The American Institute of Professional Bookkeepers
VOLUME 1: Issue 19
Starting Your Own Bookkeeping Business
—should it be a home office?
How you start your own bookkeeping practice may determine whether you succeed, as we reported to AIPB Members in The General Ledger, the monthly technical newsletter for AIPB members (www.aipb.org/general_ledger.html). But even after you decide to start your own practice, a major question is whether you should work out of a home office or rent space. Here’s how one successful professional started up and another made the difficult decision on the home office.
How Steven R. Hinds started up
After working for 5 years as a controller, I decided I could double my money working for myself. I already had 3 or 4 clients that wanted me as a consultant.
I started by offering only bookkeeping and taxes at $10/hr. It took about 6 months to get 10 clients and become established. Today I charge $25 to $200 an hour, have over 100 clients and net $150,000 a year. Here’s what I did—and you can too:
Keep your current full-time job until you are making at least the same from your part-time business.
Create a business name for your business, file your DBA, and get a business license.
Join the local Chamber of Commerce, Better Business Bureau, etc.
Create a tri-fold brochure, business cards and postcards.
Send your brochure to all the DBA filings printed in your local paper.
Create and publish a Web site.
When employers advertise for a part-time bookkeeper, send out a resume with a cover letter.
Every day, go door to door to businesses, handing out your brochure and business card. Best: Low cost industrial areas with small spaces.
Today, most of my business comes from referrals and from bookkeeping and tax services with too much work.
Through the years, I have added on other services as demand changed:
articles for professional newsletters
computer sales and services
Quickbooks Professional Advisor
next-day internet or e-mail bookkeeping
customized company policies/procedures
internet html coding
internet site creation
internet site promotion
Key to success: Provide topnotch service and always meet promised deadlines.
Source: Steven R. Hinds, Bookkeeping 2000, http://www.bookkeeping2000.com 1191 Huntington Dr., Suite 9, Duarte, CA 91505. (626) 231-3166. Email address: qbadvisor@ bookkeeping2000.com
But when you start your own practice, should you start from home, or rent space?
Pros and cons of a home office for Tiffany J. Morisue
For 3 years, I ran my accounting, tax, computer-services/consulting practice from my home. My household consisted of my husband (he is in the practice), my 13-year-old daughter, my mother, two cats, two dogs, and a full-time employee. My primary advertising was the Yellow Pages. Starting in a home office was convenient and kept my rates low, a competitive advantage.
Getting new clients
I offer a free 30-minute consultation to prospects. In my home office, I got 1 client or strong lead per 5 consultations. In my new office, I got 3 to 4 new clients per 5 consultations. Long-term clients say the office that I rented is much more convenient.
Disadvantages of a home business
Clients told me they did not like their work done near kids or pets, and prospective clients said they were turned off by the home office.
Meeting strangers in your home may infringe on your privacy and may even be dangerous.
I felt like I had to answer the business line after business hours and I got complaints if I didn’t.
IRS or state tax agents can show up unannounced at inconvenient times.
Clients showed up at all hours to drop off, pick up, etc.
If you expand and need employees, applicants may be turned off by working in your home. It is harder to set boundaries between business and personal matters in a home.
If you are in the suburbs, neighbors may object to your running a business in your home, and zoning restrictions may bar even small signs.
Clients may perceive that confidentiality is impaired.
Use a P.O. box in your ads and marketing, and reserve your street address for clients and business associates, as I did.
To cover the moving costs and rent for the new office, I raised rates slightly for current clients, more for new ones and focused on billable work, avoiding no-charge or courtesy work. Clients choose an accountant or bookkeeper who is professional and easy to work with as well as affordable.
Source: Tiffany J. Morisue, CPA, ABC Solutions, 3964 Brown Park Drive, Suite A, Hilliard, Ohio 43026. 614-850-9440 Fax 614-850-8770. firstname.lastname@example.org
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Purchase supplies and equipment as authorized by management
Monitor office supply levels and reorder as necessary
Tag and monitor fixed assets
Pay supplier invoices in a timely manner
Take all reasonable discounts on supplier invoices
Pay any debt as it comes due for payment
Monitor debt levels and compliance with debt covenants
Issue invoices to customers
Collect sales taxes from customers and remit them to the government
Ensure that receivables are collected promptly
Record cash receipts and make bank deposits
Conduct a monthly reconciliation of every bank account
Conduct periodic reconciliations of all accounts to ensure their accuracy
Maintain the petty cash fund
Issue financial statements
Provide information to the external accountant who creates the company’s financial statements
Assemble information for external auditors for the annual audit
Calculate and issue financial analysis of the financial statements
Maintain an orderly accounting filing system
Maintain the chart of accounts
Maintain the annual budget
Calculate variances from the budget and report significant issues to management
Comply with local, state, and federal government reporting requirements
Process payroll in a timely manner
Provide clerical and administrative support to management as requested
Desired Qualifications: The bookkeeper candidate should have an Associate’s degree in accounting or business administration, or equivalent business experience, as well as a knowledge of bookkeeping and generally accepted accounting principles.
Preference will be given to candidates with a working knowledge of the _____ accounting software package.