Are Bookkeeping Businesses Profitable?
The simple answer to the question ‘Are bookkeeping businesses profitable?’ is ‘Yes.’ The most important thing when setting up your new bookkeeping business is to be clear about the process; be accurate and knowledgeable about the numbers you are handling and work on the detail. That will ensure that you know exactly what is going on in the business not only your own but your clients’ businesses. Make sure you charge enough for your services to afford yourself the lifestyle you want and include fees to help you achieve the profit margin you need to thrive now as well as save for a rainy day!
You need o keep written or computerised documents on the business (especially your own) which means noting all the incomings, outgoings and the cash flow of the company. This information will lead you to the all-important profit margin. Organise your business so that it runs smoothly and you have clear steps in place. This should in turn help you to step back from the business and get an overview on how it is progressing. By doing this you should be able to see how it can grow.
It’s important to train to become a bookkeeper. At the present time you do not need any formal qualifications to become a bookkeeper but training is necessary to help you understand the jargon at the very least. You might even begin by working with another bookkeeper in a small business or sometimes you can get free training with local government or you can look into courses within an educational establishment. Nowadays you can also learn much of your trade through watching online courses.
If the business that you are keeping the accounts for is simple with few transactions you may find that you can manage with a written ledger e.g. written records of all the incomings and outgoings. However a computerised system is usually used these days and there are free trials of all the major brands of software available to help you to work out which one might suit you and your needs as a bookkeeper. Spreadsheets are commonly used in bookkeeping as well. However you run your business you will need to organise not just the accounts but your time. You need to make the most return out of your investment (ROI). Profitability depends on this. The most efficient system is the most cost-effective.
Working from home also increases your profitability. You will not need expensive premises to conduct your bookkeeping trade in the early days. Some expenses are also tax-deductible which helps with the profit margin. You may be able to deduct expenses for part of your home if you are using it to do your business in.
Bookkeeping businesses will always be in demand since everyone needs to keep accounts of their commercial transactions and inform HMRC/the IRS about their profits or losses. Many small business owners find that they would prefer to spend their time working on their businesses rather than working out the maths/details and so they end up outsourcing the bookkeeping which is why bookkeeping can be so profitable for you. However you will also need to be scrupulously honest and ensure the accuracy of your work. This demands concentration and you will need to work hard at being the best bookkeeper around but if you enjoy the tasks that bookkeeping presents to you then you really can’t go wrong.
How can you let people know that you are available to help them with the bookkeeping? Marketing. This aspect is an overlooked and key aspect to being a business owner in any trade who wants to make a profit. Marketing your company is essential. Use leafleting, posters and email to contact potential customers. Walk door to door to get yourself started if you want to! It’s free and might just help you to find your first client. After all how can you even get started on your business if no-one knows that you exist? Write a simple plan and follow it through. This plan might be as basic as ‘contact one new person per day’. But create a ‘map’ of how you will let people know that you are out there. Then follow it.
Always be looking for allies. You will be hopefully so successful that you will have too much work. Along your bookkeeping journey keep in mind that you hopefully will soon need to get help with the business in order to grow it to increase your profitability. It might be that you have help where you live (partner, husband or wife) or you have friends that could be called on. Your aim in the long run will be to have a business that almost runs itself. You will be so organised that you almost don’t need to be there. If you can get this right this will free you up to even have a holiday and also to keep your sights on the bigger picture and run the business rather than become the business itself.
In a nutshell if you enjoy organising paperwork, are prepared to keep good, clear records of all the business’s transactions and you love numbers then becoming a bookkeeper could be not only profitable but enjoyable. Organise your plan to let other know that you are available to do their bookkeeping. Work from home to help save money on premises costs. Keep your eye on potential work colleagues for when you grow you need that team behind you. Work at it slowly at first taking on one client at a time and do the necessary training and soon you will find you have more and more clients and the pennies should roll in very nicely!