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The Brilliant Bookkeeper

TABLE OF CONTENTS INTRODUCTION 1

QuickBooks for Contractors 1 Restaurant 101 2

Your Guide to Brilliance 3

YOUR BRILLIANT CAREER—WHERE TO BEGIN? 4

My Story 4 Who Are You, and Who Is Your Client? 5 Brilliant Action Plan Worksheet, Step 1: Who Are You? 6 Brilliant Action Plan Worksheet, Step 2: Your Ideal Client 9 Initial Interview Questions 11 Client Engagement 11 “Firing” a Client 12 Engagement Letters and Contracts 12 Brilliant Action Plan, Step 3: Get Your Forms in Order 13

SKILLS AND TRAINING 14

Accounting 14 QuickBooks 14 Brilliant Action Plan Worksheet, Step 4: Your Skills Training 15

SETTING YOUR RATES 16

Retainer 16 Terms 16 Brilliant Action Plan Worksheet, Step 5: Set Your Rates and Terms 18

BUSINESS BASICS AND MAKING IT LEGAL 19

Decide on a Business Entity 19 Sole Proprietorships 19 Partnerships 19 Corporations 19 S Corporation 19 Nonprofit Organizations 20 Limited Liability Company (LLC) 20

Understanding Entities for Your Clients 21 EIN (Employer Identification Number) 21 Fictitious Name Statement 21 Business License 21 Business Checking Account 22 Business Plan 22

Executive Summary 22 Business Description and Vision 22


Definition of the Market 22 Description of Products and Services 22 Organization and Management 22 Marketing and Sales Strategy 22 Financial Management 22

Errors and Omissions Insurance 23 Brilliant Action Plan Worksheet, Step 6: Make it Legal 24

SOFTWARE 25

QuickBooks Pro and Premier Industry Desktop Editions 25 QuickBooks Pro vs. QuickBooks Premier 26 What about working remotely? 26 QuickBooks Online 28 QuickBooks Payroll 29 QuickBooks Online Payroll 29 QuickBooks for Mac 30 QuickBooks Enterprise Solutions 31 QuickBooks Point of Sale 32 QuickBooks Pro‐Advisor Program 32 Brilliant Action Plan Worksheet, Step 7: Your Software 33

SETTING UP YOUR OFFICE 34

Renting an Office 34 Home Office 34 Office Furniture and Supplies 34

Hardware 35 Back Up 35

Brilliant Action Plan Worksheet, Step 8: Your Office 36

YOUR MARKETING PLAN 37

Your Brilliant Business Identity and Presence 37 Competitive Advantage 37 Tagline 38 Website 38

Claim your Google Place 39 Brilliant Action Plan Worksheet, Step 9: Your Business Identity and Presence 40 Get Clients 42 Brilliant Action Plan Worksheet, Step 10: Get Clients 44

CONCLUSION 46


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INTRODUCTION The best part about having your own bookkeeping business is that you can relate to your clients in a very real way. After all, they are business owners, and so are you.

I’d like to start with the most important advice I have to offer: Think from the perspective of your clients, and care about their business as if it were your own.

It sounds easy to do, but one of the biggest mistakes I see bookkeepers make is being rigid in their thinking. They have their way of doing things, and that’s that. They aren’t willing to change “their way” to accommodate their customers. Besides doing a mediocre job, they rarely learn anything new. Eventually, they become obsolete and fearful of new ideas and technologies. The world moves fast today, and if you want to keep up, you must be brave—be willing to make mistakes and invest time learning new skills and technology.

Your clients will know if you really care about their business, and you can build an incredibly loyal following. Remember, though, that caring does not mean “bossy”—or a nervous breakdown if things aren’t going well. Show genuine interest and concern, but make sure you respect boundaries.

This advice may not be what you expected; after all, one of the attractive things about having your own business is that you have the freedom to do things your own way. However, as a freelance bookkeeper, you will be working with all different types of people and businesses with different needs, preferences, schedules, and personalities. It’s important to always keep in mind that your clients like to feel they are your only or at least your most important customer.

There is no doubt in my mind that the number one reason I have been successful in my business is my flexibility, adaptability, willingness to learn, and genuine desire to serve my customers because I really care about them.

The first thing I do when I meet a prospective client is to learn as much as possible about them and their business. I do have my methods, “my way” of doing things, but I stay as flexible as I can. Not only does it serve my client, but also in doing so, I’ve never stopped learning. Most of my expertise and experience has been gained by learning what I needed to know to accommodate one of my clients.

Here are two real examples:

QuickBooks for Contractors

As a freelance bookkeeper, my first client was a building contractor. I’ll call him Jim, who was referred to me by a friend—he was her father‐in‐law. Jim had done a fair amount of his own bookkeeping. He was familiar with QuickBooks, and he knew his business well. Jim had a pretty good working knowledge of QuickBooks, just not the time, accounting knowledge, or inclination to do all his own bookkeeping. It was a fortunate meeting for both of us, because


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this particular man was a natural teacher who truly enjoyed mentoring me, and I had the accounting expertise and love of bookkeeping that he lacked.

At this stage in my career, I knew bookkeeping and how to use QuickBooks in general, but I did not know much about the contracting business. Jim was more than happy to teach me the intricacies of the business side of contracting, and I was eager to learn. In addition to his instruction, he lent me QuickBooks for Contractors, which laid out particular processes and workarounds in QuickBooks to provide contractors with the specialized financial information they needed to make good decisions—job‐costing, time and material and progress billing, retainers, and work in process. I didn’t just read the book . . . I devoured it. I went on to build my early business almost entirely on bookkeeping for contractors.

This willingness to learn something new not only helped launch my business but also helped build my consulting and training practice, a lifelong friendship, and still loyal client.

Restaurant 101

In another example, I was hired by a restaurateur to handle his bookkeeping. At the time, I was definitely a seasoned QuickBooks and small‐business bookkeeping expert, but I was not familiar with the restaurant business in particular. Fearless as ever, I dove right in, doing lots of research on restaurant accounting and creating processes based upon my experiences with other businesses.

The restaurant business can be brutal, and this client was struggling. It was important as a bookkeeper and advisor that I understood not just what the numbers were but also what they needed to be. This led me to accompany him on a “field trip” of sorts to his food supplier for food tasting and an important lesson on industry margins and accounting.

The trip took most of a day, but I learned that restaurants have very specific target margins for food, beverage, and labor. Even a small deviation from the target margins can mean loss rather than profit for a restaurant. I was able to set up a report in Intuit Statement Designer that displayed the margins for each of these areas for quick, easy, and constant evaluation.

I also learned that restaurants do not evaluate their financials on a “monthly” basis like other businesses, because some months include more weekend days than others. Weekends have much higher sales than weekdays, which skew reports for this month vs. last month or this month of last year vs. this year. Instead, we ran our financial statements on a four‐week cycle so that each cycle had the same number of weekend days.

During the food‐tasting part of the excursion, I admit I felt odd. After all, I was the bookkeeper —what was I doing tasting food? However, I’ve learned over the years that the more you can learn about a business, the more connected you are. Often, you are in a position to offer valuable insights into a client’s business that they are not even aware of. The more familiar you are with the business’s operations, the better an advisor you are. It’s very powerful, and I always try to learn as much as I can about the business I am serving.


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These are just two examples; I have dozens more. It’s simply a matter of practice for me to learn everything I can about my clients, their business, and their industry. The first step of this program sounds simple, but it’s possibly the most important!

Your Guide to Brilliance

Be . . .

Inquisitive Flexible Accommodating Adaptable Honest Willing to learn Brave Caring Open‐minded Friendly Reliable Accurate Timely


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YOUR BRILLIANT CAREER—WHERE TO BEGIN? There are many reasons why people are interested in starting their own bookkeeping business. Most often it is a way to make more money in less time while still enjoying a flexible schedule and work environment.

Perhaps you are at a crossroads in your life and want or need to spend more time with your family, caring for your children or elderly parents. Maybe you lost, left, or want to leave your nine‐to‐five job.

Bookkeeping is ideal because it is often not time‐of‐day or location sensitive type of work. You can structure your business and clients in a way that works best for you and still enjoy being helpful and productive in the business world.

To this day, at least once a month, I stop what I am doing and think about how lucky I am to have this amazing career. I get to help people succeed in their business and (by choice) work only for those who appreciate me. I don’t have to sit in the same office every day for eight hours doing the same boring tasks. I set my own schedule, choose my own clients, and get paid really well for my time.

