Starting a new bookkeeping business - The Book-keepers Forum (UK)

Esbee · Member

Starting a new bookkeeping business

Shamus · Forum Moderator & Expert

Hi Manoj,

there are quite a few accountants on here. Can I assume that you're in the same boat as many in that you've passed all of your exams but don't have the post qualification supervised experience yet?

Which accountancy qualification is it you have?

If your not a practicing member of your accountancy body yet you will not be covered for Money Laundering. As you already know that's an essential so you could either pay HMRC £170 to register you or you could take the route that most of us on here do and get a second affiliation.

When I know your qualification I'll tell you the best way forwards.

On the software front it depends how you will be working. The software widely regarded as the best for small bookkeeping practices is VT Transaction+ but if all of your clients are running something like sage then you need to be running the same software as them if you take work off site.

Promotion of services is best done by networking. Have a read of some of Robs excellent postings in answer to networking questions... In fact, have a read of all of Robs messages as you'll find a lot of excellent entrepreneurial advice in there.

Hope that this helps, don't forget to tell me who your supervisory body is and I'll advise what's best for a second body if you need one.

All the best,

Shaun.

RobH · Expert

Hi Manoj,

welcome to the forum.

A lot of peopel here seem to mention Trafalgar for their Professional Indemnity insurance and they seem quite competitive. personally i use Hiscox and I pay about £500 pa for that but it is based on a reasonably health turnover and the fact that I do offer taxation advice, so my exposure is a little higher than some.

For promotion of services, I am a big believer in getting out and about meeting people. This generally means finding plenty of networking opportunities. I think this reinforces any other kind of promotion you do (or vice versa).

On the software front, I use Sage and Iris. Sage because it just seems to be the industry standard and Iris because it is good. Neither are particularly cheap though. Many seem to like VT which seems good and very reasonably priced.

Good luck, I think things are picking up and with you being in London, you get to charge a bit more!!

Esbee · Member

Hi Rob & Shaun,

Thank you. I qualified from ACCA and I am in the process of applying for my practicing certificate, so I have completed my post qualification training - I just have to get the forms signed and send to ACCA. At the moment I am still working and I would like to get few clients before leaving my job.

Thanks again.

Manoj

Shamus · Forum Moderator & Expert

Hi Manoj,

no worries on the MLR then.

I'm ACCA and ICB for my MLR as I haven't got the two years yet.

Looks as though Rob was already writing a reply when I mentioned him.

Trafalgar is the insurance company pushed by ICB and IAB but you might also want to get PII quotes from Hiscox (who might actually pay out in the event of a claim!) and Morethan (another quality insurer).

If you're working from premises you would also need Public Liability Insurance. Try Direct Line for than one as they're very reasonably priced. Difficult to tell you an amount as it can change dramatically by the area that you work in.

All the best,

Shaun.

Esbee · Member

Hi,

I was also looking at a virtual PA business that is available for sale. I see Rob's company is providing similar service. Any thoughts on this market is appreciated. Is there a demand, is the market growing?

This company has a TO of about 85K and willing to sell this for 35K. I got in to this as they had a bookkeeping portfolio as well ( but very small). Do you think this is a worthwile investment?

Manoj

Shamus · Forum Moderator & Expert

Hi Manoj,

I think Robs looking at franchising his operation so that might be worth looking into as well.

Have a look at Robs website and drop him a line directly... I'm assured that he doesn't bite!

RobH · Expert

Hi Manoj,

I do well out of the telephone answering side of it as a lot of these clients turn into bookkeeping/payroll/accounts clients to and vice versa. I'm just working on offering it as 'a business in a box' on license (for less than £1k) if you want more details send me a personal email.

Do you know what the profit is? The biggest overhead would presumably be wages, I would think you would need 2 operatives to work that turnover (maybe 2 and a part-timer at busy periods), so you would be looking at around £35k to £40k wage bill. Could you operate from home or would you need offices? It would be interesting to see the accounts. it may be that you could walk straight in and recover your investment in a year. i find that clients stick with you so the business is repeated each month. I introduced it as a bolt on to my existing business, spent a lot of money developing the system but it has repaid me now and uses my staff's extra capacity. It is also good as it is a unique selling point when introducing the bookkeeping side of things and people genuinely seem to think it's a great idea and you do all their 'back office' functions. what is this company that is for sale called Manoj?

RobH · Expert

Hi shaun...thanks for the plug! Actually not loking at franchising it just licensing it, so no nasty franchise fees but still get the support!! I'd best be quiet before I'm asked to leave!

Spoke to Anna again this afternoon. The club are going to bring me their accounts and rule book so we can see what we are dealing with, but it is looking like we are in with a good shout.

