Setting up one-man bookkeeping firm - advice?

KoopaCooperKoopaCooper London, UKPosts: 85AAT Student
I'm the bookkeeper and VAT/accounts assistant for a small (12 people) accounting firm, but I've recently been considering the idea of setting up my own one-man bookkeeping business on the side, to earn some extra money (I wouldn't want to risk going fully self-employed) on the side to supplement my minimum wage.

Just to start, I'm not looking at rushing into anything. Maybe sometime next year, but I want to make sure I know all my steps before I start walking here. :) From my job, I've learnt some of the things I'd need to do in order to set this up, but I wanted to ask in case there's anything I'm overlooking anything.

I'd be looking to do bookkeeping online for sole traders or very small businesses, with the clients hopefully sending me invoices and bank statements by email, as I would be working from home and so have no physical storage space (beyond a hard drive or two). I would also want to protect myself (and my father, with whom I live) personally from any business debts,

So the first thing to do would be to form a company; that's easy enough (I've learnt how to do that as one of regular tasks at my F/T job) and not expensive. Then probably open a business account.

Being a company, I would have to maintain certain yearly actions, i.e. submitting a confirmation statement and accounts each year to CH. Also I'd be trading obviously, so I'd need a Government Gateway account and to register for CT.

I'd need a method of invoicing my own clients and doing my own books, so I'd choose some online accounting software for me; probably QuickBooks, as that's the one I have most experience of using at work.

In order to actually do business, I'd also need to be registered for AML, but I wouldn't do that with HMRC because of the cost; I'm a member of the IAB (still not yet finished doing my AAT), so I'd almost certainly register with them. I'd also need to obtain a Practising Certificate to be an MIP. On top of those, I'd need Professional Indemnity and Public Liability Insurance.

So to recap at this point. In no particular order:

1) Form the company (one-off cost)
2) Obtain practising certificate (annual fee) with IAB
3) Register for AML regulations (annual fee) with IAB
4) Professional Indemnity Insurance (annual fee)
5) Public Liability Insurance (would I need this for a home office?) (annual fee)
6) Get a Government Gateway ID and register for Corporation Tax with HMRC (free)
7) Get a business current account. A savings account might be useful too, but not necessary. (probably a monthly fee)
8) Set up accounting software for my own business. I can be invited to gain access to my client's books on several online platforms. (I have a couple of years experience already with using QB, KF, and Xero) (monthly fees)
9) I'd probably keep a small client list in something like Excel, no need for expensive software (free).

Now I know I'm not yet competent to prepare accounts (I could...but I might not do it correctly so better simply to not do it at all yet), but I could offer clients some lower-level services that I've learnt through on-the-job experience, such as:

1) Company formation and dissolution
2) Company secretarial (Confirmation Statements and generally maintaining info on Companies House)
3) Bookkeeping of course
4) VAT returns

Q) If I had a bookkeeping client, would it be considered ethical if I were to recommend them to the accounting firm that I work for, to have their accounts done?

It was at some point while I was idly thinking about all of this the other week, that I realised this was more than just a purely idle thought...it could work; I'm pretty sure I could make it work. I certainly wouldn't get rich, but it could nicely subsidise my employment income. Also wow this post just got long.

But really, is there anything I may have missed in terms of things I'd need to do to fully - and more importantly, to legally - set up a company?
Accounts Assistant, ᴍɪᴀʙ & AAT Student

AAT
Level 1 - 29 Jan 2015
Level 2 - 17 Jun 2015
Level 3 - 22 Jan 2016
Level 4...
Budgeting - 20 Oct 2016
Financial Performance - 22 Dec 2016
Financial Statements - 23 Mar 2017
Personal Tax - 30 Mar 2017
Business Tax - 27 Apr 2017
ICAS Project (Preliminary pass!)
RenBeccaLouJ9

Comments

  • BusinessWomanBusinessWoman Posts: 9Registered
    Hi I would like to do the same as you, small businesses and have them send me their paperwork. How easy is it to find them? I haven't started yet, I'm wondering whether to start level 4 first. I can already process up-to Trial Balance.
  • KoopaCooperKoopaCooper London, UKPosts: 85AAT Student
    Hi @BusinessWoman

    I honestly have no idea how hard it would be to attract bookkeeping clients - I've never had to do my own marketing before.

    To be frank, I think that if the primary purpose is bookkeeping services then holding level 3 would suffice for getting such a business started, although I'm sure you'd still want to do level 4 later (if turnover is very good, you might even take a dividend to pay for level 4).
    Accounts Assistant, ᴍɪᴀʙ & AAT Student

    AAT
    Level 1 - 29 Jan 2015
    Level 2 - 17 Jun 2015
    Level 3 - 22 Jan 2016
    Level 4...
    Budgeting - 20 Oct 2016
    Financial Performance - 22 Dec 2016
    Financial Statements - 23 Mar 2017
    Personal Tax - 30 Mar 2017
    Business Tax - 27 Apr 2017
    ICAS Project (Preliminary pass!)
  • BusinessWomanBusinessWoman Posts: 9Registered
    Oh thanks for your reply. You are well on your way as I see you have completed level 4. I'm deciding whether to self-study. Good luck!
  • KoopaCooperKoopaCooper London, UKPosts: 85AAT Student

    Oh thanks for your reply. You are well on your way as I see you have completed level 4. I'm deciding whether to self-study. Good luck!

