5 Things To Know Before Starting a Bookkeeping Business With Xero
Candlefox
Are you looking to start your own bookkeeping business using Xero’s bookkeeping software? Here’s everything you need to know about offering your own bookkeeping services.
The importance of having a business model
Creating a business model will help guide your business decisions going forward, so it’s important to have a strong handle on your objectives from the get-go. Think about your ideal client (i.e. small business vs established industries), what services you’d like to offer, and how you plan on carrying out these services.
It’s also worth considering your end goal – do you always want to be a solopreneur, or would you like to eventually hire employees, or even go global?
Choosing the right bookkeeping software
Bookkeeping software is essential for managing your various clients, and there are a few good options on the market like Quickbooks and MYOB. Many bookkeeping professionals find, however, that Xero is the best choice for their business. Recognised globally and highly scalable, Xero has great accounting features and integrations.
The right accounting software will allow for easy data entry, bank reconciliations and payroll, helping you provide a better service to your clients.
Getting Qualified
In order to become a professional bookkeeper, you’ll need some training and certification. From taking a lengthy course at a TAFE to becoming certified in specific accounting software programs, there are a number of options available to you depending on your existing knowledge.
If looking to specialise in Xero specifically, consider online certificates like the Advanced Certificate in Xero or a Small Business Accounting Software Certificate for a complete overview of different systems and tools.
If you’ll be providing BAS and GST services, you’ll also have to register as a BAS agent with your local government.
Determining Your Niche
As a new bookkeeper, it can be tempting to try to be a jack-of-all-trades in order to secure as many clients as possible. However, you’ll do much better in the long run if you clearly determine your niche from the beginning.
Would you rather work with entrepreneurs and start-ups, or established businesses? Is there a particular industry you’d like to service? Do you want to work with tech-savvy companies, or more traditional ones?
Fine-tuning your bookkeeping skills
While it’s always good to master a few essential bookkeeping tasks, it’s also important to have a clear specialisation. Here are some tasks to pick and choose from:
- Standard bookkeeping: All bookkeepers will find themselves having to maintain ledgers, which involves linking accounting software with your clients’ bank to collate transaction data. Your client may do the bank reconciliation themselves, or you could handle this task for them too.
- Monthly reporting: Many bookkeepers also conduct regular health checks for their clients, which involves producing a balance sheet, profit and loss statement, aged payables report, aged receivables report, and a cash flow forecast.
- Accounts receivable: This involves advising on payment terms, monitoring ageing receivables and following up overdue accounts.
- Accounts payable: Accounts payable involves keeping an eye on what your client owes, when these amounts are due, and when it makes sense to reconcile amounts in accordance with the cash flow forecast.
- Filing taxes: Bookkeepers specialising in taxes keep tabs on GST collected and paid, file ATO reports. ensure clients are able to pay income tax when required and make payments on the client’s behalf.
- Payroll: Managing payroll for your client involves maintaining employee records, ensuring leave entitlements are accurate, calculating pay and deductions on payday, creating payslips, making payments and more.
- Training staff: Some bookkeepers help business owners and their staff better understand their own bookkeeping duties and best practice for invoicing, stocktaking and expense reports.
Starting a bookkeeping business with Xero can be challenging, so it’s important to have a good idea of what you’re getting into.
With the right qualifications under your belt and a good understanding of the Xero bookkeeping partner program, however, you’ll be off to a great start!
