The home bookkeeper's clients drop off their receipts and sales slips for posting to a ledger or computer data bank. The client is provided monthly statements and information for his yearly taxes, plus any other contracted services.
Although it would be nice to have a full capacity computer operation and an MBA in accounting, there is room and a real need for less than expert (at a much lower price) bookkeeping services. Not all small businessmen can afford or even need a lawyer or professional accountant; many simply need someone to keep track of their day to day operations so they can tell where they are financially and stay out of trouble with the IRS.
For example, a one-man painting business might be happy to find someone to keep a single entry ledger for him. Then, he just drops off his receipts and copies of tickets and his bookkeeper takes care of them (records the information in the proper column and adds it up each month). A single entry ledger is a simple form of bookkeeping for uncomplicated operations that does not require any special skill or training. For the painter, the ledger would have five columns:
Date, Description, (what was done or bought), Invoice, ticket or check number, Expenses and Income.
The painter's equipment is almost all expendable because life is five years or less, so little if any of it must be depreciated. He can even use the mileage option on his work truck or car.
When he buys paint the receipt is filed and a line in the ledger filled out with the amount spent written in under Expenses. When he is paid for the job, another line is filled out and the amount received is listed under Income. At the end of the month, total the expense and income columns to see how he did. Meanwhile the tax preparer can check the expense items to see which ones are listed and how -- the information he needs is right there in the ledger.
As long as the painter is dealing in service, there are no complications. For example, the customer pays for the paint, it need not be reflected in the painter's books at all. On the other hand, if the price of the job includes the cost of the paint, the paint is a business expense. Either way, the single entry ledger works. It is only when the painter buys the paint wholesale and retails it for profit over and above the quoted price for the job that some additional records may be needed. As you can see, buying and selling paint separately can be handled more simply by treating the paint as an expense of the job, which allows the easiest bookkeeping.
Profit from the paint is included as job profit rather than profit from resale of the paint. The profit is the same, the painter pays tax on the paint, and there is no need for the tax permit or additional records -- unless the operation grows to the point where it is worth while.
The bookkeeper is legally obligated to accurately and honestly reflect client profits that come to his or her attention. Professionals often advise their clients to be honest, and if they aren't DON'T TELL ME.
Although it is quite possible to start a bookkeeping service with hand kept records (especially the single entry), a really profitable operation will eventually REQUIRE a computer. - 2 - With one, some practice and a good records-keeping program, you will learn to operate a surprisingly complex bookkeeping service. You will be able to personally handle at least ten times the volume of records.
As receipts are brought in, you simply add the information to each customer's file (disk) – the computer does all the figuring for you, and prints out the reports. Like riding a bicycle, it is difficult BEFORE you learn how, then it's easy.
A bookkeeping service is similar to a word processing service in that accuracy is extremely important and business connections are especially beneficial. Join the Chamber of Commerce, Rotary, etc. That is where to find potential customers. Have quality stationery, business cards and brochures. Be visible in community business related affairs (charity balls, cook-outs, fund-raisers). Place an ad in the service section of the paper and mail out brochures describing your service to business in your area. Try to get an easy-to-remember phone number (or convert it to a catchy word). List your number in the business section of the paper name with A to get listed first in the yellow pages.
Another suggestion is to find a professional consultant, such as a CPA that you can go to for advice when necessary. He will probably not worry about the competition because you will handle accounts that couldn't afford him anyway.
Overview: http://www.funcareers.com/categories/fi/fi-book/Start_A_Bookkeeping_Business.html
Association: http://www.aipb.org
Newsletter http://www.aipb.org/newsletter/
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BizShop/Steve Veltkamp, 2008
Please let us know at bizshop@bizshop.com
if you find any errors, or have any suggestions or comments.
Your level of success in attaining the results in our materials depends on the time you devote to the program, ideas and techniques mentioned, your finances, knowledge, market conditions and various skills. Since these factors differ according to individuals, we cannot guarantee your success or income level. nor are we responsible for any of your actions. Any and all forward looking statements here or on any of our material are intended to express our opinion of earnings potential. Many factors will be important in determining your actual results and no guarantees are made that you will achieve results similar to ours or anybody elses, in fact no guarantees are made that you will achieve any results from our ideas and techniques in our material.
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