How To Start A Bookkeeping Business

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.
__________________

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.

A bookkeeper who’s involved in our Bookkeepers Marketing Program did some bookkeeping work for one of our clients, and sent us an invoice accordingly

If your personal bookkeeping looks shabby to your clients, what impression does that give them?

We were surprised and somewhat disappointed to discover that this MYOB bookkeeper was using excel spreadsheets to generate her invoices.

Her response was:

I do not have many clients to use account receivable neither double handling

Ummmhh …..

Just a thought:
If you’re still raising invoices on excel, then is it too hard to print them to a pdf file and email them to your clients, rather then sending them the excel spreadsheet?

At least that way your new book-keeping clients can’t make any changes to the invoice, and your invoice for bookkeeping services may look a little more professional

After all, if your personal bookkeeping looks shabby to your clients, what impression does that give them of how you approach their bookkeeping?

When you start your bookkeeping business, why is it so hard to set up a new MYOB Company file, just as you would with your clients, and invoice them in a professional manner.

When starting your bookeeping business, maybe you are working as a home based business with off-site clients.

“Is it true that any bookkeeping client is better than no client?”

Or perhaps you are happy to go to the client’s premises to start your bookkeeping business

“Any bookkeping client is better than no bookeeping client”

We’ve heard that many times – but is it true? That’s your choice, because it’s your business. The reality is that some clients are better off with another bookkeeper.

After all, why do you need the hassle and aggrevation of a difficult client? Now you’re asking:”How do I know this will be a difficult client?”

We’ve just turned away a prospective client, because she didn’t know how to do the bookkeeping but insisted that she had a system in place and wanted the new bookkeeper to follow that system, and oversee the existing admin person who was doing the books

That’s fine, she’s got a bookkeeping system that she’s happy with. Furthermore she wanted to tell us how much we should be charging. That’s OK too. If you’re desperate for work, you may take anything.

Soon, you’ll find yourself with a full calender, plenty of agrevation, and no room for good, happy, and profitable bookkeeping clients.

Instead you have to turn those profitable book-keeping clients away, and leave them to bookkeepers such as ourselves, because we’ve only got room for good profitable clients.

We leave those troublesome clients alone as we understand that some bookkeepers are desperate they’ll take on difficult clients.

That way, everybody wins.

You want to know how to find bookkeeping clients in Ipswich, QLD?

Business owners in Ipswich, Queensland often contact us looking for experienced MYOB and QuickBooks bookkeepers

We offer bookkeepers a program whereby we will find them bookkeeping clients for their bookkeeping business.

Right now we are looking for Quickbooks and MYOB bookeepers in the Ipswich area of South East Queensland, so if you are starting out, or need more bookkeping clients and feel that you have sufficient experience as a freelance bookkeeper*, then contact us today.

We talk about finding bookkeeping clients, and the sort of experience that you need to start your own bookkeeping business in our EBook How To Find Bookkeeping Clients

Every bookkeepers dream seems to be starting their bookeeping business with off-site clients.

Is it possible? Yes – anything seems to be possible these days.

Does it limit your choice of new bookkeeping clients? Yes – because many small business owners want their bookkeeper to work on-site.

Our experience has been that most off-site clients are those that need our services around BAS reporting time (i.e quarterly). So there’s a flood of work for a few weeks each quarter, but hardly enough to make a decent annual income.

Do you have a bookkeeping business around Stirling, northern suburbs of Perth, Western Australia?

If you qualify as an experienced freelance bookkeeper, and you need more clients around Stirling and Warwick, Western Australia, then we may be able to help you and your business

We’ve successfully helped a bookkeeper start basically from scratch. She wasn’t sure how much to charge, or how to speak to clients, and generally struggled to get the business happening. Now that she’s reached full capacity, we’re getting enquiries from clients wanting experienced MYOB and QuickBooks bookkeepers

We offer bookkeepers a program whereby we will find them bookkeeping clients for their bookkeeping business.

Right now we are looking for Quickbooks and MYOB bookeepers in Stirling and Warwick, Western Australia, so if you are starting out, or need more bookkeping clients and feel that you have sufficient experience as a freelance bookkeeper*, then contact us today.

We talk about finding bookkeeping clients, and the sort of *experience that you need to start your own bookkeeping business in our EBook Secrets To Finding Bookkeeping Clients