It’s amazing, but I admit that for me it didn’t happen overnight. Many of you may wonder how to get started financially, where to get clients, how much to charge, and even what kind of forms you might need. I designed this guide specifically to give you all the information you need to get started right away.

My Story

Your situation is completely unique and will ultimately determine your journey as an entrepreneur. I started my business after my daughter Hanna was born, and, for various reasons, developed it over a period of years.

Throughout my earlier career, I had always worked in the corporate accounting world, even through the births of my older daughters Emma and Abbey, who were ages 5 and 6 at the time. With three small children and my husband working out of town several days a week, it quickly became apparent that there was no way I could manage a traditional job and my family situation at the same time the way I had in the past.

I still wanted and needed to contribute to the family financially, and I missed being a part of the business world. I knew that my accounting and business expertise was valuable. I just needed a way to fit it in and make it financially rewarding in the small amount of time I had available.

I knew bookkeeping for small businesses would be ideal, but I had no idea where to start.

When the bookkeeper for Hanna’s preschool quit, I seized the opportunity and offered myself for the job. The pay was terrible, but it included free childcare, and it was a start.


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I really wanted my own clients, but I wasn’t sure where to find them. I started by letting everyone I encountered know I was a bookkeeper open for clients, and eventually a friend of mine referred her father‐in‐law to me. Jim appreciated me and had lots of contractor friends who also needed bookkeeping. Soon, I had more clients than I could handle.

Your situation and journey may be completely different from mine, financially and otherwise. I wasn’t in a big hurry, but if I had pursued my business more diligently from the beginning, I would have been way ahead!

I started out in a somewhat slow and haphazard fashion, partly because of my situation, but mostly because I had no idea what I was doing. With this guide, I am offering you the benefit of my thirteen‐plus years of experience so that you can get started right away at a pace that works for your lifestyle.

Who Are You, and Who Is Your Client?

When you are starting out, it’s tempting to take on any job that comes your way. Don’t make this mistake. Being accommodating does not mean taking on clients that are not a good fit for you.

Although I am flexible and genuinely want to help everyone, it’s not always possible. The first thing you need to do is decide what kind of client you are looking for, what services you offer, and how you will deliver them.

The first step in any successful business is planning. The best way to get where you want to go is by mapping the route. Think of it this way: when you want to go on a trip, you don’t just get in the car and start driving without a good map or GPS (unless you are my husband, but that’s another story). The more you work with small businesses, the more you come to realize that planning is critical.

The following worksheets will help you make decisions as you move forward. Be sure to be specific, and don’t be afraid to “niche.”


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Brilliant Action Plan Worksheet, Step 1: Who Are You?

What are your personal strengths?

What stands out most about your personality?

What is your personal Mission Statement? (Resources: http://www.entrepreneur.com/article/65230, http://highperformanceadvocates.com/wp‐content/uploads/2010/11/Strategic‐thinking.pdf)

What is your business Mission Statement?

What days and hours will you work?

Will you work from home, an office of your own, or on location?

What geographical areas do you work in?

How many hours per week will you work?

How much money do you need to make per hour/month/year?

Are you willing to do seasonal work or work more hours at certain times? Be specific:


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What services will you offer?

Bookkeeping

Compilation

Accounts receivable

Accounts payable

Bank reconciliation

Online Banking

Payroll

Online—Accountant Wholesale or Client Account

In QuickBooks—Enhanced Subscription as Pro‐Advisor or their account

On‐site or Your Location

Time card calculation

Payroll tax payments

Payroll tax forms

Union or Certified Payroll

Financial Statement Preparation and Analysis

Cash Flow Preparation and Analysis

Budgeting

Specialized industry accounting services

Sales Tax reports

Income Tax preparation

What additional services do you offer or are willing to do if asked?

Letters

Contracts

Special industry legal requirements (e.g., preliminary notices)

Customer correspondence, including collections

Dealing with vendors if cash flow issues occur

Filing

IT services

(I have been asked to do all these things and more, even once picking up a client from his mechanic.)

What software are you proficient in and/or willing to learn and work with?

QuickBooks

QuickBooks Online

QuickBooks Point of Sale

Peachtree

Excel

Online shopping carts


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PayPal

Online banking download

Other:

What industries do you specialize in or have special knowledge of?

Construction

Nonprofit

Restaurants

Professional Services

Retail

Automotive

Real Estate or Property Management

Health Care

Manufacturing

Ecommerce Retail

Other:


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Brilliant Action Plan Worksheet, Step 2: Your Ideal Client

Your ideal client:

Age:

Gender:

Education:

Lifestyle:

Business/Industries your clients work in:

What size of business do they have (annual revenue, number of employees)?

New or established business?

Where is their business located?

What are their fears, hopes, desires?

Other traits of your ideal client:

Wrap‐up:


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My Mission Statements:

I am a bookkeeper who specializes in the following industries:

I work from to on these days:

I offer the following services:

I use the following software:

I solve these problems for my clients:


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In addition to creating a road map for your successful business, you’ve now completed the first part of your marketing plan (we’ll get more into marketing later in the book).

When you are just starting out or if you are in a small town, your ideal client may be more broad than specific. Either way, in addition to your ideal client parameters, you must also use your common sense and instincts when entering into a relationship with a client. I always do an interview with prospective clients—preferably in person, at no charge. This interview is my opportunity to find out if the client is a good fit for me and if I am a good fit for them in every way. Below is my client interview form, which I don’t always “fill out,” but it will give you a guideline of what questions to ask. (Prior to the interview, I always provide my clients with a Confidentiality Agreement.)

Initial Interview Questions

1. Tell me about your business.

2. What are you looking for help with regarding your bookkeeping?

3. What are your key products and services?

4. What is the structure of your business (e.g., sole proprietorship, S corporation)?

5. Who is the owner of the business?

6. Who are the other important people in the business?

7. What services are you looking for in a bookkeeper?

8. What software do you use?

9. Will anyone else need access to the books, at what level, and how often?

10. Tell me about your previous bookkeeper.

11. What is your approximate annual revenue?

These questions are just suggestions; you can often learn a lot about a person and their business by asking a few questions and letting the conversation flow.

Client Engagement

After the interview, if you have any doubts about whether or not the client is a good fit, don’t be afraid to pass on the job.

Here are some warning signs that may occur during your interaction with a potential client:

1. Serious cash flow or financial problems are fairly common; be mindful of the source of the issues and the client’s plans to rectify them. If you choose to work with these clients, be


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sure you have a solid payment agreement for your services. Bill and get paid frequently, and make sure they understand that paying you promptly is an absolute requirement.

2. Past Due Taxes or Returns may or may not be an issue—it depends upon the circumstances. It’s important to recognize the client’s attitude toward the issues, the cause, and the plans for resolution and staying current. Maybe they need your help, or maybe they are just flaky.

3. Complaints that a prior bookkeeper has embezzled from them, but they never found “proof.” Some of my clients had former bookkeepers embezzle from them, but some of my worst experiences have been with clients who complained about their former bookkeepers, but when I reviewed their work, I couldn’t find any issues. If you feel your alarm bells going off, by all means listen to them and pass on the job.

4. Indications that their previous bookkeeper is somehow responsible for their financial situation. This often accompanies those who claim embezzlement. Unfortunately, this could be a sign that these people do not take responsibility for their own decisions.

5. Anything else that makes you uncomfortable in any way. You just aren’t going to “click” with everyone, and that’s okay. In my experience, your feelings about someone are not going to change as time goes on, and it doesn’t serve you or your client well if you dread every interaction.

“Firing” a Client

No matter how carefully you screen them, you will have some clients that are fantastic—providing you with all of the information you need, paying their bills (including yours) on time, taking responsibility for their finances, understanding and reasonable, appreciative of your work—and those that are just the opposite—flaky, annoying, and demanding. Keep in mind that this is your business, and you have every right to “fire” a client who drives you crazy or puts your professional integrity or reputation in jeopardy.

I’ve had clients whose precarious situations—always of their own making—caused me personal stress, sometimes keeping me up at night. My biggest wake‐up call came the day I received a letter from the IRS indicating that I could be held personally responsible for one of my client’s past‐due payroll taxes. After this incident, which was resolved without me being held responsible, I became much more discriminating about who I am willing to work for and under what circumstances.

