Every business needs a bookkeeper/accountant. Business owners today realise more than ever before that if they are not careful about their finances, they soon won’t be in business. As it can be costly for smaller businesses to appoint a full-time bookkeeper or accountant, outsourcing this function has become very attractive to business owners and a great opportunity for bookkeepers or accountants to start up their own bookkeeping or accounting businesses.
The importance of bookkeepers and the role they play
A client not only wants to pay an independent bookkeeper or an accountant to balance their debit and credit transactions. The client will be paying you for your expertise, accuracy, loyalty, honesty and integrity, and your ability to handle their affairs with confidentiality and professionalism.
Clients don’t just buy a service because you want them to.
In fact, clients don’t buy products or services – they buy what those products or services do for them.
Although a vast range of accounting software packages is available to process captured information quickly and accurately, the software is unable to detect where transactions have been allocated incorrectly, omitted or have been duplicated. A lack of internal controls in a company could lead to fraudulent transactions. The bookkeeper or accountant plays a vital role in the accurate reporting of the affairs of the client.
You are no longer just a bookkeeper or an accountant.
Keep in mind that when establishing your own bookkeeping or accounting business, you are no longer just a bookkeeper or an accountant, but you are also an entrepreneur. You therefore have to start thinking like a business person.
Your business will have 3 basic components:
It will consist of the following 3 basic business elements:
You are the most important part of your business. You are the person who renders the service – you bring the exciting elements into the business which will lead to success.
“If you think you can do a thing or think you can’t do a thing, you’re right.” – Henry Ford
1. Consider your skills
What skills do you need? Which of these skills do you already have? What do you need to do to get those skills which are essential in your business? Your starting point will be to get yourself well educated. The Institute of Certified Bookkeepers (ICB) offers valuable qualifications in this area. The ICB offers four main study programs which include the Accounting Programme which has qualifications that range from the level of a junior bookkeeper through to a financial accountant.
2. Consider the market’s needs
The area you are going to operate your business in must show a need for the services you plan to offer – and your fees will need to be market-related.
3. Consider your resources
Which resources do you currently have? Think about equipment, your home office, your talents and skills as well as personal characteristics. The experience which you have gained (which can be added to your CV) is an important marketing tool. Clients want to know that you have experience in their line of business. Years worked in the corporate or business world are never wasted, and through this you would have gained valuable knowledge and experience which can be used in your own business.
4. Consider other bookkeeping and accounting businesses who can assist or support you when needed.
It is important to network with other bookkeepers and accountants as you can capitalise on each other’s fields of expertise. You may be able to get business from bookkeeping or accounting services that have too much work.
5. Be different
To be different will give you a competitive advantage in the market.
6. Register your business
Once you have decided on the type of business you intend opening – sole trader, Pty (Ltd) – you will need to adhere to certain legislative requirements regarding the registration of your business with the South African Revenue Service (SARS) and Companies and Intellectual Properties Commission (CIPS).
To lay the foundation of your business you need to take the following into consideration:
1. Give your business a name
This will give your business an identity which your clients will recognise. Do not combine your personal and business finances but see your business as separate from yourself.
2. What do you need to start your business?
Start by listing the items and their estimated costs in a budget to determine your set-up cost.
You need to invest in a computer, printer and a bookkeeping/accounting software package. Also budget for some stationery and implement a good filing system from day one – piles of unfiled papers can become a nightmare when your client base starts expanding. You will also have to find and furnish an office – a home office helps to keep your costs down while you grow your business but needs to be accessible to your clients.
You should also buy insurance to protect yourself against unexpected liabilities.
3. Finance your business
It is good practice to keep your start-up cost as low as possible as you will have to finance some of it – if not all – yourself. You can finance your business as follows:
- Finance your own business – you basically lend your own money to your business.
- Finance with a partner – either a partner who actively takes part in the business or a silent partner who wants a return on their investment.
- Bank financing – the bank will want a business plan with your application.
Entrepreneurs focus on clients’ needs.
When starting your bookkeeping or accounting business, keep in mind that clients will not come to you unless you work hard at catching their attention. Your marketing plan will have to be focused yet creative.
Modern technology has made it relatively easy and cost effective to attract many potential clients’ attention. Apart from marketing through your local newspaper, notice boards, handing out flyers and business cards, it is important to make yourself “visible” through electronic media/the internet. Start off by researching your local market to assess opportunities. The most effective way of marketing bookkeeping or accounting services is through word of mouth – when your service is good, your business will start selling itself. Soon you can expect new business from referrals.
- Go the extra mile – offer a free consultation to business owners. This will include advice about their business finances. Be careful not to spend too much time on this – 30 minutes per client should be enough.
- Extra services will give you a competitive advantage in your market. This could include services such as company secretarial services or offering the services of a tax practitioner. Should you decide to offer extra services, you should familiarise yourself with the appropriate legislation and regulations.
- Sales – Throughout the sales process you should:
1. Determine the client’s needs – keep contact; ask questions; listen; identify shortcomings in the business.
2. Present yourself to the client – who you are; what you can do for them; why you are different.
- Keep your clients:
1. Be professional.
2. Any problem with delivering on time is not your client’s problem.
3. Build a good, friendly relationship.
4. Keep in contact.
The management of your business will determine its success. Two very important components of management are cost calculation and financial management.
How much you can charge for your services will be affected by the area within which you work and the level of work that you do. It will range from basic record keeping to all the tasks leading to the preparation of the financial statements.
Follow these rules in the management of your business:
1. Keep your personal and business finances separate
2. Keep records
3. Have goals and targets
4. Collect fees owed to you by clients on time
5. Offer credit to clients? NO!
6. Pay yourself a salary.
Stay informed and in touch
It is easy to isolate yourself in your own business, so remember to stay informed and in touch with others like you. The Institute of Certified Bookkeepers and Accountants (ICBA) is the ideal organisation to do this. Become a member and you’ll get information, guidelines and support for a career as bookkeeper or an accountant or for your bookkeeping or accounting business.