    Thanks, haha. :) Actually I haven't finished yet - just submitted my ISYS project and I'm waiting to hear back whether I passed or not.

    Typically, a student would get their tutor to evaluate the project and if they deem it ready for upload, then you've effectively passed. However I lost my contact with my tutor ages before I finished, so I just finished on my own and uploaded, and now am hoping for the best. xD
    Accounts Assistant, ᴍɪᴀʙ & AAT Student

    AAT
    Level 1 - 29 Jan 2015
    Level 2 - 17 Jun 2015
    Level 3 - 22 Jan 2016
    Level 4...
    Budgeting - 20 Oct 2016
    Financial Performance - 22 Dec 2016
    Financial Statements - 23 Mar 2017
    Personal Tax - 30 Mar 2017
    Business Tax - 27 Apr 2017
    ICAS Project (Preliminary pass!)
  • MickdundeeMickdundee LondonPosts: 382Registered
    Your previous posts suggest that you are employed in practice.

    Your contract of employment may prohibit you from taking on work of this nature outside of your employment.
  • KoopaCooperKoopaCooper London, UKPosts: 85AAT Student

    Your previous posts suggest that you are employed in practice.

    Your contract of employment may prohibit you from taking on work of this nature outside of your employment.

    Good point, thanks for making it!

    I shall have to look again at my contract...if I can find it. xD
    Accounts Assistant, ᴍɪᴀʙ & AAT Student

    AAT
    Level 1 - 29 Jan 2015
    Level 2 - 17 Jun 2015
    Level 3 - 22 Jan 2016
    Level 4...
    Budgeting - 20 Oct 2016
    Financial Performance - 22 Dec 2016
    Financial Statements - 23 Mar 2017
    Personal Tax - 30 Mar 2017
    Business Tax - 27 Apr 2017
    ICAS Project (Preliminary pass!)
  • Cordy88Cordy88 SouthamptonPosts: 9Registered
    Also interested in looking into this - your have to keep us posted @KoopaCooper

    So how much overall do you roughly estimate this cost of setting up to be?
    Member Status: MAAT
  • kimballykimbally Posts: 1Registered
    I'm in the process of doing this at the moment too, although not employed as well. I took a career break to complete my studies to enable me to set up as a bookkeeper on my own. Currently have acheived L3 Bookkeeping and continuing to get the L3 accounting.
    You have a very comprehensive list of things to do before you set up! I have got that we need to register with ICO (£35) and have our own policies and procedures, such as client care, continuity of practice. Also to check home and car insurance to check if business covered. I will be doing my licence through AAT which also ticks the AML off the list.
    I'm just having a bit of a crisis of faith, can I do it on my own with no one to fall back on, am I disciplined enough to do it from home (and ignore the washing, cooking, cleaning etc!)
    I also haven;t got experience of accounts software and am planning on trying to learn QB/Sage/Xero etc but not sure how the best way is to go about this.
    Good luck!
    Cordy88
  • KoopaCooperKoopaCooper London, UKPosts: 85AAT Student
    edited October 26
    @kimbally - from my experience, QuickBooks and other online accounting software platforms are made to be used not just by accountants, but by small businesses and sole traders with potentially little-to-no accounting experience of their own.

    To be honest, I had never used QB before I started working at the practice, but then I started doing some bookkeeping work for a few clients and (except for one bigger client whose books had already been fouled up by their own part-time bookkeeper and director) I quickly got the hang of it. You'll learn most of the basics just by using it, and there's an excellent online help manual, access to their help chat system...it should be a breeze. :)

    Oooh, registering with the ICO, I hadn't thought of that - thanks! I'll add it to the list. :smile:

    EDIT: After looking on the ICO website, and running through the quick self-assessment they have:

    https://ico.org.uk/for-organisations/register/self-assessment/y/N/Y/Yes/No

    Because how we would be processing personal data is determined by the regulatory body (e.g. AAT), rather than solely by us, we would therefore be exempt. So that saves that task then. :)
    Accounts Assistant, ᴍɪᴀʙ & AAT Student

    AAT
    Level 1 - 29 Jan 2015
    Level 2 - 17 Jun 2015
    Level 3 - 22 Jan 2016
    Level 4...
    Budgeting - 20 Oct 2016
    Financial Performance - 22 Dec 2016
    Financial Statements - 23 Mar 2017
    Personal Tax - 30 Mar 2017
    Business Tax - 27 Apr 2017
    ICAS Project (Preliminary pass!)
  • KoopaCooperKoopaCooper London, UKPosts: 85AAT Student
    So, I asked the Office Manager for a copy of my employment contract for my personal files, and it says under section 4:

    4.5 The Employee shall not without the Employer's written permission undertake other employment (which shall not be unreasonably withheld).