I no longer hesitate to “weed out” the higher‐maintenance, irresponsible, or less‐appreciative clients by letting them know I can no longer be of service to them—in the nicest way possible, of course.

Engagement Letters and Contracts

For most engagements except payroll services, I use what I call an “Engagement Letter” rather than a formal contract. The engagement letter clarifies the understanding and agreements made verbally between you and your client about what you will and won’t do, as well as your


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rates and payment terms. Here are some examples of the agreements I use, please feel free to modify and use them for your business:

Brilliant Action Plan, Step 3: Get Your Forms in Order

Engagement Letter for Bookkeeping Services

Engagement Letter for Payroll Services

Payoll Form 8655 Authorization for Electronic Payment

Payroll Form Direct Deposit Authorization

Confidentiality Agreement

New Client Intake Form


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SKILLS AND TRAINING

Accounting

It’s likely you have a bookkeeping or accounting background if you are looking to start your own bookkeeping business, and I recommend that you do. I also recommend that you have formal, college‐level training in accounting. Many bookkeepers are actually not trained accountants, and that is okay in many environments. As an independent bookkeeper, however, you’ll need to understand everything that is going on in the books, and to do that, you’ll need a solid understanding of accounting.

It’s easy to get such training; I recommend at least two semesters of accounting at your local community college. You can also get this type of training online. To get a jump‐start, I really like John Day’s Heart of Accounting, which you can get here: Heart of Accounting E‐book. Although it’s marketed as “accounting for non‐accountants,” it does a really great job of simplifying the concepts and can also help you see the process through your client’s eyes.

QuickBooks

Other small‐business accounting programs are available, but QuickBooks is the most widely used and my favorite. I recommend my Core Training interactive tutorial, because it is a very thorough lesson. Many bookkeepers using QuickBooks have figured out how to use the program on a surface level but don’t understand the logic and mechanics behind it or how to use it efficiently.

It’s especially important that you use it efficiently if you want to make money. The faster you are able to complete the work, the more you can charge. I am at least twice as fast, while being as accurate, as most bookkeepers are, because I am efficient and I know the tricks and shortcuts of the program.

It’s absolutely critical to thoroughly understand the program to understand the source of the report data. If you are a good bookkeeper, when your client wants to know the source of this income or that expense, you can easily identify and explain it. You must be able to confidently present your client with their financial reports, knowing that they are accurate. In my Core Training program, I have a reports section that will help you see the reports from your client’s perspective, as well as drill down and understand the numbers.

It’s always beneficial to be comfortable with technology, computers, and software in general. If you don’t have much training in this area, I recommend getting as much as you can, especially Microsoft Office Word and Excel.

I’ll get into more detail about software later in this guide.


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Brilliant Action Plan Worksheet, Step 4: Your Skills Training

Accounting Training Plan:

Timeline:

Cost: $

QuickBooks Training Plan:

Timeline:

Cost: $

Other Software Training Plan:

Timeline:

Cost: $


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SETTING YOUR RATES How much you should charge for your services depends upon several factors:

Experience and Referrals – If you have an established reputation, your services will be more in demand.

Credentials – If you are a CPA or Pro‐Advisor, you can usually charge more.

Community – The economics of where you work come into play. There is a big difference between what the market will bear in San Francisco and in rural Grass Valley, CA.

The average nationwide rate for bookkeeping is about $45–$65/hour. You’ll want to perform some local market research and find out how much other bookkeepers are charging for services in your local area. A good way to boost your earnings is to charge more for things like preparing payroll, tax, or financial reports.

You may choose to bill your clients either on a fixed‐fee basis, hourly, or both.

The benefit of a fixed‐fee contract is that you can charge a reasonable price for your services without your customer suffering from “sticker shock” over your hourly rate, plus you don’t need to haggle over every minute. The trick is in knowing how much of your time the job is likely to take so that you are compensated fairly.

I have clients on both fixed‐fee and hourly rates. I have fixed rates for Payroll, Tax, and Form Preparation and also for some steady bookkeeping and consulting jobs.

Retainer

You may choose to bill your clients using a “retainer”—a fixed amount they pay up front; when you’ve performed services that exhaust the amount of the retainer, you bill them for another. Basically, you are billing them for your services in advance. This is a great way to make sure you get paid, especially if you are uncomfortable with the client’s financial situation. The actual billing process for this is more work, and I bill almost all of my clients with payment terms.

Terms

I bill many of my clients on a monthly basis, after the fact for hourly services, in advance for fixed‐fee contracts, and offer them Net 10th terms.

Many of them (all Payroll) are set up with an agreement so that the amount of their bill for the previous month is automatically deducted from their account or credit card on the 10th of the next month. May’s services are paid via EFT or credit card on June 10. I am careful to send them their invoice promptly by the 1st of each month so that they have time to review it in advance of the deduction.


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If you have Intuit’s merchant service, Innovative Merchant Solutions, you can add Electronic Funds Processing to your account; the fees are much more reasonable than the credit card fees. At this time, EFT transactions have to be manually processed in QuickBooks, one at a time, while credit card billing can actually be set up automatically. To learn more, in your QuickBooks file (I assume you’ll be using QuickBooks to do your own bookkeeping), click Customers—Add Credit Card Processing. You’ll want to make sure your clients fill out a form authorizing you to do this. Here’s the one I use: EFT Authorization Form.

Your billing rates and terms are entirely at your discretion; just be sure you have a clear understanding and strict collection policies spelled out in your Engagement Letter and explained in person. You may be surprised to find out that some of your clients don’t consider paying you a priority. It’s up to you to set the expectation.

Whether you bill your clients hourly or on a fixed‐fee basis, be diligent about keeping careful track of your time. I use QuickBooks timesheets and time‐invoicing feature to bill my clients. Whether I am in the office or out in the field, I always record my time after each job on my iPhone (you can also use a notebook or planner) and then enter it into QuickBooks later.


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Brilliant Action Plan Worksheet, Step 5: Set Your Rates and Terms

Rates:

$ : Hourly Bookkeeping

$ : Hourly

$ : Fixed Fee for

$ : Fixed Fee for

Terms:


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BUSINESS BASICS AND MAKING IT LEGAL

Decide on a Business Entity

Getting started in business is fairly simple. The first consideration is what type of “entity” your business will be. For most very small businesses, Sole Proprietorship makes the most sense.

Sole Proprietorships

Sole proprietorships are otherwise undefined businesses. Anyone can have a sole proprietorship, and all you need to do is file a Fictitious Name Statement with your local county clerk‐recorder. All of the profit from your business flows to your personal tax return using a Schedule C. Keep in mind, though, that you’ll pay self‐employment tax, which is 100% of the social security and Medicare taxes due (half of this tax is paid by the employer for employed individuals). If you have employees, you will also need to apply for an EIN with the IRS (irs.gov) and your local state employment agency.

When you move beyond a sole proprietorship, your structure is more complicated, usually requiring additional tax returns to be set up by an attorney, and has more complicated dissolution procedures and paperwork.

Partnerships

A partnership is two or more people in business together. A partnership can be implied in law, so it is often a legally risky form of business entity. It is usually better to form an entity to define the business relationship. It pays taxes on the income that is attributed to the partners according to the terms of their written or oral partnership agreement. The IRS has tax forms for partnerships (Form 1065). Individual partners receive K‐1 forms declaring their share of the income that is reported on 1040 Schedule E.

Corporations

A corporation is considered to be a separate legal person under the law. It is owned by shareholders and operated by a board of directors who appoint officers to manage the day‐to‐day business affairs. Shareholders are either common or preferred. Preferred shareholders usually have more rights than common shareholders. Rights of preferred shareholders are specified by the corporate charter and director’s resolution. It is the most common entity used by public companies. Standard corporations are often referred to as “C corporations,” a reference to Section C of the Internal Revenue Code where their tax treatment is defined. The IRS has tax forms for corporations (Form 1120). Individual shareholders receive K‐1 forms declaring their share of dividend income (if any), which is reported on 1040 Schedule E. This results in a “double tax.” The income is taxed at the corporate level and then on the individual level.

