The gig economy’s growth is hard to miss, with the recent economic disruption and remote working propelling more of its growth in the last two years. This, plus the freedom of choosing when, where and with whom to work with, is leading to an increase in the number of professionals choosing the freelance route.
The sector has grown in the US, with about 59 million Americans working freelance. The number is expected to grow to 86.5 million freelancers by 2028. Additionally, this sector is estimated to grow by 6% in the next decade, creating more accounting opportunities.
Of course, accounting is one of the leading industries regarding the increase of freelancers. If you are considering starting a freelance accounting business, perhaps it is the right time to set your plan in motion.
That said, starting any business is a step any entrepreneur should consider carefully. A freelance accounting business is no exception to this rule. In fact, you must be hands-on with everything that affects putting up and running your freelance business.
This article provides you with an excellent guide on 7 things you need to know before starting your freelance accounting business.
1. Everything is on you
Clearly, work is abundant for accountants, and going freelance will probably not disrupt your cash flow. However, work is not always guaranteed, and earnings fluctuate.
You might enjoy the freedom of flexibility, but self-motivation is a must if you want to make any money. In addition, there are no company benefits, and you will have to cater to insurance expenses, pension contributions, and other benefits.
Before starting a freelance accounting business, you need to be sure you can handle it. From the emotional and psychological aspects of managing different clients to not making money sometimes and the pressure of the job when you have too much of it. Not forgetting catering to any benefits you’d otherwise enjoy from an employer.
2. What services are you offering?
One thing you do not want to do is stretch yourself too thin only to disappoint and lose clients along the way. You might be a skilled accountant with all the qualifications and years of experience.
But are you able to offer everything accounting to your clients? Can you do financial reporting, tax management, auditing & assurance, strategy & governance? Or are you only able to perform one or two services?
Think of it as a specialization that allows you to carve your niche as a freelance account—Because you are better off being more efficient and reliable, offering a few services, than trying to provide everything and failing.
3. Have a marketing plan
Unfortunately, many professionals start businesses and rely solely on personal connections and referrals. But given the competition in the industry, you cannot afford not to have a marketing plan.
How will you advertise your business and stand out from the rest of the competition? How can you show what services your business offers? Most importantly, how can you reach and retain more clients from all over?
That’s where a solid marketing plan comes in handy. It will help you:
- To highlight your target market – are you targeting small business owners, medium enterprises, or large corporations? Do you want to deal with clients in a particular industry alone, like manufacturing, entertainment, or hospitality?
- Knowing your target audience ensure whatever marketing content you formulate is for that specific niche.
- Create a differentiation plan – who are your competitors, what accounting services do they offer, what are their prices, and what can you do differently?
- Have in writing your client acquisition and retention strategies.
- Choose the best sales and marketing strategies – will you use traditional methods, digital strategy, or a combination of both?
- To set goals, timelines, milestones, and how to measure your performance
- Create a financial plan that meets your business needs.
4. Develop a digital presence
In addition to having a marketing plan, you must also have a digital footprint:
- You must have a company and or individual website. It needs to be up to date with your credentials, the services you offer, testimonials, and contact information.
- You must have social media accounts, including LinkedIn, Facebook, and Twitter.
- Sign up on freelance marketplaces hosting professionals, including Upwork, Fiverr, and TopTal.
Most importantly, ensure your website and social media pages have quality content, from blog posts and newsletters to webinars, podcasts, and insights on the industry’s happenings and the country’s laws. Sharing more about your work and providing business owners with insights on accounting and bookkeeping can help you land clients who follow your work.
You must also optimize your website, social media pages, and content for search engines (SEO). This includes keywords that potential customers are likely to use when searching for accounting services. It will help you rank higher on search engines like Google, Safari, and Yahoo.
5. Have the right tools
Fortunately, starting a freelance accounting business will not cost you an arm and a leg. Apart from having the basic qualifications, you must have a reliable internet connection, a laptop, and accounting software to manage your clients. In addition, you should invest in items like headphones, video-conferencing platforms, and subscriptions to business, accounting, and finance websites.
6. Your pricing
How much are you worth? Remember, you are selling a service and not a product. So you need to know how much your time is worth.
But determining how much your services are worth, say per hour, is not as easy. It is not like you can come up with a figure from your head because it is close to what a friend earns. Or you could have made per hour on full-time employment. No. It would be best if you had a price that doesn’t throw you right off the competition but leaves you fully content and compensated.
Confusing, right?
You can simplify this by factoring in your expenses, like monthly subscriptions, internet bills, phone bills, benefits, and marketing costs, to name a few. Then add how much you would be comfortable paying yourself for any hour you spend on a client’s work.
7. Plan for Uncle Sam
Yes, the ol’ and feared Uncle Sam! But, unlike in employment, where your employer is in charge of deducting and remitting your tax, as a freelance business owner, you are in charge of all your tax deductions and payments. So, what taxes are you liable for? Apart from federal taxes, are you liable for any state taxes?
Then, set money aside from every payment to cater to your tax payments at the end of the year. Sadly, many freelance business owners do not save money for taxes and end up coughing significant amounts they had not anticipated. This will disrupt your cash flow and possibly lead to the accumulation of unwarranted loans.
Final thoughts
Now that you know what it takes to start a freelance accounting business, are you ready to take the plunge?
If so, remember to have a solid plan in place, develop a strong digital presence, invest in the right tools, and price your services competitively. And don’t forget to save for your own taxes!
With these tips in mind, you’ll be on your way to success as a freelance accountant.
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