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I am seriously thinking of starting a home based bookkeeping business to service other home based or smaller businesses. I would do their payroll, a/p, receivables, financials etc. I don't know how much to charge though??
I plan on doing it part time at first but would like to develop into full time in the near future.
I am planning on going back to school to get my cpa and mpa. I have over 13 years private/public sector accounting. And although I am not a CPA I know just as much as one knows.
I have a couple of leads right now. I can also do consulting work for small local cities to help them prepare their audit, budget (very specialized field). I am trying to start a business venture that I can do from home with very little onsite at the clients.
Give me some ideas on how much to charge etc. With my current situation I can survive comfortably by bringing in about $3K a month net.
Thanks
Here's my suggestion, and only because we have and are currently doing this: get a part-time job as an accountant/bookkeeper through a recruiter and on a contract/project basis, say 10 hours a week. Bump up the net hourly rate to you by about 70% so if you get paid $20/hr by the recruiter, you can pretty much estimate that the company is paying the recruiter $35. Stay there and live out your contract, say 6 months. After 6 months, offer to be a contractor direcly with the company at or a bit under what they paid the recruiter for you previously. Offer to be on a 1099 unless you want the benefits. This way you can make them your first client and you can write off your mileage as business expenses.
Join a BNI chapter (Business Network Inc.) in your area. You have to pay a membership fee to join but it's a great way to network. You will meet owners of small business who are not large enough to pay CPA rates. They will require a no compete situation, which means if there is already an accountant in the group, you may not be able to sign up, so go look for another chapter in your area. Offer to do back taxes for people there. You'd be surprised at how many people did not file the previous year's tax returns. Figure out how much H&R Block or a Jackson Hewitt charges for types of returns and modify your charge schedule. For example, x charge for each W-2, x charge for a Schedule C, X charge per schedule...you get the picture.
The key to starting out on this business is word of mouth advertising as this generates the most repeat business. If you have an HOA or a bulletin board in a common area of where you live, post a flyer there. In the beginning, you may not hit your target $3K net a month. I don't know what wages are in your area, but with the combined PT job and this, you'll be growing your business in no time. One other consideration is to go into partnership with a CPA, but like all partnerships, the downside is you don't have 100% control of the business. Look into operating as an S Corp rather than as a single proprietor as well, as there are benefits to operating as such. Make sure you check your local biz and state requirements for licensing esp if you are crossing states as we are (we are in a border town). Hope this helps as a start.
My suggestion is check out a website that can give you some information about starting an online bookkeeping service. One I found is www.ebooksuniv.homestead.com
As you are just starting out chances are the best clients will be small business owners... once you have a track record with references and/or the CPA then you can expand to the large and substantial accounts...
With that thought, I think the best way to understand how/what others are charging is to just talk to the local merchants you interact with everyday... walk up/down mainstreet and ask them... call (and join) the local Chamber of Commerce and ask them... if you have a local office of the SBA then see if they have SCORE counselors - if they do, go ask them as well.... those 3 or 4 sources will give you the best/easiest/cheapest market information....
Also, with each contract you will learn more, so if you find yourself underpriced then still serve that client well and consider the difference between your price and the market price as advertising expense... keep that client happy and you will have a good reference for gaining the next client (where you can then charge closer to the market rate)...
Good luck - I have used home based bookkeepers (without CPA designation) several times and always served me well... other times I have fealt the need for an actual CPA...
Here's my suggestion, and only because we have and are currently doing this: get a part-time job as an accountant/bookkeeper through a recruiter and on a contract/project basis, say 10 hours a week. Bump up the net hourly rate to you by about 70% so if you get paid $20/hr by the recruiter, you can pretty much estimate that the company is paying the recruiter $35. Stay there and live out your contract, say 6 months. After 6 months, offer to be a contractor direcly with the company at or a bit under what they paid the recruiter for you previously. Offer to be on a 1099 unless you want the benefits. This way you can make them your first client and you can write off your mileage as business expenses.
Join a BNI chapter (Business Network Inc.) in your area. You have to pay a membership fee to join but it's a great way to network. You will meet owners of small business who are not large enough to pay CPA rates. They will require a no compete situation, which means if there is already an accountant in the group, you may not be able to sign up, so go look for another chapter in your area. Offer to do back taxes for people there. You'd be surprised at how many people did not file the previous year's tax returns. Figure out how much H&R Block or a Jackson Hewitt charges for types of returns and modify your charge schedule. For example, x charge for each W-2, x charge for a Schedule C, X charge per schedule...you get the picture.
The key to starting out on this business is word of mouth advertising as this generates the most repeat business. If you have an HOA or a bulletin board in a common area of where you live, post a flyer there. In the beginning, you may not hit your target $3K net a month. I don't know what wages are in your area, but with the combined PT job and this, you'll be growing your business in no time. One other consideration is to go into partnership with a CPA, but like all partnerships, the downside is you don't have 100% control of the business. Look into operating as an S Corp rather than as a single proprietor as well, as there are benefits to operating as such. Make sure you check your local biz and state requirements for licensing esp if you are crossing states as we are (we are in a border town). Hope this helps as a start.
Thanks so much guys! You all are AWESOME! Great tips and advice. I am going forward with this plan. I plan to do an LLC??? I know the financial advisor to the city I currently work for says he did this all online himself. I plan on staying with my current employer till the end of this year. By that time I will have saved enough money to take us through 5 months of current living expenses (will be a lot less after I quit no GASOLINE!!! expenses to my job)
I will do the LLC and then print up some flyers and business cards at VIsta print and will join the local chamber. I have already sent out an email to all my church friends so they can spread the word. They know me well and my professionalism.
I really feel good about this guys. I am so tired of babysitting my subordinates at this job. I LOVE accounting but I can do without the babysitting and lazyness of some of my workers. Kinda sad huh??
But at least I will be doing something I love out of my house with minimal travel.
Keep the ideas coming.
Really think thru all the places you spend money and that are local small business owners - your mechanic, flower shop, garden shop, doctor, hardware store, coffee shop... not national chains... approach each of them and you might be suprised that one or two solid leads for clients might come about... good chance that they are either doing themself and are tired or have a friend doing it and would be exstatic to have a better system with better tracking/reporting...
also, learn the nuiances of not-for-profit and fund accounting (which is similiar to some of the unique gov't reporting requirements you mentioned) and then approach the small-mid size churches... a lot of them do it in house and just get buy - but also would love to have a better systems of accountability/transparency
Thanks Dave. I am an expert in govt'/fund accounting. I plan on approaching other small govt's to make sure they are compliant in different areas. I am also looking to educate myself on water rate studies. The consultant we have now charges a fortune
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