S Corporation

A Subchapter S Corporation is exactly the same entity as a corporation or a “C” corporation and defined by state law. The “S” and “C” designations are for federal tax law purposes only. The


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“S” designation comes from the name of the subchapter of the Internal Revenue Code that defines its tax treatment. An S corporation was the first entity designed to help small businesses avoid the double tax C corporations must pay (at the corporate level and then at the shareholder level if dividends are paid). Because this type of entity has been in existence for over fifty years, the rules and regulations enacted by Congress and the IRS are complex.

The S corporation election taxes the shareholders for the profits of the corporation even if no dividends are paid. Losses are passed on to the shareholder but can only be deducted to the extent of the amount paid for the stock (called the “basis”). Generally, S corporations are complicated and have hidden risks. Limited liability companies are a better choice for most small businesses. The IRS has tax forms for S corporations (Form 1120S). Individual shareholders receive K‐1 forms declaring their share of all income, which is reported on 1040 Schedule E. If the S corporation had income, the shareholders must pay tax even if they received no distribution from the corporations. This is called “phantom income.”

Nonprofit Organizations

A nonprofit corporation is formed for the purpose of serving a purpose of public or mutual benefit other than the pursuit or accumulation of profits. The IRS grants nonprofit organizations a tax exemption status on the condition they conduct their business as agreed upon while operating within the rules established by the government agency. Special bookkeeping and tax returns are required for most nonprofit corporations.

For a corporation to apply for a nonprofit designation, it must fit into several organizational categories detailed by the IRS. Each organization has a sectional code attached to it. The categories are charitable organizations, whether public or private (Section 501(c) (3)), social welfare organizations (section 501(c) (4)), agricultural/horticultural organizations (section 501(c) (5)), labor organizations (section 501(c) (5)), and business leagues or trade associations (section 501 (c) (6)). Nonprofit corporations operate for purposes that are religious, artistic, literary, charitable, scientific, and educational and in the interest of public safety.

Limited Liability Company (LLC)

An excellent form of business entity is usually the limited liability company. It is taxed like a partnership, is very flexible, and has legal advantages. The operating agreement needs to cover all possibilities (e.g., death, retirement, divorce, and conflict).

If there is only one owner or if the spouse is active (500 hours per year), the entity can be disregarded for federal tax purposes and the income and expenses scheduled on 1040 Schedule C (like a proprietorship).

Whatever entity you decide to choose for your own business, keep this information about business entities handy (and be sure to stay updated as things change). It’s information you’ll need not just for yourself but also for your clients.


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Understanding Entities for Your Clients

Although I don’t recommend that you recommend any particular business entity to your clients, it’s important to understand these entities from a bookkeeping standpoint.

The most frequent issue that comes up regarding business entity and bookkeeping has to do with personal expenses and property. There are no restrictions for sole proprietors and the mingling of personal and business expenses; they can deposit and withdraw business funds and make personal expenses out of their business account at will (although I don’t recommend this). Corporations, even one‐owner S Corporations, need to be more careful, as the co‐mingling of personal and business funds is not permitted and can potentially have serious tax and legal consequences.

The second most frequent issue concerns owner payroll. Sole proprietors do not pay themselves through payroll but rather simply by “drawing” cash (equity) from the business, whereas officers of a corporation must pay themselves a reasonable salary on payroll (assuming the company is profitable and they receive income from the business). I always recommend my clients consult with a CPA for guidelines.

If you are not a CPA or an attorney, be sure to defer to their recommendations, and refrain from making decisions yourself.

EIN (Employer Identification Number)

In spite of its name, an Employer Identification Number, also referred to as a “Tax ID Number,” is not just for employers. If you are a sole proprietor, you don’t necessarily need an EIN—you can just use your social security number as your Tax ID Number. However, if you like to keep your social security number confidential, you’ll want to get an EIN, even if you don’t have employees. If you select another entity type, you’ll need to get an EIN specifically for your organization, again, even if you don’t have employees. Apply for an EIN number here: EIN Online Application.

Fictitious Name Statement

You can apply for a Fictitious Name Statement at your local County Clerk‐Recorder's office, which should provide you with the documentation and instructions you need to publish it in a local publication. If you are just going to use your personal name as your business name, you may not need a Fictitious Name Statement, but if your clients are going to write their checks out to “Penny Lane’s Bookkeeping” rather than your name, you’ll definitely need one to set up a bank account in your business name. We’ll talk more later about choosing your business name.

Business License

Most cities require you to obtain a business license if you are doing business within city limits; you can apply for a business license through your local city’s administration office.


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Business Checking Account

If you choose to set up your business as a sole proprietorship, it isn’t necessary to set up a separate business checking account, but I highly recommend it. As a bookkeeper, you can easily understand how much easier it will be to do your bookkeeping if your business income and expenses are separate from your personal account.

Business Plan

Having a formal business plan for your business is an excellent idea, but don’t let the task overwhelm you completely. I love the books and electronic financial planning forms from The Planning Shop. You can also use this free Business Planning Template from the Small Business Administration.

A Basic Business Plan consists of the following (from the SBA):

Executive Summary

This should be written last and explains who you are, what you do, and why. You should make sure that a complete stranger could read this document and have a basic understanding of your business.

Business Description and Vision

This should include your Mission Statement (business purpose), Company Vision (statement about your growth), business goals and objectives, brief history of the business, and list of key company principals.

Definition of the Market

Describe your business industry and outlook, the needs of your customers, your target market, your targeted clients, and any market share you currently have.

Description of Products and Services

This should be a specific description of your products and services.

Organization and Management

This presents your legal structure, licenses and permits, and brief bios of key managers.

Marketing and Sales Strategy

Identifies your market and your customers, the demand for your products and services, channels of distribution, pricing, promotions, and more.

Financial Management

An estimate of start‐up costs (if a new business), Projected Income and Balance Sheets for at least one year, as well as existing Income and Balance Sheets for the past three years (if an existing business). If applying for a loan, your current personal financial statement for each principle.


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You will notice (if you haven’t already) that many of the exercises in this book are included as part of this business plan. This book is all about a “business plan,” and it is my intention that the exercises, information, and worksheets will help you breeze through this process.

Completing the business plan may seem overly formal and even tedious at times, but stick with it. You will be amazed by the questions raised that you haven’t thought of, and you are much more likely to be successful if you know what your objectives are and how to realize them. Many people have uncertainties about the projections and unknowns, but don’t worry too much about accuracy—just be as realistic as you can with the available information.

A business plan isn’t a task you are going to complete and then file away. You are going to review, analyze, and update the plan regularly as your business evolves. I’ve created and altered many business plans for my business over the years, and it is an exercise that has proven very valuable each time.

Errors and Omissions Insurance

Although I rarely hear of bookkeepers getting “bonded” these days, you should carry Errors and Omissions insurance. You can get insurance through a local broker, possibly your homeowner’s insurance carrier, or through any number of companies on the Internet.


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Brilliant Action Plan Worksheet, Step 6: Make It Legal

Establish your Business Entity:

Type:

Timeline:

Cost: $

Get EIN:

EIN:

Cost: $0

File Fictitious Name Statement

From:

Cost: $

Business License

From:

Cost: $

Business Checking Account Bank

From:

Cost: $

Business Plan

Template:

Cost: $

Errors and Omissions Insurance

From:

Cost: $

Legal and Other Professional:

Cost: $


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SOFTWARE For most small businesses, I recommend QuickBooks. It’s reasonably priced and very powerful, flexible, and user friendly—the number one software used by small businesses in the U.S., and it’s also popular in other countries.

Most of the people I have trained to use QuickBooks are bookkeepers and the number one issue they seem to have is a lack of what I call Core Training. A large majority of them are self‐taught or were taught by someone who was self‐taught. Some have even taken classes but either did not learn much or can’t remember what they learned when they need to apply their knowledge. This is why I created Penny Lane’s QuickBooks Now! Core Training. Once you have a really solid understanding of how QuickBooks works, it’s not only possible to handle your daily transactions correctly, it’s also easier to figure out how to handle situations as they arise.

The Help menu is actually a great resource for learning specific tasks once you know the basics. Once I knew how to use the program, I learned how to use many QuickBooks features from the Help menu.

Do you have to buy the software? If you are just starting out freelancing, you may choose to work on location and use your client’s software. If you are a serious bookkeeper, however, I recommend that you purchase QuickBooks.

