Bookkeeping Business From Home Part 4

In part 1 of this guide we covered the basics. Part 2 introduced finding your first partners. Part 3 looked at your image and how you present that to prospective clients. This part focuses on how to get those clients.

By now you should have a good idea of how much to charge, how many clients you need in order to be completely independent, how partners can help you, and why your image, from your business name down to what you wear is absolutely vital. So, let’s put it all into practice and go win some clients.

But first a note of encouragement. Once you get a few clients on board, you will find that they start recommending you to other business people they meet. So although you need to get on the first rung, after that it should be plain sailing providing you follow the advice in these guides.

Here’s a great question: How many cars do you see driving around in your local area with a sign on the side or back that says ‘Local Bookkeeping Service…’? None right? So go to a sign maker and get some magnetic car stickers made. That way you can remove them whenever you need to (eg. if you sell the vehicle).

The message on the sign must be absolutely clear and simple. Since you will be displaying the sign in your local area you can use your business name ‘Jill Smith Bookkeeping Service’. It is absolutely vital you put your landline number on there too. The STD code also tells people you are local. You will also need a simple selling slogan. Eg. ‘Best Rates in Town’. It sounds corny, but if someone is looking for your service, they need reassurance they are making the right decision, and ‘best rates’ works. So you will end up with a 3 line ad:

• Line 1: Who you are
• Line 2: Why they should use you
• Line 3: Call to action

The text must be legible at a distance. Do not use fancy fonts. Simple is best and works. Make sure your landline forwards calls to your mobile when you are out (or your partner is aware they will get calls if they are in).

Advertise in your local newspaper. There is usually a section for local services. You may see competitors in there, so all you need to do is study their ads and look for their weakness. If they offer ‘Established 1899’, make yours ‘Modern Fast and Friendly Service’. Or you could counter it with ‘Fully Accredited’ if they do not mention that. Look for what they have missed off and highlight it in your ad. You will find that these people only advertise occasionally (as you will also do in time yourself) because most clients come from recommendations.

After you advertise, contact that paper’s editorial staff and offer to write a piece on small business and how to succeed. Make it relevant to the readership. Do not ask for money, offer it free. It should be helpful to small businesses, not about bookkeeping. You are gaining trust with peices like this and gaining credibility as an expert. If you can get a regular spot, in 6 months, you will not be able to stop the stampede.

Produce a hand out. Drop them in letterboxes. Ask if your local library would accept them in their local services section. They will display them if there is value in the leaflet. Eg. ‘How to do your bookeeping’. Contact your local chamber of commerce. They may want you to join, but you do not have to. They are there to promote local businesses and you offer a service that will help local businesses. Explain that and they may help. Contact all local networking groups and attend their breakfast meetings. If you get the chance of a 5 minute speaking slot, grab it. All you need to say is that you are a local bookkeeping service, fully accredited and qualified and charge the best rates, come and see me afterwards. Once you have done that a few times, you will find it easy. It will also help with your confidence when meeting other business people in any context.

There are many more ways to promote yourself and your business, but follow the above as a starter and you should have no problem getting your business started and growing it rapidly.

In part 5 of this course we will look at how to keep your clients and meeting deadlines.

If you would like to understand a little more about bookkeeping, subscribe to our 12 week bookkeeping course.

Bookkeeping Business From Home Part 3

In part 1 of this guide we covered the basics. Part 2 introduced finding your first partners. This part focuses on going direct to clients.

By far the hardest way to get clients is to try to attract them directly. Having said that, it is really easy to find them! the hard part is getting them to give you business.

Your first problem is convincing them that you are trustworthy. After all, you are going to be dealing directly with the finances of their business. Ask yourself this: would you trust someone you had never met before with looking after your money? No? well there you have it!

So, how do you overcome this. The simplest answer is in how long you have been established. If your sign says ‘Established 1980’ great. You must be bona-fide, the problem is, you haven’t even started yet! (that’s why you are reading this, right?). So, what to do.

Basic Marketing Checklist
1. A real postal address. Do not use box numbers.
2. A landline. Always have a landline.
3. Always use your real name for the business (see part 1)
4. Qualifications and member of bona-fide bookkeepers association
5. Professional stationery. Business card, letterhead and compliments slip
6. Always dress professionally

A real postal address lets your potential clients know you are permanent. A landline really adds credibility to this. So many service businesses start up using a mobile number. But for a business thinking about outsourcing its bookkeeping, a mobile is just too, well… mobile! Don’t use free or premium numbers either. You are aiming at a local market, so give them a local landline. Business owners want to know where you live. They want to be sure any paperwork they give to you is safe. Freephone numbers are terrific for established businesses, but for new businesses they are a hindrance. It suggests you are not local. And not local implies you are not really interested in local business.

