that he can understand simple instructions or take direction.

We’ve said many times on this website – clients outsource bookkeepers because they want a problem solved.

Bookkeeping clients do not want to engage a freelance bookkeeper to give themselves more problems. This is nothing to do with discrimination. It’s a simple fact, that for the time being at least, Australia is primarily an ENGLISH speaking nation.

If you can’t speak English fluently, then you will not be as much of an asset as a freelance bookkeper who can speak English.

When asked why he hasn’t bothered improving his level of English, his answer was that most times bookkeepers just sit in a corner “head down – bum up” and don’t need to talk to people.

Yes, he’s right. However, when busy small business owners want to have a quick chat with their bookkeeper, they do not want to be bothered wasting time on someone who can’t speak the language, thus creating a further problem for the bookkeeping client, not SOLVING a problem for that client.

This wanna-be bookkeeper realised the importance of a Cert IV, but hadn’t realised that it is really not much use if his English is substandard.

Also he didn’t consider his age – who’s going to employ a “junior bookkeeper” who’s just starting out a new career in their mid-fifties? It’s not like he’s been bookkeeping for twenty years and just decided to go freelance.

Because he didn’t do the necessary research, he’s gone to a great deal of trouble to lead down a path that’s taking him to a dead-end.

It’s great to start your bookkeeping business – but then comes the question of how much to charge.

Only you know how much you are worth, or do you? Many bookkeepers have no idea of the value of their services.

Notice there’s a difference between price and value.

The first question most bookkeeping clients also ask is “What are yor rates?” or “How much do you charge?”

Like that’s really going to tell them anything.

When we started our bookkeeping business, we had no idea how much to charge. We were just excited that someone wanted to use our bookkeeping service. Indeed, we would take on anybody and everybody as clients.

Big mistake.

We talk more about that in our Ebook How to find bookkeeping clients

There’s no one answer to how much you should charge for your services. Some bookkeepers specify an hourly rate for some services and another rate for other services. Other bookkeepers offer a fixed price per month or quarter.

Each system has its own merits.

We charge the same rate regardless of the work that we do.

If the client wants us to do filing at our bookkeeping rate, then more fool them.

Why should we drop our rate to do work that an admin junior can do – after all, it’s still our time – and we could be doing someone else’s books at that higher rate.

Soon the client realises that we are not the office junior, we are skilled professionals – so that they then treat us accordingly.

Helen contacted us, saying:“I am looking to gain experience, ie working with an experienced bookkeeper. I’m not having much luck!”

Do you need experience in bookkeeping?

Is it possible to start your own bookkeeping business with no experience? Short answer is “YES” – the long answer is “NO”

Uummm .. that doesn’t make sense, does it? It makes little sense to start a bookkeeping business, or any business for that matter, if you have little or no experience in the field that you are embarking on.

That doesn’t mean that you need experience in business to get started. What it does mean is that you need experience in bookkeeping.

Think about this:
You decide to freelance your bookkeeping services to an unsuspectng business owner. You are on your own. The business owner in most cases does not know how to do the bookwork, so they can’t help you.

You’ve been hired because you’re a “Professional”. So who do you turn to if you get stuck? There’s nobody. It’s all you.

Having a driving licence doesn’t make you ready to enter the grand prix. And nor does having a bookkeeping certificate make you ready to be a freelance bookkeeper.

Where does Helen get her bookkeeping experience?

The obvious place would be to contact local bookkeepers.

It can be difficult finding a bookkeeper who’s willing to take you “under their wings”

Most bookkeepers are sole traders, and do not have time / inclination to train new bookkeepers such as yourself. After all, what benefit is it to them? They train you, and then you go out and compete against them!!

We would suggest that you contact local accounting firms that may be more set up to employ junior bookkeepers

The other option is to apply to larger companies that are employing junior bookkeepers.

Over the years we have received so many emails and phone calls from bookkeepers asking us about the steps to start their own bookkeeping business, working from home and seeking help to find bookkeeping clients.

Many bookeepers experience similar challenges in getting started

After helping so many bookkeepers “kick start” their bookkeeping business, we compiled our Ebook “How To Find Bookkeeping Clients” that answers many of the questions you have about getting started, finding clients etc.

There’s also answers to questions that you haven’t even thought of yet

By reading the book you’ll learn about getting your business started, as well as some innovative strategies to help your business move forward, and gain an understanding of what’s involved.

