AutoEntry: What do you need to be a successful accountant or bookkeeper?

In this extract from Natasha Everard's book, The Bookkeeper Superhero, she explains the core things you need to have in place to make everyday the most productive it can be—as well as ensuring you're legally compliant and working towards a clear business goal.

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The great news is that bookkeeping needs very little expenditure upfront. Many of us can and do work from a home office, and use our existing laptops and mobile phones.

But you need to consider your needs. What kind of bookkeeper are you going to be? For example, if you intend to do face-to-face meetings with clients then you’ll need to be able to do that—whether that’s having transport or, if the client is coming to you, a dedicated space.

An accountant's workspace

In terms of workspace, you need to find what works best for you. There’s no right way of doing it. There are people who find a desk in a café and work from there. You might hot desk in a shared space. However, you should take care around data protection requirements. People can peer at your screen over your shoulder. In fact, I would suggest you avoid client work if you’re in any kind of shared space, and do other kinds of work instead.

For me, I realised that I would need a dedicated desk at home that was my own. It needed to be in a quiet place, away from children and pets! Crucially, I don’t mention my location anywhere. So, I sometimes work from my parents’ house, or cafes.

I realised during Covid that I really needed a dedicated internet connection for my home office. Everything bookkeepers do is in the cloud nowadays, so this is simply vital. My son was at home during lockdown and would often max-out the connection while playing on his Xbox, or downloading files, or streaming from school. Getting my own independent internet connection turned out to be simple: I signed-up for 4G broadband. This is like having a permanent mobile phone connection for your

computers, so it doesn’t need a cable to your home, or phone line. Therefore, there’s very little setup, too.

Scheduling and safety

Consider your schedule. Are you going to keep to a strict 9-5? Or are you simply going to start when you’re feeling ready, and finish following the same rules, with the proviso being only that the work gets done?

Some people choose to have certain days where they only work solidly, and the phone is set to send calls straight through to voicemail and the email app is closed.

Consider safety, too. You might be working from home during the daytime when family members are out. You might find that clients have to drop things off for you, such as bundles of paperwork. My home/office is in the middle of nowhere, and the nearest people to me are dead people in a churchyard! However, I have a video doorbell system, so I can see who’s at the door each time.

Finally, do make sure that you’re legally permitted to work from home. For example, many rental properties don’t let people run a business from the home, although home working is usually considered OK. It might be as simple as just running it past your landlord first. Check your home insurance policies, too. Again, working from home for an employer is usually OK but running an actual business from the address might invalidate the terms.

Hard infrastructure

Make sure you have a budget plan when you start, so that you don’t start spending uncontrollably. Even small purchases here and there can add-up.

But ultimately, our industry is one that simply doesn’t have a lot of capital expenditure and fixed costs. It’s relatively economic when starting out.

Here’s a few tips around what I personally use to run my bookkeeping business, and the costs associated with it:

• Mobile phone: I use my personal mobile but with an e-SIM for my business number, and a normal SIM card for my personal calls. Most modern mobile phones allow this configuration. If in doubt, speak to the phone manufacturer’s support team, or your mobile provider’s helpline. Another option is voice-over-IP apps that let you rent a UK number. These are just like the existing phone app on your phone, but for me, it’s means just one phone I take everywhere.

• Computer: I started my business with my own laptop, and I kept using that for four years. During Covid I decided to get a more powerful computer, and nowadays I use multiple monitors. I find this is better for automation work, which I’ll cover in a different chapter of this book. But none of this extra hardware is strictly necessary. In fact, one thing that pushed me towards buying the extra screens was because they were on sale, and I couldn’t resist the bargain!

• Scanner: I invested in a business scanner in order to get data from documents and into AutoEntry by Sage, my financial data automation tool of choice. The scanner was a large investment, by the standards we’re discussing here, costing a little over £300. But it’s been a very useful tool.

• AML licence: Every year you’ll need to get an anti-money laundering (AML) practice licence, either through your awarding body (e.g., the ICB), or direct from HMRC. This is around £300-£350, and usually needs to be paid as a lump sum rather than monthly.

• Data protection fee: Currently this is £40 a year and is paid to the ICO. It’s a legal requirement for any business that processes personal information. And bookkeeping definitely falls into that category.

• Indemnity insurance: This is a fixed fee each month, and in recent times this has increased, just like all insurances have, such as car or home insurance. Insurance cost vary, and I suggest you speak to either a broker, or to those your governing body recommend.  If you do have clients visit your home, you may need to take a look at other insurances, too, that may be applicable.

• Software subscriptions: Most software nowadays is in the cloud, and usually it’s paid for by monthly or yearly subscriptions. There’s two ways to handle this. You can pay for the apps and work this cost into the prices you charge clients. Or your clients can pay for the software themselves and provide access (or the output from the apps) for you. Sometimes there are partnership programmes that provide a happy middle ground, where the bookkeeper can actually earn money or credits by offering their clients the apps to use themselves. AutoEntry offers a scheme like this, for example.

Business plan for bookkeepers

You’ll need a business plan but, perhaps surprisingly, I don’t believe you need feel stressed if you either don’t have one from day one, or if you have one but feel it’s incomplete. You can fill in the gaps as you progress. Some of these gaps you won’t even know until you start working for your first client, so this makes sense.

A great tip is to use artificial intelligence (AI) tools like ChatGPT or Google Bard to create your business plan. Just ask it to create, say, a three-year business plan for a British or UK bookkeeper. It’s stunning what it comes back with, and you should certainly be able to use this as a template for your business plan, at least. It might be all you need!

You’ll need a method statement, which is what you can take to clients to give clarity on how you’re going to work. Here’s where you list the technology you’re going to use, like automation, and things like that.

Your business plan is valuable because it will remind you of your “why”, as we discussed right at the beginning of this chapter. It’ll also break down your financial targets, so you’ll know if your business is doing well.

But financial targets are also more concrete. The issue with bookkeeping is that it can be an up-and-down existence. You have to be prepared to ride the crest of the wave and accept that some periods will be better than others. Some clients may stay with you for 10 or 20 years. Some might not last 20 minutes! Financial targets help you keep an eye on where you should be heading for.

Furthermore, our industry has no happy norm when it comes to income, with people charging based on what they feel works best. Location plays a big factor, too, as does whether you’re a sole practitioner compared to the services of a big firm.

As a sole practitioner, there’s no hard limit on the maximum number of clients you have, and that you want to aim for in your plan. It’s all about the workload the clients you have present to you. For example, you might have 100 clients, but they’re all Self Assessment income taxpayers. So, the work is largely a single touchpoint during the year.

Or you might have 10 clients, and each could demand nearly all of your time, every day!

Here's what I’d expect to include in any business plan for a bookkeeper:

• Year 1: 5-10 clients. Pricing will cover your expenses, plus the net income afterwards that you’re hoping to achieve.

• Year 2: Up to 30 clients.

• Year 3: Expect to plateau at this point. Maybe you might marginally boost client numbers, but this is the point where you’ll be starting to work out what clients you like to work with, plus what industries you prefer working with.

• Years 4 and 5: This is the point at which you can expect growth once again. You’ll have figured out what’s worked, and what doesn’t work.

This was an excerpt from The Bookkeeping Superhero, by Natasha Everard. The eBook is available for free download from Natasha's website or to buy in paperback.