As of this writing, a few months after the annual release (usually in November), you can generally get the Premier Edition on sale for about $300 and Pro for about $150. Even better, you might join the Pro‐Advisor Program, which I will talk about later. For $549, you get QuickBooks Online and QuickBooks Premier Edition (and more), plus all of the great resources of this program. You have the option of taking the Certification Exam, but you don’t have to pass the test to get the software and most of the other benefits. See “QuickBooks Pro‐Advisor.”

With that said, QuickBooks is not necessarily just QuickBooks anymore, and we now live and work in a very mobile world. Now there is not only QuickBooks Pro and Premier Industry Editions but also QuickBooks Online and QuickBooks Online Payroll.

QuickBooks Pro and Premier Industry Desktop Editions

As of this writing, QuickBooks desktop versions are by far more powerful, feature rich, and user friendly than QuickBooks Online. When you purchase QuickBooks Pro or Premier, it’s a traditional software arrangement—you own a license for that version (year) software, and you install it on your computer.

You will need one license for each computer/user. You can install the software itself on more than one computer, like your desktop and your laptop, but only one person can use the license at one time. For instance, if you have two computers networked together, you can’t access one data file with both computers at the same time. So, if you and your assistant want to work on ABC Company’s books at the same time, you’ll need to have two user licenses. You can,


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however, access data files through a network—just not the same one at the same time with only one user license. All of the data files here at the office are stored on one computer, and I access them through our network with my laptop.

What’s very important to understand is that a company’s QuickBooks data file lives in only one place at a time. This means that when you create or restore a data file, that data file is now stored on the hard drive of the computer, usually in this path: shared (or public) documents—Intuit—QuickBooks—Company files (although you can override this when you create or restore a file). The file extension for the data file is .qbw, which stands for QuickBooks working file. It looks like this:

I have used other accounting systems, including Timberline, Peachtree, and Businessworks; QuickBooks is by far the most user friendly and flexible.

QuickBooks Pro vs. QuickBooks Premier Accountant Edition

Many businesses are perfectly fine using QuickBooks Pro. The main benefit of Premier is the Industry reports, which are a great benefit to contractors, manufacturers, professional services, retail, and nonprofit businesses. For manufacturers in particular, you will need the Premier Edition for assembly items. Here’s a link that compare the features of Pro vs. Premier.

For us, QuickBooks has created QuickBooks Premier for Accountants, which is $100 more than QuickBooks Industry Editions or the new QuickBooks for Bookkeepers. The Accountant Edition also has these additional features: Working Trial Balance, Client Data Review, Fixed Asset Manager, Adjusting/Reversing JEs, and quickly reclassify multiple transactions. Here is a great article on the difference between QuickBooks for Accountants and QuickBooks for Bookkeepers: http://www.sleeter.com/blog/2012/06/quickbooks‐professional‐bookkeeper‐2012/?goback=.gde_1854557_member_127147703.

I use Premier for Accountants exclusively, although some of my clients have Pro. I have clients who use the manufacturing version, contractors, and nonprofit. It’s good to know that you purchase all these versions for the Premier Edition and then choose the industry version you wish at the time of installation. Intuit now offers a monthly subscription option for the Accountant Edition, starting at $20.99/mo (as of this printing), that can help make it more affordable.

What about working remotely?

The Internet has made so many things possible—you can work from home, from your hotel, an airplane—even the beach! Sometimes, I’m not sure if it’s always a good thing (really, we should just enjoy the beach), but it is convenient.

The catch with the QuickBooks desktop version is that the data file lives in one place on the hard drive of one computer. This is not a problem if the computer is a laptop and you take it


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with you everywhere. But for bookkeepers, it can be tricky, because sometimes the data needs to be accessible to your client or someone else in your office. Based on a recent LinkedIn discussion I was involved in, I would say that QuickBooks is a little behind in this area. What most people would like is for the full‐blown version of QuickBooks to be available in the “cloud.” Many feel the current version of QuickBooks Online does not always suffice and it does have some drawbacks.

So, what are your other options for working remotely? Here’s the latest consensus:

A remote desktop access program like Logmein.com or gotomypc.com. These programs charge a monthly or annual subscription fee and allow you to access one computer from any computer with an Internet connection. You install software on the computer you need to access. To access the computer remotely, it must be turned on and connected to the Internet. When you access the computer, you will actually be “taking it over,” just as if you were sitting in front of the computer itself, which does not allow anyone to work on it at the same time you are. Most of the time, even with very fast Internet connections, I notice a delay. Processing isn’t quite as smooth and quick as working on a computer locally.

Windows Remote Desktop is a good solution for many businesses with QuickBooks Enterprise, and I have a few clients who use this program. With this software, you pay a one‐time licensing fee, which is pretty reasonable: as of this writing, about $700 for five licenses. With the software installed, users can access their own “desktop,” as well as shared documents, remotely from any computer with an Internet connection. Almost all Windows computers have the Remote Desktop installed, which makes it simple. As long as you have a fast Internet connection, there is no delay in program operations. Sounds amazing and it is, but there are costs involved. One of the expenses is making sure that you have a good computer to act as your “server” that will host the software and applications. You also must be sure that you keep the data securely backed up. Most people will require an IT professional to install and maintain the server and the software. Additionally, any software that you install and want to access on a remote desktop—regardless of how many users will access it—must be a Network version, which can add significantly to your software expenses. For instance, Microsoft Office starts at $1,800 for the network version—definitely something to keep in mind but worth it if you have several users who need to access the same programs and data.

Hosted QuickBooks with a company like RightNetworks.com. This is Windows Remote Desktop without any of the responsibility. Instead of paying licensing fees for software and IT services, you pay a monthly fee to the hosting company. The benefit is that your data is secure (make sure you choose a reputable hosting company!), and you have no IT or up‐front licensing costs. They usually charge a monthly fee per software product you wish to access. You pay the hosting fee, a monthly fee for QuickBooks, Microsoft Office, etc. The downside is that it can get costly, and there are limited software products they can host. It doesn’t work quite as well as a holistic solution for a company that wants to work exclusively on the server desktop and share documents and programs with other people in the company as hosting your own Windows Remote Desktop.


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Backing up and restoring the data file between computers is an option that I rarely recommend. It works like this: you create a backup QuickBooks file and restore it on a different computer. When you finish your work, you back up the file from that computer and restore it back to the original. It does actually work; unfortunately, there are so many places where things can go wrong:

The most common problem is that you forget to restore the most recent data version and start working. There is no way to integrate this data, so you have now either lost the work you did that you forgot to restore or that which you most recently did. Actually, there is a way to integrate data—but it’s complicated, costly, and requires a third‐party program—not a solution for this type of issue.

You accidentally restore an older version and start working. Again, you have lost some work.

Instead of replacing the data file, you create extra working files. At any point, you may inadvertently open an “old” version and start working.

I have personally experienced every one of these issues, and it is very unpleasant to have to re‐create your work. It’s even worse if you should provide bad information or reports to your client before you realize the error.

I have a couple of clients with whom I share data using the backup and restore option; we use very strict protocols and are careful that we never restore over the data on our side. The most important thing about this is that your client restores the data correctly on their end. I have a client who has me restore his data remotely using Logmein every time because we have had issues with him not restoring properly in the past. I also use Logmein to log in to a client’s file to restore their data to our most current, while we keep the “live” data file on our system in cases where they don’t use the data file but just like to have access to the most current information. I also use Logmein to work on a client’s computer directly, but it can be frustrating because there is a bit of a delay with each transaction. Windows Remote Desktop is definitely my favorite, but, of course, you need Enterprise. I have a couple of clients who use Right Networks, and I also like this arrangement because there is no delay when working in QuickBooks.

QuickBooks Online

QuickBooks Online is a very reasonable alternative for many businesses. Rather than a one‐time licensing fee, you pay a per‐user monthly subscription.

It is not as fully featured as the desktop version and does not support the features that some businesses require, e.g., assembly items, but there are 3rd party add‐ons (and more being developed all the time) that can often fill in these gaps.

For me, I find that QuickBooks Online takes a little extra time to use, and sometimes I find the reporting and functionality frustrating compared with the desktop version (although sometimes I think it’s just a matter of getting used to it). However, it is cloud based, and sharing data and tasks with clients and others is seamless. Its functionality is similar enough to the desktop


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version that most experienced QuickBooks users can learn it fairly quickly, the online banking is much better than the desktop version and it’s much more affordable in a multi‐user environment than the desktop verison – $39/mo for 5 users compared to $1500+/yr for the desktop version. And, with QuickBooks online in the cloud, you never have to worry about networking or IT.