Jenny Newgate
BookkeepingTeam Pty Ltd

If a person is doing bookkeeping, they are a bookkeeper. If they are doing accounting, they are an accountant.

What is Bookkeeping?
Bookkeeping is the process of systematically recording the financial transactions of a business, so as to show how the transactions relate to each other.

All bookkeeping steps are mechanical in nature. Bookkeeping is a regimented process usually occurring in monthly cycles consisting of entering transactions into the journals, making adjustments, and preparing reports.

Bookkeepers are responsible for maintaining the “business chequebook”, much like a personal chequebook.

What is Accounting?
The accounting process is much less mechanical and more subjective. The accountant presents the financial statements to the business management in such a way that decisions can be made.

They prepare financial statements and tax returns at year end. Accountants may also prepare budgets for management and loan proposals for bankers; and perform cost analysis for the company’s products or services.

Bookkeeping is procedural and is largely concerned with development and maintenance of accounting records. Book-keeping is the “how” of accounting.

Accounting is conceptual – it’s concerned with the “why”, reason or justification for any action adopted.

Everybody wants to start a bookkeeping business correctly.

How do you know the right ways and the wrong ways to start your bookkeeping business? That’s a question we are often asked. There are basic criteria to start any business – whether its a bookeeping business or any other small business.

Can I start my bookkeeping business without ABN?

[ Disclaimer: we are not tax agents / accountants / lawyers so cannot give advise in such matters] – The Australian Taxation Office has information regarding business start-up, and legal requirements. The following is an extract from the ATO website:

Not everyone is entitled to an Australian business number (ABN).

Companies registered under the Corporations Law and business entities carrying on an enterprise in Australia are entitled to an ABN.

Employees and hobbyists are not entitled to an ABN as they are not carrying on an enterprise.

Self-funded retirees do not need an ABN. They continue to use their tax file number when reporting their annual income to the Tax Office.
Is the ABN compulsory?

Applying for an ABN is not compulsory. However, if you are required to register for GST, you will need to apply for an ABN as well.

All businesses with a GST turnover of $75, 000 or more must register for GST and will need an ABN to do this. This can be done on the same form. Organisations with a lower annual turnover may choose to register.

Why might my enterprise need an ABN?

You need an ABN and GST registration in order to claim GST credits for any GST you have paid for goods and/or services you have used in your business.

If you are supplying goods or services, you will need to be able to quote an ABN so that others businesses do not withhold tax at the top marginal rate when they pay you.

How does the ABN affect relations between businesses?

Businesses registered for GST are required to issue tax invoices that quote their ABN. Under pay as you go taxation, businesses receiving an invoice are required to withhold tax from their payments for goods and services if an ABN is not quoted.
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Melinda writes: I’ve been bookkeeping for my husband but have been a financial analyst for 14 years and now looking at branching into a bookkeeping business.

It doesn’t mean that she’s ready to go and become a freelance bookkeeper

We recently asked a bookkeeper to do some subcontracting for us. We’ve had the client for a while, and all the bookkeeper was required to do was basic data entry so that we could complete the BAS.

“I’ve worked in an accounting office for fifteen years,” she told us.

If a person is doing bookkeeping, they are a bookkeeper. If they are doing accounting, they are an accountant. Bookkeeping is the process of systematically recording the financial transactions of a business, so as to show how the transactions relate to each other

The accounting process is much less mechanical and more subjective. The accountant presents the financial statements to the business management in such a way that decisions can be made.

Her accounting experience was certainly reflected in her bookkeeping. She ignored the cheque numbers, and simply followed the automated numbering system in the software package

“Oh, it doesn’t matter, I’ll reconcile from the amounts in the expense account!”, was her response.

The fact that Melinda has been a financial analyst for 14 years and has bookkeeping for her husband doesn’t mean that she’s ready to go and become a freelance bookkeeper!

We’ve come in behind too many wanna-be bookkeepers who’ve messed up their client’s accounts, because they thought they knew how to do bookkeeping

Before starting out on your own as a freelance contract bookkeeper, you need to get some experience working under the direction of established bookkeepers.

Like it or not, being a freelance bookkeeper is a different game out in the real world, compared to doing your husband’s books – ask any professional freelance bookeeper.