Your business name is vital for establishing credibility. Would you use a firm called ‘ACME Bookkeeping’ or ‘James Smith Bookkeeping’. See part 1 for more on that.

Qualifications are also absolutely vital. It’s the same thing again. Put yourself in the shoes of your clients. If you mess up their VAT, it is they who suffer the consequences, not you. So would you entrust your bookkeeping to an unqualified person?

Become a member of an established bookkeepers association. Make sure they have a code of conduct. Advertise that fact on your stationery, website and advertising. Advertise it on any sales letters or handouts you produce. Use the associations logo and any other marketing material they can provide.

Make sure your stationery is designed by a professional designer. Do not make it fancy. You must be seen as a safe pair of hands. Do not design it yourself to save money (unless you happen to also be a designer of course). Your image must be professional and simple. Do not use tag lines. Eg. ‘Bookkeeping to die for’! Let your business name and stationery design speak for itself.

If you get an appointment to visit a client, always dress smartly. You are a professional. They are trusting you with a very sensitive part of their business. You will probably be the first to know if they have problems or are making a success of their business. Your confidentiality is vital to them. Show them you are professional by dressing appropriately.

In part 4 we will talk about getting new clients. If you haven’t signed up to our free bookkeeping course yet, just enter your name and email in the form on the right.

If you would like to understand a little more about bookkeeping, subscribe to our 12 week bookkeeping course.

Bookkeeping Business From Home Part 2

In part 1 we talked about starting a bookkeeping business working from home. In part 2, we talk about exactly how to set that up.

You can choose to be self-employed or set up a company. This is a simple decision. Self-employment is the way. The reason is that you will not have to pay tax until much later. That is really important when you are starting a new business. Cash is king as they say. Whilst you build up your client list, you need to conserve as much money as possible. If you were to form a company, any money you pay yourself in remuneration you will need to pay tax on there and then.

Another consideration is why you would want a limited company. If you were a retailer or someone supplying and selling other people’s goods, then a limited company is probably vital. You will be buying these goods on credit, hoping to sell them to make a profit. If, for some reason, the goods do not sell (maybe a competitor our prices you or a better product comes along) you may have to sell them at a loss. You could end up losing not just money, but your house! If you are self-employed, that is exactly the situation you do not want. Whereas selling a service such as bookkeeping, involves mostly your time.

The next thing you need to consider is your trading name. You have two choices here:

Bookkeeping Business From Home Part 1

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.

Self-employed Bookkeeping

Bookkeeping is the art of tracking money; where it came from and where it went to. That is all there is to it.

A simple transaction involves 2 accounts. The ‘from’ account and the ‘to’ account. This is what the concept of double-entry means. Trained bookkeepers and accountants use the term ‘credit’ and ‘debit’ to do this. A transaction credits one account and debits another. Hence a double-entry (it’s not two identical entries, it’s the two sides that make up a transaction).

By transposing ‘from’ with ‘credit’ and ‘to’ with ‘debit’, business people (not trained in accountancy) can get a simple handle on how accounting works. But enough of the theory, let’s look at a few examples.

This article explains some common transactions the self-employed need to make plus some of the differences and common pitfalls experienced in bookkeeping tasks between a limited company and the self-employed.

Limited Company Employee And Director Pay

In a limited company, all workers including the directors are employees. Their pay and salaries are direct expenses of the company. A company, for example, could account for its payroll with just a few transactions. The accounts affected would be the bank (the ‘from’ account, ie. where the money is coming from to pay the wages) and some expense accounts to track how much is going to the employees and how much is going to the Revenue for tax etc. (these are the ‘to’ accounts).

Self-Employed Pay

For the self-employed, it is a different story. Their ‘salaries’ are not expenses. As a self-employed person, when you take money from the business, it is usually only as a result of the business making a profit. These transactions are typically called ‘Drawings’. You are ‘withdrawing’ money from the business, hence the name.