I use QuickBooks Online for a few clients who like to have access to their books and write their own checks, while I handle their other bookkeeping requirements, such as online banking and bank reconciliation and it works great. The most annoying thing for me about QuickBooks Online is that you can have only one window open at one time. So, if I have a report open that I have modified in some way—like the date range—and I want to open the check register, I have to close the report and open the check register. If I want to open the report again, I have to go back and open and modify the report again. There is a simple workaround for this – you just open another browser window and open the register instead, but it’s just not quite the same.

My bet is on Intuit putting a lot of development resources into QuickBooks Online, and we will continue to see great improvements.

QuickBooks Payroll

Several basic options for processing payroll are currently available. By using a payroll subscription called Intuit QuickBooks Enhanced, you can process payroll in the desktop version of QuickBooks. This approach requires the most expertise regarding payroll and the proper use of QuickBooks. I am steering most people away from using this version of payroll except for those with complicated job‐costing issues, and I use mostly Online Payroll. Unfortunately, a simple error in the setup of a payroll item or an employee can cause major issues in QuickBooks. Processing payroll is a big responsibility. Errors can significantly impact both employers and employees financially. If done accurately, it’s the most reasonably priced, currently about $20–$30/month for the subscription fee for your client. If you are a Pro‐Advisor, you can add up to fifty clients using one subscription, which is currently $395/yr, making it very reasonable per client per year or month.

I have used Enhanced Payroll for years. I have switched most of my clients to Online Payroll, but I have a few contractors who still used Enhanced because they use time tracking and job costing in QuickBooks. Enhanced does have job costing available now, but I prefer the system in QuickBooks because it completely integrates with time tracking and worker’s comp costs.

QuickBooks Online Payroll

I recommend Online Payroll for almost every case. For accountants, it’s ideal, because you can set up an Accountant’s Wholesale account, where you can access all of your client’s payrolls in one place! You can process payroll, file forms, and pay taxes electronically from any computer with an Internet connection. I find this type of cloud access especially important in my practice when it comes to payroll. Even better, you can share payroll duties with your clients. Many of my clients create their own paychecks, while I pay their taxes and file their forms for them. The clients don’t realize that filing the forms and paying the taxes is extremely simple for me. I


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receive email reminders about paydays, tax payments, and forms due, plus all of my clients’ “to‐dos” are on one page. With an accountant wholesale account, you are charged a monthly subscription fee per client—about $16–10/mo depending on how many clients you have. You, in turn, choose how much to charge your clients for the service. It’s great!

Find out about QuickBooks payroll for accountants options here: http://proadvisor.intuit.com/commerce/catalog/fragments/payroll‐software‐and‐services.jsp

I started using QuickBooks Online Payroll for accountants as soon as it was available in 2009, and I put as many clients on the system as possible. It’s extremely efficient because as soon as I log in to the system, I see all of the “to‐dos” for all of my clients—taxes and forms due, etc. I get email reminders in advance when my client’s payroll is due, and I can log in from anywhere and quickly run payroll. Before online payroll, we would spend hours every month paying taxes and quarterly filing forms because we had to log in to each QuickBooks file individually. Now, we spend very little time—it’s all electronic and all in one place. I have a few clients who are still on QuickBooks Enhanced; they are contractors who have complicated job costing and time tracking that we have to do in QuickBooks.

QuickBooks for Mac

QuickBooks for Mac is very similar to QuickBooks for Windows, but there are fundamental differences between the Mac and Windows interface, and QuickBooks for Mac follows the Mac interface style. As an experienced QuickBooks for Windows user, you should have no problems using the Mac version, although it can be a little disorienting and take some practice to get used to. It’s easier to adjust to if you are familiar with the Mac interface style.

Aside from the interface, the main difference between QuickBooks for Mac and QuickBooks for Windows is the lack of certain features available in the Mac version. In the past few years, the Mac version has been much improved, but you still need to be aware of some important differences:

No accountant’s copy—You can share your QuickBooks for Mac file with your accountant, but you won’t be able to continue working in it.

Online payroll—QuickBooks for Mac exchanges data with the online QuickBooks Payroll for Mac service. Payroll is not part of QuickBooks for Mac as it is on Windows.

Limited third‐party app integration—Any applications that rely on the QuickBooks SDK, Web Connector, or App Center to access QuickBooks data will not integrate with QuickBooks for Mac.

Basic online banking—QuickBooks for Mac offers online banking statement downloads using Direct Connect or Web Connect. However, transactions can only be added to the account register one at a time, and not as many financial institutions support QuickBooks for Mac.

Price levels—Price levels make it easy to change the prices of many items at once, for example, to discount all your items during a sale.

Reports—QuickBooks for Windows has more reports than QuickBooks for Mac.

Premier and Enterprise versions—There’s only one version of QuickBooks for Mac.


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Inventory—QuickBooks for Mac does not have units of measure or assembly items.

Multicurrency—QuickBooks for Mac does not support multicurrency.

In later versions, it is possible to convert QuickBooks for Mac files to Windows and back again, though it is a bit complicated. Personally, I have had enough bad experiences with this that I don’t recommend it as a regular practice. In my experience, certain data doesn’t convert quite right, and in one case, I was unable to convert my work back from Windows to my client’s Mac version. I lost four hours of work and had a very disappointed client.

QuickBooks Enterprise Solutions

QuickBooks Enterprise is not much different from QuickBooks at all, although there is a significant cost difference, Enterprise being in the $3,000 range, with an $800/year support fee —quite significant, considering you can get Premier for as little as $250, and they appear to operate the same way, with an identical interface. The differences are subtle but important. QuickBooks Enterprise is meant for small businesses that have outgrown QuickBooks. The main differences are:

QuickBooks Enterprise can now have up to thirty users in the company data file at the same time; QuickBooks Premier is limited to five users.

QuickBooks Enterprise is designed to handle a much larger data file size. When a business’s data file gets too large (150–200 MB), QuickBooks will operate slowly and will likely experience data integrity issues.

Customer and Vendor names and list items are restricted to a certain number in Pro and Premier—at this writing, the limit is 14,500 names. Many businesses, like online retailers, may run into a problem with too many customers. Here’s a more complete list: http://support.quickbooks.intuit.com/support/Articles/INF12412.

QuickBooks Enterprise supports the use of Windows Terminal Services (Windows Remote Desktop) for remote connectivity. I talked about this earlier in “What about working remotely?”

QuickBooks Enterprise provides a much more detailed set of tools and options relating to user security and permissions. In QuickBooks Pro and Premier, you can set up users and restrict their permissions—access to certain areas of the program and reports—but it’s limited in scope. Oftentimes, when you give someone “restricted” access, it turns out there are some tasks and features you don’t want them to have access to that they still do, or that the restriction locks them out of something you do need them to do. Enterprise allows you to get very detailed in your permissions for different users, down to certain reports and tasks.

Advanced Inventory Features—QuickBooks Enterprise 12 supports multilocation inventory, lot number tracking, and FIFO. To learn more: http://enterprisesuite.intuit.com/products/advanced‐inventory/

I use QuickBooks Enterprise Solutions for one of my clients, an online retailer with lots of inventory items. We switched originally because their data file had gotten so large that it was running very slowly and frequently had errors. At the same time, we implemented Windows Remote Desktop (Terminal Server). Everyone in the company works with QuickBooks using


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Windows Remote Desktop and can access the data file from any computer with an Internet connection. It’s great; we are able to do the bookkeeping from our office without disrupting their work or having to go on location.

QuickBooks Point of Sale

QuickBooks Point of Sale program is for retailers with a physical storefront. Most clients order this program complete with bar code and credit card scanner, and it acts as their cash register. POS handles all of the inventory, purchasing, and sales transactions but does not include accounting features, such as bank reconciliation or financial reports. The sales and inventory information is imported into QuickBooks Pro or Premier through either detailed sales receipts or journal entries and vendor bills. It works very well when it is all done correctly. Working with clients using POS is a specialty. I don’t recommend diving into it without training, which you can get as a Pro‐Advisor.

QuickBooks Pro‐Advisor Program

I highly recommend the QuickBooks Pro‐Advisor Program. It is not necessarily a place to get your feet wet with QuickBooks, but it offers the bookkeeping entrepreneur many helpful resources.

