Staring my own business

kelrob74

Good afternoon,

I'm in the process of commencing my own accoutancy business offering book keeping and Management accounts, I'm at a loss at what cost to charge to customers, can anyone please provide any pointers.

David Ballantyne

Hi Kelrob,

How to set prices is a continuous conundrum for bookkeepers and accountants in practice.

A simple approach, which would be highly justifiable to the client, would be as follows:

For the particular service you wish to offer, research what the client would have to pay to employ someone to do this work and then add on your own overheads. Divide this total by the number of weeks per year that you want to work in your business (you need to take some time off for holidays), then divide this total by the number of chargeable hours you can work in your business per week (you will need some time for internal admin).

An alternative way to view the scenario is to research what it would cost you to employ someone in your accountancy practice.

This will give you a minimum hourly rate to charge on the basis that if you were charging less then you might as well get a job.

As an example: Bookkeeping rate.

In North East England, a sensible salary to attract a fully qualified AAT bookkeeper would be £23,000 per year. You can find this out simply by doing a Google search for "bookkeeper salary" and looking at the various websites that appear in the listing. On top of this should be added employer's NI and employer's pension contribution plus possibly other statutory costs such as employer's liability insurance and your own overheads (mainly practice license and PI insurance).

So, £23000 salary + £3174 employer's NI + £690 employer's pension + £1000 overheads = £27864 per year.

Divide this by the number of working weeks in the year: 52 weeks less 28 days minimum statutory holidays = 48 weeks.

£27864 / 48 weeks = £580.50

Divide the weekly amount by the amount of chargeable hours you can work after allowing for your own internal business admin:

37.5 hours per week less 2.5 hours for internal admin = 35 hours.

£580.50 / 35 hours = £16.59 say £17 per hour for convenience.

This is the rock bottom, absolute minimum that you should charge otherwise you might as well get a job. Adjust the formula to suit your own circumstances. Management accounting is a different job and you should research a different rate for that.

A good source of information on rates is Bark.com. Bark.com is a lead generation site. You can register for free and view leads for free (you only have to pay if you want to contact the lead). When you view leads, Bark provides information on the range of prices that other professionals charge.

On Bark.com, the advised range for bookkeeping is £18 to £20 per hour. They generally advise that a premium rate would be £25 per hour.

I aim to charge £20 to £22 per hour. I know of another AAT mip who charges £25 per hour for bookkeeping. I understand that high street accountancy practices charge around £35 per hour.

Hope that helps,

David.

kelrob74

Hi David, Thank you so much for your advice. It has been incredibly useful.
It is very much appreciated.

Very best wishes, Kerry

kelrob74

Hi David,

Thank you so much for answering the above question. I do have one other question. Do you have any advice with regard to marketing and obtaining clients. I am planning to develop a website. Any additional advice would be greatly appreciated.

Kind regards

Kerry

David Ballantyne

The number one headache for all self employed bookkeepers and accountants is how to get clients. This is something I am still trying to successfully solve myself. I believe I have now broadly got a grasp of the options available and I am now in the process of gradually implementing this myself.

I think a website is pretty important these days. You want to have at least an attractive brochure site. Further down the line you may want to develop a content marketing and sales funnel strategy but that's a whole other topic in itself.

The quickest, most convenient way of getting good leads is Bark.com. These leads are people who are looking right now for services. There are other similar lead generation sites, Bidvine, Star of Service and Service Start. Bark.com is far and away the best of the bunch in terms of the number of leads and overall quality of service. The downside is that the leads have to be paid for if you want to contact the prospect. Having said that, the lead cost is reasonable. Bark advises that on average one in four leads will convert into a client. I have only recruited one client through Bark and I would say their advice on conversion is about right.

A cheaper, time consuming approach which also requires patience is networking. Networking includes telling and frequently reminding everyone you know that you are offering services. Your networks are friends and family, formally organised business networking groups in your locality, your Facebook, LinkedIn and Twitter contacts. Your goal is to develop relationships of trust within these communities by showing how you can help people and also by just generally chatting to show your human side (think of this as chatting with colleagues in the office). You should be thinking in terms of three months to a year before this approach starts producing leads (you have to build the relationships of trust first).

Something I have yet to try but which is commonly advised by marketing gurus is Facebook advertising. Another obvious option is Google Ads. I know an accountant in my locality who spends about £350 a month on Google Ads and this produces about 20 leads a month. I understand that Facebook ads are a lot cheaper.

Marketing gurus I suggest you follow are:
Amanda C Watts of oompf.global. I would not suggest that you sign up for her courses, they are horrendously expensive. I do suggest that you connect with her on LinkedIn, search out and join her Facebook group and follow her on Youtube. She gives away a lot of valuable tips on these platforms.

Other online marketing Youtubers I suggest you follow are:
Miles Beckler
Wes McDowell
Adam Erhart
Jason Whaling

Other options include print advertising. I have not done this but I have read that some people have had good results by advertising in local advertising booklets which are delivered to people's homes.

Hope that helps,

David.

kelrob74

Thank you so much David, this is incredibly useful, Your help is greatly appreciated.

David Ballantyne

Thought I would add something else to this regarding finding clients. I have signed up to a gig working website called People Per Hour. Having looked through some of the jobs available and profiles of other UK based bookkeepers and accountants, I think this may be a decent site for finding work.

I have also looked at a site called Freelancer but there doesn't seem to be much UK based work on it and the fees being quoted seem very low.

Another similar site that I am aware of but not looked at is Upwork. I have heard also that fees on this site are also very low.

Weezy123

I am currently studying CIMA with just one exam left on Strategic level. I am looking at starting up bookkeeping along side my full time job. I have my CIMA membership so would I still need my AAT membership to be able to take on other peoples books?

Thanks
Louise

David Ballantyne

Hi Weezy,

As a general point, there is no legal requirement to have any bookkeeping or accountancy qualification to provide bookkeeping services.

The benefit of having membership of a professional body is that they will help to ensure that operate your business in compliance with the law. Even simple bookkeeping is quite a heavily regulated business.

Do not operate a bookkeeping practice without a license from the AAT or you could lose your membership.

You are currently a CIMA student. I am also. CIMA do allow you as a student to operate a bookkeeping business but you are not allowed to make reference to your student membership or to any qualifications that you have currently achieved, e.g. Advanced Diploma, in marketing your business. You can only mention CIMA in your marketing once you are fully qualified and have a practice license with CIMA or another body acceptable to CIMA.

I believe that AAT and CIMA accept each other's practice licenses. By that I mean that if you have a practice license with one, then you don't need to apply for one with the other (you should double check this).

AAT has much better support for members in practise than CIMA.

You should check your employment contract to see whether you need permission to operate a business alongside your job. Employment contracts usually forbid this and require you to seek express permission to do this.

Hope that helps,

David.

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