Maybe you have just been laid off from your job. Maybe you are tired of your current job and want a change. You may be thinking to yourself, “should I open a bookkeeping business?” And why not? Every business has to keep track of its accounting records and pay taxes each year so there must be a high demand for the service, right? That statement may be true, but the real question is are you a good fit for owning and running a bookkeeping business?

Below are some ideas I would like to share about my experience as a self-employed bookkeeper (and QuickBooks guru) that may help you with your decision:

Greater Responsibility – when you are hired as an outsourced bookkeeper, as opposed to an employee, you have a greater responsibility in making sure your work is accurate. Companies are more willing to forgive an employee for making a mistake that cost it $300 than an outside company. If the bookkeeping company made a $300 error it may be fired or be asked to reimburse the company the $300. Worst case it could sue your company and if you are not insured against errors and omissions the money could come out of your firm’s pocket.

Also, as an outsourced bookkeeper, the client will expect you to know the answers to all their accounting questions. You will not have the luxury of talking to a co-worker or bouncing an idea off of your supervisor. Instead, you are expected to have the answer right when the client asks the question.

Ability to Read & Understand Financial Statements – in your experience working at a company were you responsible for the day-to-day data entry or did you also review financial statements? You need to have a keen understanding of a Profit & Loss statement and a Balance Sheet in order to be an effective bookkeeper. Most small business clients do not even read and/or understand their financial statements so they do not know if the balances are accurate. You have to be able to apply the “smell test” by looking at the report and just knowing if an account balance seems off. Remember, the client expects you to know all accounting answers and therefore expects you to produce perfect financial statements.

Tax Knowledge – although it is not a requirement to be a bookkeeper, having some tax experience is helpful. Knowing how some items are treated on tax returns for a Limited Liability Company vs. a C-Corp. vs. an S-Corp. makes you look smarter and more valuable to your client. For example, you should know that a member of an LLC cannot be an employee of its company and instead takes a member distribution and that an Officer of an S-Corp. has to take “reasonable” wages even if the company is not making a profit. Knowing some tax knowledge also helps you properly set-up some chart of accounts.

Some clients collect sales tax. Are you up-to-date on the current North Carolina sales tax laws? Some clients want you to prepare payroll. Do you know how to prepare Federal and State payroll tax forms? Some clients use subcontractors. Will you be preparing the 1099′s?

You are not just servicing your client, but also making the tax preparer’s life easier at tax time which saves your client money.

Untangling Accounting Messes – most small business owners are good at their business, which might be selling furniture, building a deck, or baking a cake. However, most of them do not have any formal accounting training. Usually a small business owner will try to tackle his/her bookkeeping using QuickBooks without using the services of a QuickBooks trainer and ends up making a huge mess. By the time you are asked to help with the bookkeeping, you may be faced with an initial clean-up of the books.

Unique Characteristics – there are many bookkeeping services in existence. If you want to be successful, you need to have some unique characteristics that set you apart from the “general” bookkeeper. And having a different price structure from your competitors does not count. For example, you may have specialized knowledge in an area, such as working with non-profits. For me, I have experience creating import files by scratch in Excel and importing them into QuickBooks. I also have three masters degrees, one of which is in Accounting.

Doing Almost Everything – owning your own bookkeeping service is more than performing bookkeeping services. You have to do almost everything else, especially if you are new and on a shoestring budget. You may have to create your own website, Google Place page, and Google Ad Words. And do not forget about making a Facebook page, opening a Twitter account, getting LinkedIn, hopping on inside919, and any other social media page you can think of. You will have to create your own blogs, tweets, and updates. With no secretary to take your calls and schedule your appointments, you will have to return calls in between clients and have great time management skills to be able to allocate the proper amount of time to each client each month.

Networking – if you worked as a bookkeeper and felt great when you spent time alone with numbers, then owning a bookkeeping business may not be for you. Owning your own bookkeeping business means constantly networking to build business relationships with CPAs and tax preparers, other small business owners, and even your competition. You must become a people person and be outgoing to try to earn new business clients.

The above are just a few ideas I had to share. There is a lot more to think about when trying to determine whether or not you should open a bookkeeping business.

If you have liked this blog, find out more tips by following EverChange, LLC on Twitter, “like” EverChange, LLC on Facebook or sign up for the EverChange, LLC newsletter.