The Certification Exam is not for the novice. I recommend some QuickBooks training and/or experience. I had been using QuickBooks for several years before taking the exam in 2005. However, the program does offer plenty of pre‐exam learning material and preparation, which is excellent information and may assist you in passing the exam at an earlier stage. Much of the learning material presented specifically for the exam is advanced knowledge that is helpful for a bookkeeper handling multiple clients and more complex situations independently. It’s a great way to take your practice to the next level when you are ready to make the $549 investment.

In addition to the exam and certification, the Pro‐Advisor program also comes with the following:

QuickBooks software—including a QuickBooks Premier Accountant Edition

Online subscription, QuickBooks for Mac, and QuickBooks Enterprise Solutions

Unlimited QuickBooks support—incredibly useful

QuickBooks training materials

Advice about marketing and how to grow your practice

Community forum strictly for Pro‐Advisors

Discounts on additional software for you and your clients

For an additional fee, an enhanced payroll subscription for up to fifty clients (this is the in‐program payroll, not the online version)

Referral listing on the find a Pro‐Advisor website—I’ve gotten many clients this way

Learn more about the Pro‐Advisor program here: http://proadvisor.intuit.com/


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Brilliant Action Plan Worksheet, Step 7: Your Software

Software Needed:

Cost: $

Cost: $

Cost: $

Cost: $

Pro‐Advisor Program? Cost: $


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SETTING UP YOUR OFFICE Whether you decide to do your bookkeeping work on location at your client’s offices, at your home, or rent an office, you’ll need some type of space to run your business.

Renting an Office

Renting office space can benefit your business in several ways:

Professional appearance

A convenient, private space to meet with your clients

Clearly separates home and business time and activities

Your clients come directly to you, limiting your travel time and costs

You won’t likely need much space and should be able to rent an office for $200–$500/mo, depending upon where you live. You may even be able to share space. I have actually never had an office that I didn’t share in some manner with one of my clients, even though we had separate private offices.

Home Office

Even if you have a professional office, you may want to have an office at home as well. If you will be meeting clients at your home office, it’s important that the meeting space is neat and professional, preferably with a separate entrance from your home. You do not want to meet clients at your home if:

You live in a remote location that is difficult to get to (e.g., dirt roads) or out of the main area of town

Your home is anything less than well‐maintained, organized, and sparkling clean

Your clients will have to deal with pets, dander, or odors

If your home office isn’t appropriate for clients, you can always meet them at their office or a local coffee shop.

When setting up your home office, I recommend that you find the most comfortable place possible and put some effort into making it appealing to you. My very first office was a small space in our dining room; another was situated in what was practically a closet. You’ll definitely be more likely to feel like working if your office is a pleasant and comfortable place.

Office Furniture and Supplies

Besides your computer, you will likely want to invest in at least one file cabinet, a desk, a comfortable chair, a printer, a scanner (or a printer/scanner/copier), and possibly a fax machine. You can actually get away without a fax machine and invest in an online fax service like www.efax.com or www.myfax.com. If you’re on a budget, look for office furniture on


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Craigslist or at yard sales. IKEA also has reasonable prices and a great selection of office furniture.

You’ll also need office supplies, such as file folders, sticky notes, paper, and a stapler.

Hardware

A laptop is the most flexible choice, and you can get one at a reasonable price. There’s a good chance you already have a laptop or computer at home that you can put to work. QuickBooks desktop version software (Pro, Premier, and Enterprise) uses a considerable amount of computer power to operate, and you may notice poor performance if you have an older computer.

If you use a laptop, you may also want to get a docking station, along with an extra keyboard and mouse. You can plug your printer, monitor, and extra keyboard and mouse into your docking station and then just “dock” your laptop into the docking station for easy portability. I have a docking station at both my home and my professional office, because it’s much more convenient than having to plug all of my devices into my laptop each day.

I highly recommend you get an additional monitor as well so that you can work with two monitors. It’s very easy to set up, and after you have worked with two monitors, you’ll never go back to one. In addition to being incredibly convenient, having two monitors will allow you to use very little paper. There are many documents I no longer need to print out, such as emails, daily sales summaries, and bank statements. I can work with a document open on one screen, while I have QuickBooks open on the other.

Back Up

You simply cannot be too careful about backing up your data. I recommend using both Carbonite, which you can set up to automatically back up the files you choose securely online, and a hard drive backup system that you back up either automatically or manually each day.

I recommend both because you need a backup to your backup and because restoring your data from the hard drive is much easier and quicker than restoring it from Carbonite. Personally, I have my IT guy on speed dial. I had my hard drive backup system installed, and I have it regularly checked by him.

I also have my computers checked out at any sign of trouble so that the hard drives can be replaced if possible before they die. Can you imagine explaining to your client that you have completely lost all of their financial data and have to re‐create it? This is a nightmare that you don’t want to experience!


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Brilliant Action Plan Worksheet, Step 8: Your Office

Office Furniture Needed:

Desk, from: Cost: $

Chair, from: Cost: $

File Cabinet, from: Cost: $

Other: Cost: $

Other: Cost: $

Office Equipment/Supplies:

Printer/Scanner/Copier, from: Cost: $

Fax machine/service, from: Cost: $

Misc. office supplies, from: Cost: $

Other: Cost: $

Other: Cost: $

Computer, type/from: Cost: $

Extra Monitor, from: Cost: $

Docking Station, from: Cost: $

Hard Drive Backup, from: Cost: $

Backup Backup, from: Cost: $


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YOUR MARKETING PLAN For many of us, the thought of marketing is overwhelming and intimidating and makes us think of sales and advertising, but it’s a lot easier than you think, and it’s about so much more than advertising. In fact, step one is to identify your services and your ideal client, which you’ve already done.

Your Brilliant Business Identity and Presence

Your business identity depends upon what type of person you are and what type of image you wish to project. Now is the time to bring it all together. Pull out the work you did in “Step 1—Who Are You?”

It’s pretty simple and cost‐effective these days to develop your business identity or “brand.” You can hire a graphic artist at a reasonable price to create a logo or use the templates available from online printing companies, such as vistaprint.com or in Microsoft Word or Publisher. My first “logo” was actually something I made with clipart, which I used to design my own letterhead and business cards in Microsoft Word. I’ve also used graphic artists that I hired cheaply on eBay (didn’t have much luck with this), and I once paid as little as $35 for someone to develop a logo for me. My current business image was created by a graphic designer, but it didn’t start out that way.

Don’t be afraid to show your personality, but whatever design you choose, I suggest you keep it professional looking. You needn’t get too elaborate, and you don’t even need a logo. You can simply choose a certain font and color scheme, or use a photo of yourself instead of a logo.

As for your business name, if you are an individual independent bookkeeper, I suggest keeping it simple and using your name “Penny Lane’s Bookkeeping” or something similar. If you would like a different name, be sure you tie it into what you do at some level. My bookkeeping business is “Business Matters,” so feel free to use “Brilliant Bookkeeping”—just make sure no one else in your area is using the same name. It’s okay if someone somewhere is using it, just not within your customer base.

When you are thinking about how to present your business to the world, consider not just what services you offer but also what types of problems you solve for your clients and the benefits.

For instance, you ensure they’re in compliance with the IRS, which, in turn, offers them peace of mind and security in their future. You keep track of their bank account and payables, which allows them to focus on growing their business rather than worrying about the status of their cash flow. Here’s an example of a brochure I created: Brochure.

Competitive Advantage

What makes you stand out from the crowd? Why should I hire you instead of the next bookkeeper? Review Step 1 for clues. Are you flexible? Reasonably priced? Friendly? Do you


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have specialized industry or other knowledge? Be aware of your competitive advantage for use in all your marketing material.

Research some of the other bookkeepers and bookkeeping companies in your community (Google “bookkeeping” and your town). Find out as much as you can about their businesses so that you can position yourself uniquely.

Tagline

Every business should have a tagline. A tagline is a key phrase that captures the essence of what your business has to offer. GE’s tagline is “We bring good things to life,” KFC: “Finger lickin’ good,” Maxwell House: “Good to the last drop.” My business, Business Matters’, tagline is “do what you do best, we’ll do the rest.” Make sure you focus on what benefits your business offers to your clients rather than what services your business offers.

