how does one know if they're ready to take on clients?
Hi guys, I'm fairly new to bookkeeping. I've been doing it for 6 months but have only been working with 1 client.
I'm trying to figure out what's the base I need to have before I start taking on more clients. Is there any minimum amount of knowledge I should have before doing so? Are there any courses I can take that would cover all the basics?
Hi Dan. There are two bases for accounting, the accrual and the cash, then there's the tax basis which is closer to cash basis as far as small businesses are concerned. What small businesses are interested in for the most part is someone to keep their books so they can file their taxes annually.
So, it could be that a simple single entry cash basis system is sufficient for smaller businesses, while a larger business (but still a very small business as far as revenue is concerned) might need their books kept using a cash basis double entry system. If you ever keep books for a business that has inventory then it may need its books kept on an accrual basis, at least for the inventory part.
Here is a link explaining cash basis accounting and showing a simple single entry system. Something like Quicken is probably sufficient for this.
QuickBooks keeps a bookkeeping system using both cash and accrual basis.
I don't think a person learns enough from any one source to be able to put it all together. The AIPB training and certification program is a good one, IMO, but it doesn't teach double entry bookeeping/accounting. It teaches some aspects of it, but I think obtaining an inexpensive college entry accounting textbook and studying the first 10 or so chapters in it would give a person a good grounding in double entry bookkeeping. Kiseo, Weygandt, and Warfield are my favorite authors when it comes to accounting textbooks, but that's just my own personal preference. Decades ago there were a couple of authors, Pyle and White, that were also good. Their books can still be bought on Ebay very inexpensively ($10 plus shipping).
Taxes are another thing entirely. If you want to learn about taxes you'll have to obtain textbooks on taxes to teach you that. The AIPB offers some courses in the subject.
I would encourage you to not be afraid to make mistakes, but I would recommend obtaining some errors and omissions insurance to protect you in case of mistakes.
It took me 5 years of full time employment as an accountant before I felt like I had a handle on general accounting. It took even longer to learn taxes. By that time frame I had done accounting on both an accrual and cash basis and had been involved in 4 annual audits with outside auditors. I needed a lot of training before that and because I was working for publicly held companies I got it.
I think that a combination of study, combined with learning by doing is the best approach for learning bookkeeping. So, coming to a forum like this is a good move, IMO.