Questions about Starting Your Bookkeeping Practice

Starting your own practice can feel daunting.  Each new thing you oncover adds another million tasks to your to-do list.  

In this short article, I hope to answer some of the burning questions you'll have about starting your own practice.

What is a bookkeeper?

Before we get started, I think we should address this one.  What is a bookkeeper and what do they actually do?

Not so long ago we'd probably have said that a bookkeeper takes the prime records (invoices, receipts, bank statements) of a business and analysis them, creating a trial balance that would allow an accountant to create final accounts and tax returns, but now that's not really the case.  With the advent of more advanced training and software, the lines between a bookkeeper and accountant have become blurred.

Some bookkeepers love organising and analysing and are happy to take clients up to a trial balance and stop, while others offer more advanced services such as advisory and tax returns.

One of the joys of this role is just how unique you can make it depending on your skills, training and what you enjoy.

Who runs a bookkeeping practice?

The simple answer is anyone.  It's not gender-specific, however, about 75% of bookkeepers are female.  Many choose to run their practice because of the freedom it can provide.  This is especially important for those with families looking for something that can easily fit around their already busy lives.

That's not to say that running your practice is easy.  Historically, it was seen as something done on a part-time basis for "pin money", but with changes in regulations and legislation over the years it's now very much a profession in its own right.

Like many self-employed businesses, though, it can fit around your other commitments very easily.

Who needs a bookkeeper?

The lazy answer here is any small business owner, but if we scratch the surface we can be much more specific.  

The clients that you are likely to attract when you are running your practice are small businesses.  When a business gets to a certain size they'll likely employ in inhouse bookkeeper, or a finance team and your services probably wont be attractive at this stage.  At the other end of the scale are the tiny businesses who will more than likely try to do everything themselves.

We're often told that with the advent of new software, the bookkeeping role is becoming redundant.  That's not true.  Actually, with the advent of new software, it's becoming a more specialised and professional service.

What do I need to get started?

The list isn't a long one really.  If you already have training in bookkeeping you'll need to check that it's up to date and relevant.  If you don't, talk to our friends at First Intuition and they'll be able to advise you.

You need to be supervised in terms of the Money Laundering Regulations.  That can be through one of the professional bodies or directly with HMRC.  Legally, you'll also need to register with the ICO for GDPR.

Although not legally required, it would be advisable to have professional indemnity insurance incase anything should go wrong.

You will need some equipment like a laptop or computer and a phone, but you'll possibly already have that.

How much will it cost to get going?

I've set out some of the things you'll need above.  This isn't an exhaustive list.  You may need software and training.  You'll almost certainly need a website and a small marketing budget to get going.

Many people will have you believe that bookkeeping is something you can do with no funding from home.  I've seen bookkeepers starting on a shoestring come and go.  My advice would be to save up at least £5,000 before you get started.

How long will it take to get started?

From the idea to getting your first client can take from 6 to 12 months.  Some people do it faster, others take longer.

Getting your first client isn't always as easy as you think it might be, and everything takes much longer than you assume.

There are different models of bookkeeping practice and different clients you could work with.  Make sure you have a proper plan in place of what you want your business to look like and how you'll get there.

How much money will I make?

Most bookkeepers I work with don't charge and hourly rate any longer.  They use some variations of a fixed price.  That said, for this question you can expect to earn between £25 and £45 per hour.

You won't be billing for all the time you work as some of your work will be on your business rather than client work.  On a part time basis you could earn between £18,000 and £24,000.

We have training that will help you become more efficient and help you earn more.  We also have custom-built pricing software that will help you price your work to allow you to tap into a higher level of earnings.

How much experience do I need?

I started my bookkeeping practice with absolutely no real-world experience.  It is certainly possible.  My advice would be to take on really small clients to begin with and build up to bigger clients and more complex work as your confidence and experience grow.

It's important to know what you don't know and the boundaries of your knowledge.  Don't be cocky.  If you don't know how to do something don't wing it.

There are decades of experience within our member's Facebook group to take advantage of.

I still don't know if it's right for me

Starting any business is not something to enter into lightly.

The house can be long, the pay can be rubbish, there is no guarantee of work and it can cause real problems for your relationship with your family and friends.

That said, if you approach it with the right frame of mind running your practice can be the most rewarding thing you'll ever do in your life.

As long as you are clear in your head about the realities of running a business and are ready to face them head-on, there is no reason you can't be like so many of our members and run a practice that fulfils your lives dreams.