Anyone can start a bookkeeping business from their home. Amazingly, you don’t even need to be qualified, though it does help!
To give you an idea of what it involves once you are up and running, the average number of clients per bookkeeper is around 30. This makes it fairly easy to figure out how much you will need to charge for your services. In very simple terms, decide how much you want or need to make a year, then divide it by 30. You now have your cost per client.
The next important point to consider is the size of business you want to target. The larger the business the more work there will be. Larger businesses will want more analysis, and although that analysis may not be done by you, the bookkeeping will become far more involved and therefore time consuming. Accounting for items when they are actually consumed, rather than when they are paid for, means extra accounts and more transactions (insurance spread over 12 months but paid for in a single sum for the year is just one example).
So, if you are just starting out, target micro businesses. That is, those with a staff count of less than 5 including the owner(s). The turnover is not that important, it is the number of transactions and the nature of those transactions that matter.
You are not competing with accountants here. That is probably one of the main things to understand. Accountants are your friends. They can actually give you loads of work if you are struggling to find your own clients. Accountants do not like bookkeeping! Their work is in interpreting the books, advising about tax, and preparing statutory accounts for the Inland Revenue.
Another important thing to remember is to keep your overheads to the minimum. Working from home is the best and simplest answer to this. It also means you can claim expenses from your household costs. If you have 6 rooms in your house and you use one of them as your office, you can claim back 1/6th of many of your utility bills (eg. electricity and gas).
You could also claim back 1/6th of the interest on your mortgage if you have one, though be careful of capital gains tax if you should subsequently sell your house. Take advice from your own accountant in this case (if you take on freelance work from an accountant, you will find they will be more than willing to help you out with advice in this area).
In part 2 of this article, we will give you a step by step guide on how to start your own bookkeeping business.
If you would like to understand a little more about bookkeeping, subscribe to our 12 week bookkeeping course.