Shamus · Forum Moderator & Expert

I can't see the likes of you, Bill or myself being asked to leave the site. We must be doing great things for their traffic.

Excellent news on the friendly society Rob. I'll keep my fingers crossed for you.

RobH · Expert

Cheers Shaun,

I think Atilla was talking about potentially specialising in restaurants etc, if pubs and clubs weren't doing so badly they would be a good one to specialise in. If this one comes off, that would be three clubs I'll be involved in (and one pub) and I bill around £150 per month each on those and then a decent bit at the year end. If Anna is happy with preparing the final accounts and signing off it may be worth looking for more of the ones that are still solvent. Us bookkeepers could do vat returns etc and payroll and still earn well and undercut some of these auditors. If this job comes off, even with Anna's bill, the club should be over £2000 better off, at a GP of 40% that's £5k worth of extra beer they would need to sell.

Esbee · Member

Hi Rob,

They don't have any employees, there are about 5 contractors so payment will be made only if there is work. So I think it is good on that end. But there is not much of a profit as the director is taking about 25k as salary for 2/3 days work. You can operate this from home, but I think it will be better to have a small office.

I want to see if I can use this client base to provide more services. As you said give it as a package.

-- Edited by Esbee on Thursday 25th of March 2010 09:58:04 PM

RobH · Expert

Well that £25k is basically the profit then if the director is also the owner (which I assume as you say there are no employees). Why is he not taking as dividends?

Esbee · Member

I have no idea, I am meeting them next week need to discuss these issues. I will have a better idea next week.

RobH · Expert

Good luck Manoj, I will be interested in hearing how it goes. I have picked up two new clients for telephone answering this week so I believe it works well.

Esbee · Member

Hi Rob,

How do you charge them?

RobH · Expert

Manoj,

take a look at my website and my charging packages are on there.
Rob

Rhianrach · Expert

RobH wrote:

Good luck Manoj, I will be interested in hearing how it goes. I have picked up two new clients for telephone answering this week so I believe it works well.

Hmm whats telephone answering?

I know i'm running the risk of looking really dumb but I just can't think what that might be. confuse

lor · Guru

From what I can see, it is way to have your telephone calls answered when you can't be there to pick up the phone, have a look at the website.

RobH · Expert

Yes it is when you cannot answer your phone to all those new clients because you are in a meeting, on holiday, driving, trying to get some work done etc, you can divert your number and a service like ours would answer in your company name as if it was your receptionist and take a message. We would then email you with message details and contact telephone number etc.

Amanda · Expert

Sounds interesting Rob, I suppose its something that could be done when you have extra people working for you, am I reading that correctly?

Would you need to have a permanant person in the office to offer that service, ie someone like me who is a) part-time and b) I'm not always in as busy seeing clients myself, so something like that probably wouldn't work for me unless I was a bigger business with someone on board as well?

Is there a company that sets it up ie have to outlay some money?
Sorry for all the questions but it intriques me. I was in Sales for years, mainly because I had a boss, who gave me school hours after the 2nd child, 3 days a week and was flexible, so although it didn't tax my brain enough it meant I could study quite easily in the evening and my day off when the kids were at pre-school, so it fitted in nicely.

thanks,
A

RobH · Expert

Ideally you would need someone there all the time, but you could use home workers too. I set this up to use our spare capacity and it is taking off really well. I am about to offer the service as a license so people wont have to spend the thousands I did in setting it up or by paying Kendlebell £22,500 for a similar franchise! One of the things I am hoping to do is have a support service so if a licensee is away, then another licensee can take their calls for them. I find it really good to be able to offer this as it is a talking point at networking and often new clients get you to do other things like bookkeeping and payroll. That's why I set up my website for The Smarter Office to be heavily biased towards the telephone answering service. I have another website which is much more accounts oriented, but we still offer the service there too as again I have had enquiries from that one where the caller has mentioned they like the idea of the telephone answering service.
Feel free to ask any questions on it Amanda.
Rob

BobHarper · Guru

@Rob...we are looking at "service extensions" to Crunchers so feel free to get in touch about a JVC or licence.

Esbee · Member

Hi Rob,

It's been some time now. I met with this company and at the end someone else made an offer before me, so it did not work. But I am interested in 'virtual office' concept and thinking of doing it.

What is the process ( and cost) for me to use your services as a licensee?

Thanks,

RobH · Expert

Hi Manoj,

send me an email on info@thesmarteroffice.co.uk and I'll reply with details for you.

thanks

Rob

Marywashington · Member

Hello all

I have read this and i just wanted to know if after 6 months of training to be a bookkpeer, whether it would be best for me to look for a part time bookkeeping job, or I do like the idea of getting a bookkeeping franchise.