So, for the self-employed, you will need a ‘Drawings’ account. This should be set up in the ‘Equity’ section of your chart of accounts. Whenever you take money out of the business, create a transaction From Bank To Drawings. In a traditional double-entry system you would credit the bank and debit drawings (so remember the rule: from=credit and to=debit if you want to make sense of it).

Using Personal Cash To Buy Things

Another common transaction is where you have bought something using personal money or a personal credit card. As your personal credit card or money won’t be included in the books, the simplest way is to treat it as cash, as follows:

Create a cash account in your ‘Current Assets’ section of your Chart of Accounts. All payments will be From Cash To [some expense account]. When you decide to pay yourself back from the business make another transaction, but in reverse: From Bank To Cash.

A better way, from an auditing perspective would be to set up a ‘Loan’ account in Current Liabilities. This is important if you need to track cash separately. The transactions are exactly the same as described except you will use Loans instead of Cash.

Opening Balances

Finally, opening balances. For a limited company, the opening balances will involve the shares bought by the shareholders. A typical transaction for this would be From Shareholders To Bank.

For the self-employed, you would have an account called ‘Capital’ and make a transaction From Capital To Bank.

All the above and more is explained step by step with tasks and answers in the Accounting for Everyone online certified bookkeeping course. Click below to find out more.

Treasurers Guide Part 3

Reports
Every year you will be responsible for presenting the accounts at your annual general meeting. This is generally not as daunting as it may appear. All the facts and figures you need are right there in your account books. Your committee will not want a blow by blow account of every transaction, nor will they want to hear the detail of every account balance. All they are really interested in is how much is in the bank (and therefore available to spend in the forthcoming year). However, a short statement should be made as to how much was received during the year, how much was spent, and whether the accounts show any unusual trends (eg. “subscriptions have doubled during the year”).

The finer details (eg. the balances of every account, and an income/payment statement) should be included in a printed report available to everyone for later digestion.

If you are treasurer of a registered charity there will almost certainly be legislation that you will need to follow. Please check with your local Inland Revenue Service.

Hints and Tips

Use dedicated computer accounting software. It will save you a lot of time even if your organisation doesn’t have many transactions.

Learn the basics of double-entry. If nothing else, it will make you more confident as a treasurer.

Keep your accounts as simple as possible. It results in less work and makes them easier to read.

Always make regular backups of the accounts. Keep them in a safe place. Ensure the committee knows where to find them in case anything should happen to you.

Treasurers Guide Part 2

Image via Wikipedia

Receipts
All the money received by your organisation must be recorded no matter how small the amount may be – ‘accountability’ is all important. If someone gives you £1 for the cause – write it down in your account book.

Use as many accounts as you think fit to record the receipts of the organisation. Attention to detail early on will prove invaluable as a management tool later. A simple example would be a charity that advertises and also attracts income by direct mail. Using an account to record the receipts from each source will tell you which one is more efficient (or which one needs improvement).

You can group your accounts under general headings. An example set of account groups and accounts could include:

• donations
  • 1. from individuals
  • 2. from business
• subscriptions
  • 3. annual
  • 4. lifetime
• merchandise
  • 5. direct mail
  • 6. charity shops
• others
  • 7. refunds
  • 8. grants

Always include the name of the person or organisation which gave you money as well as the date. It is also useful to note whether it was in the form of a cheque/cash or other source (eg. a direct transfer).

Payments
All payments must be written down – even if it was for a pint of milk. If you fail to write everything down, not only will your petty cash be short, others may wonder if anything else is amiss regarding your book-keeping.

It is for this reason that a receipt must be produced before you allow any money to be paid.

If someone buys a small item and forgets to get a receipt, a petty cash slip is fine – provided their name is written on it and they sign it.

Use as many accounts as you like to record payments, but keep in mind the maxim ’simplest is best’. Postage is a good example: you may be tempted to breakdown the costs into ‘recorded’, ‘registered’, ‘1st class stamps’ etc. Unless this kind of detail can be used as a management tool (eg. to discover if a 1st class mail shot worked better than a 2nd class one) don’t do it – it only complicates things and results in extra work not just for you, but also for an auditor should one be required.

Try to keep each group of payment accounts relevant to the requirements of your organisation. For instance, if it has a permanent office, it is worth keeping payments relating to the office in a group of their own (the committee can then keep track of whether the office is ‘paying’ for itself).

If your organisation holds regular events, it may be worth noting in your accounts which payments belong to which event (so you can later decide which events prove the most lucrative).

Treasurers Guide part 3 here…