Website

You will need a website, and you’ll need a domain name, which is “an identification string that defines a realm of administrative autonomy, authority, or control on the Internet.” As wordy as that is, it just means your website address—quickbooksnow.com is my domain name, for instance. You may even decide to base your business name around it, and it’s easier than you might think. You can get a domain name from many providers; one of the most popular is godaddy.com.

Your website doesn’t need to be elaborate. You can actually create one yourself with a template. Some companies even specialize in websites for financial professionals, such as cpasitesolutions, that come preloaded with a considerable amount of content. This is an easy and really fast way to get up and running, but I personally recommend a WordPress site.

WordPress is “open source” (free) software that you can download and use to create a website yourself. You can easily find templates that are very reasonably priced (Google “WordPress templates”). If you are very tech savvy and you have the time to invest in learning, you can create your own website for almost nothing.

If your skills in this area are marginal or you don’t wish to spend lots of time, you can likely find someone to set up a WordPress site for you at a reasonable price and then maintain it yourself with a little bit of training.

I recommend WordPress (there are others that are similar, such as Joomla, that many people prefer) because it is set up in a way that makes it very easy to make changes and maintain for the average person. Historically, websites are all html code, but WordPress pages can be maintained through what looks almost like a word‐processing type interface. Here is a screenshot of editing a page:


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I have a couple of WordPress experts that I have used, and still use on occasion, to maintain aspects of my sites that are over my head, but if you’ve ever had a “traditional” website, you are familiar with having to call your programmer for every little change to your text. With WordPress, I am no longer dependent on my programmer. I can change my text and even add a page or a blog post very easily.

What’s also great about WordPress is that it was originally designed for bloggers. You may have heard that to get the best Google search ratings, your site should be “active,” and a great way to show activity is with a blog. WordPress comes built in with an easy blogging feature. You literally just click Posts—New post and—voilà—you are an instant blogger!

What should you blog about? Choose anything that might interest your clients or your colleagues, preferably those that highlight your expertise. Check out Google “accounting blogs” or “bookkeeper blogs” for ideas. My blog articles, found at www.quickbooksnow.com/tips‐tricks, attract hundreds of visitors to my site.

Claim your Google Place

With Google places, you can connect your address with your business. You can add your picture, business hours, and all kinds of details about your business. Not only is it basically free advertising for your business online, but also when people search a key word like “bookkeeping in [your town],” Google Place listings are usually on the first page near the top. If your listing shows your photo and more information about your business and your competitors do not show this information, you are most likely to be clicked. As an added bonus, your customers can “rate” you, giving you even more credibility. To claim your listing for free, go to http://www.google.com/places/.


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Brilliant Action Plan Worksheet, Step 9: Your Business Identity and Presence

Business Name ideas:

Tagline ideas:

My competitive advantages:

Graphic Artist

From:

Cost: $

Business Cards/Forms

From:

Cost: $

Domain Name

Provider:

Cost: $

Website

Type:

Cost: $


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Other Professional Fees:

Cost: $ Other Professional Fees:

Cost: $ Blog Ideas:


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Get Clients

Almost all of my clients have come through personal referrals, either from clients, friends, or colleagues. Cultivate referrals at every opportunity. Here are my top networking and promotional tips:

1. Personal networking: Tell all your colleagues, friends, and family about your business, and ask them to spread the word about your services. This is really important, an absolute must. First, people hire people they know and trust, and second, people that someone they know knows and trusts. Let them know how confident and helpful you are. Example: “Hi, Jan, I want to let you know that I have started my own bookkeeping business, and I have openings for clients. Please pass on my name and number to anyone you know who may be in need of my services.”

2. If you specialize in a particular industry, advertise in their trade publication or on their website. Even better, ask if you can write articles for their publication or newsletter. I got many clients from the newsletters I wrote for the Nevada County Contractors Association. I even found some of them cut out and hung up in a couple of their offices! One of the articles I wrote was about how to set up QuickBooks to do 1099s, because contractors usually have to do them, and it’s tricky. How‐tos, advice—anything related to bookkeeping that makes you look smart works.

3. Make sure you are on Twitter, Facebook, and LinkedIn—link your blog articles, and let people know about what you do.

LinkedIn—Be sure you join groups for bookkeepers, small‐business finances, QuickBooks, or accounting for any industries you specialize in.

Facebook—Set up a separate business page for your business on Facebook, and encourage all of your friends and family to “like” it.

Twitter—I don’t fuss too much with Twitter—it’s a fast‐moving scene. I recommend posting links to helpful tips and industry‐related articles, plus your blog on Twitter, LinkedIn, and Facebook.

4. Join a local networking group, such as BNI (www.bni.com) or LeTip (www.letip.com). I was a member of BNI and made many great connections and gained some clients too. You may also consider groups like Toastmasters or Rotary, where you aren’t necessarily promoting your business but meeting other businesspeople in your community.

5. Join the local Chamber of Commerce and go to their networking events. Consider taking on extra responsibilities, such as becoming an ambassador.

6. Join the board of a local nonprofit organization, and offer to do some or all of their bookkeeping for free or campaign to be elected treasurer. I am the treasurer for Purpose Ranch, a local horse rescue operation. It gives me credibility, I’ve met some wonderful people, and it gives me the opportunity to give back to my community at the same time.

7. Lobby your local newspaper to get featured in an article. The best way to be successful is to have an interesting or compelling spin on your situation. Almost all of us can come up with something—think “Stay‐at‐Home‐Mom Turned Entrepreneur.” The writers are always looking for something to write about. Imagine having to come up with something


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every day! Here’s an article about me in our local newspaper: http://www.theunion.com/news/2290996‐113/businessgeneral

8. Connect with your local CPAs and Tax Preparers. For the most part, they are not interested in doing bookkeeping but are constantly encountering people who need your help. Take them to lunch or set up a meeting if possible to tell them about what you offer, and be sure to find out what they can offer your clients as well. The idea is to create a mutually beneficial relationship. Alternatively, you can send them a letter or brochure. Here’s an actual example of a letter I sent out: Letter to CPAs.

9. Once you have clients, ask for referrals, and consider offering incentives, such as a free month of payroll service or 20% off their next invoice. Periodically send out an email or write a note on their statement, reminding your current clients that you love referrals. When you get a referral from a current client, send them a thank‐you note and a nice gift.

10. Upsell. Your current clients are the easiest to sell to—you don’t have to convince them of your value. Make sure they are aware of all the services you offer. For instance, perhaps your bookkeeping clients would appreciate your payroll service, help evaluating their financial statements, or budgeting. It’s amazing how often your current clients are not aware of all of the services you offer.

11. Post helpful tips and videos on YouTube. People search for all types of information on YouTube. Posting on YouTube is great for your Search Engine Optimization!

12. Offer a workshop, seminar, webinar, or class on a subject that interests local businesses and showcases your expertise. I’ve done workshops on QuickBooks for contractors, as well as QuickBooks Tips and Tricks for both business owners and bookkeepers.

Don’t be overwhelmed by this list. You don’t have to do all these things, and it’s unlikely you’ll have time to do all of them at once. Just choose a couple that are the most inspiring to you and get started.


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Brilliant Action Plan Worksheet, Step 10: Get Clients

Personal Contacts or Colleagues to call or email (tip: in person or by phone is best!):

Social Media setup:

Twitter

Username:

Password:

LinkedIn

Username:

Password:

Facebook

Username:

Password:

YouTube

Username:

Password:

Networking Groups and Organizations:

BNI

Cost: $

Meets at: Day: Time:


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LeTip

Cost: $

Meets at: Day: Time:

Chamber of Commerce

Cost: $

Other: Cost: $

Other: Cost: $

Other: Cost: $

Article Ideas:

Workshop Ideas:


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CONCLUSION It is my sincere intention that the secrets and strategies I’ve shared in this guide will help you create the career of your dreams. While it is true that being a business owner comes with its own set of trials, I wouldn’t trade it for the nine‐to‐five world in a million years!

Having your own business is not always easy. After all, you’re it—the buck stops with you. My final piece of advice is this: don’t go it alone. Over the years, I’ve sought advice from mentors, business coaches, an attorney, and even a therapist. When you need help, don’t hesitate to seek it.

I’ll leave you with this: It is a fact that small businesses are the economic backbone of our country—the very definition of the “land of opportunity.” As a small‐business owner who supports small businesses, you are now among the most important people in the country. Brilliant!

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