    So...that's that then, I guess.
    Accounts Assistant, ᴍɪᴀʙ & AAT Student

    AAT
    Level 1 - 29 Jan 2015
    Level 2 - 17 Jun 2015
    Level 3 - 22 Jan 2016
    Level 4...
    Budgeting - 20 Oct 2016
    Financial Performance - 22 Dec 2016
    Financial Statements - 23 Mar 2017
    Personal Tax - 30 Mar 2017
    Business Tax - 27 Apr 2017
    ICAS Project (Preliminary pass!)
  • MickdundeeMickdundee LondonPosts: 382Registered
    Look harder. That clause doesn’t prohibit self employment.
  • KoopaCooperKoopaCooper London, UKPosts: 85AAT Student
    edited October 31
    (Edit: That was the only clause in my contract relating to work outside of my paid employment with KBA)
    I have to admit, I wasn't sure. Working for yourself is not employment, you're not an employee - you're a sole-trader or a director (and given I'd incorporate, I'd be the latter), but depending on the management's mood, they could consider that taking advantage of a loophole.

    I wasn't going to do anything until next year anyhow, so I might try to catch the boss alone in a good mood at the staff Christmas dinner and gently enquire...or, do I need to? The contract doesn't cover it at all, so probably more polite to ask first rather than be found out later and look suss?

    @Cordy88 - sorry. you asked how much I thought it might cost to set up, I totally space on attempting to answer that.

    1) Form the company - about £30 on Business Tax Centre.
    2) IAB practising certificate - £100/yr
    3) Professional Indemnity Insurance - £250/yr
    4) Public Liability Insurance - £0 (home office, contact clients by email only so no public liability)
    5) Government Gateway ID and register for Corporation Tax with HMRC (free)
    6) Business bank account - current and savings. (Monthly fees)
    7) Own accounting software. £10/mo for QuickBooks to access clients' books and do my own (£25/mo after first 6 mo). Kashflow for Accountants - free.
    8) Client list in Excel. £0

    Without the overheads of a physical office to consider and using my existing home computer and internet connection, the initial expenses actually wouldn't necessarily be that high - probably about £400 or so in the first year. That also includes zero for marketing, stationery, printing, postage etc because I aim to be entirely online.
    But getting my butt in gear and organising my workload would be much harder, I presume.
    Accounts Assistant, ᴍɪᴀʙ & AAT Student

    AAT
    Level 1 - 29 Jan 2015
    Level 2 - 17 Jun 2015
    Level 3 - 22 Jan 2016
    Level 4...
    Budgeting - 20 Oct 2016
    Financial Performance - 22 Dec 2016
    Financial Statements - 23 Mar 2017
    Personal Tax - 30 Mar 2017
    Business Tax - 27 Apr 2017
    ICAS Project (Preliminary pass!)
  • MickdundeeMickdundee LondonPosts: 382Registered
    How long have you worked there?
  • KoopaCooperKoopaCooper London, UKPosts: 85AAT Student
    I have worked there just over a year-and-a-half. Feb 2016.
    Accounts Assistant, ᴍɪᴀʙ & AAT Student

    AAT
    Level 1 - 29 Jan 2015
    Level 2 - 17 Jun 2015
    Level 3 - 22 Jan 2016
    Level 4...
    Budgeting - 20 Oct 2016
    Financial Performance - 22 Dec 2016
    Financial Statements - 23 Mar 2017
    Personal Tax - 30 Mar 2017
    Business Tax - 27 Apr 2017
    ICAS Project (Preliminary pass!)
  • MickdundeeMickdundee LondonPosts: 382Registered
    Don’t rock the boat then.

    Don’t even mention your little dream.

    They can pretty much sack you (protected characteristic ignored) for no reason.

    Get your head down and don’t mention this for at least 6 months.
  • burgburg Experienced Mentor GloucesterPosts: 1,336Moderator, FMAAT, AAT Licensed Accountant
    I haven't had chance to read through all the posts but hear are my thoughts. Apologies if anything has already been covered.

    1 - Most important definitely. Need to discuss your plans with your current employer. It is a conflict of interest and if they are not on board and find out you may lose your job.

    2 - Assuming you can proceed based on 1 above. Bookkeeping is declining market. With MTD around the corner and the automation power of cloud bookkeeping utilising bank feeds and automation of purchase and sales invoices manual bookkeeping is becoming so much less. We are a practice who do some bookkeeping for some clients but the fees are less that what they were before. We spend money of automating the process which saves more time for the higher fee charging work.
    Regards,

    Burg
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