My main worry in getting the franchise is that all the expereince I would have would be what we cover on the course, and I will not have real life experience.

Does anyone know of training where you could also get work experience?

Also is it a good idea to sepcialise in a particular area? for example doing the bookkeeping for private nurseries?

Thanks

Shamus · Forum Moderator & Expert

Hi Mary,

which body are you affiliated to and how far are you through your studies at the moment?

Is your intention to go it alone or to work for someone else?

I'll assume for now that you are looking at self employed work as most people on this site do.

Whilst the franchise route is an option making sufficient income to pay the initial franchise fee can be problematic. Check out the length of time that the franchise has been in operation and check whether they are only making money by selling franchises.

The idea should be that you are buying into someone elses success, not subsidising someone elses failure.

Specialisation may be a better option than franchising but you still need to build a reputation so don't expect to make a profit for a couple of years. (it will be better if you have a permanent job to subsidise you whilst you build your business).

Don't forget that you MUST have MLR in place in order to practice or face a two year jail sentence and an unlimited fine.

The main bookkeeping bodies require you to have PII in place to get MLR cover through them when you are issued with a practicing certificate.

You can also cover yourself for MLR directly with HMRC. I believe that the cost with HMRC is £170 but someone else on the site put up a sound argument for why it may be only £120.

That;s something that you will need to look into if you take that route.

Let us all know your specifics (Body / qualifications / expectations etc.) and we'll gear an answer closer to your situation.

Kind regards,

Shaun.

Marywashington · Member

Thanks for your reply

I have only just started the first module, and the plan is for me to do the exams in June. I do this at my local college.

It is the AAT ABC bookkeeping course I am doing and I am in the process of registering as an AAT member.

I am thinking of self employment because I have young children and I would like to work around the school hours, and I thought bookkeeping will given that flexibility.

Thanks for your help!

Shamus · Forum Moderator & Expert

Hi Mary,

AAT ABC is an excellent start (it's the same course as the Open University course B190) and will give you exemptions either from the fundamental level AAT papers or some of the papers with the ICB or IAB.

In itself AAT ABC will not give you a professional membership but it will at least teach you the fundamentals of bookkeeping and will provide you with exemptions when you move on.

Doing that course alone though will not prepare you for self employment as a bookkeeper and if you can really you need to look at getting some temporary work in practice before going it alone.

I know the problems with balancing childcare and work, I have it myself and appreciate how ideal self employment is in combating the balancing of a 9 to 5 against childcare.

However, the real world of bookkeeping is very different to the books and clients expect bookkeepers to basically be cheap accountants.

I don't think that you're giving yourself enough time to really understand bookkeeping before starting out which may cause serious problems.

You will find it difficult to get PII insurance without practicing certificate level memberships of ICB / IAB or AAT. And without PII you are exposed to legal claims if you make a mistake which believe me is incredibly easy to do in this business.

The likes of Bill, Rob, Sheila and Myself on this site are all very experienced but we still have technical debates from completely different standpoints.

You have to appreciate that clients can sue you not just for advice that you give but also advice that you don't give so you really have to know your stuff before setting out.

That said, I'm not trying to deter you. Just warn you of the pitfalls.

As mentioned in the previous message you must have MLR in place before you start trading otherwise you are breaking the law and that one carries severe penalties.

Have a think about whether signing up with the IAB may be more beneficial to you in the short term to the AAT which will take you around two years to complete and you would need to do supervised work in order to attain your practicing certificate.

Finding an employer to take you on to get your post qualification experience can be problematic as there are so many unemployed bookkeepers chasing so few positions at the moment.

That is not to say that the positions do not exist, they do. But you have to be persistent and not give up hope.

Also, if you go AAT then you are much more employable than someone with IAB or ICB qualifications that are aimed more at self employed bookkeepers.

For self employment, it may be better to take the IAB route and then, if you feel that you need to study AAT whilst you are earning.

Doing it that way of course the AAT training would be an allowable expense as you could put it down as CPD training. Just studying bookkeeping without already earning income from it is not CPD and is not allowable as an expense.

Anyway, I wish you the best of luck but I think that you need to allow a longer time frame before thinking about self employment in this field.

Kind regards,

Shaun.

Marywashington · Member

Hello Shamus

Thanks so much for taking time out to reply with such an informative email.

This has helped me to plan my studies and future carrear path.

I will continue with my studies and look for some kind of voluntary work .

I have been looking through the forum and notice that you do have a lot of knoweledge and experience which is valuable to us all.

Thanks once gain and have a good day.