Over 95% of businesses today are, in fact, small enterprises, and 60% of them acknowledge that they don’t know enough about finances and bookkeeping, as they thought they did upon starting the business. About 42% of businesses receive business advice from their accountants, and 14% of these businesses outsource their bookkeeping. Bookkeeping holds the second-largest number of professionals in the accounting sector. Accounting, auditing and bookkeeping are services that dominate the present global market.
In 2019, the bookkeeping market value was placed at about $424.18 billion with clear indications that the value could grow at about 6.6% CAGR within 2020 and 2028. Countries such as Germany, Brazil, USA, China, the United Arab Emirates and South Africa are very fertile grounds for bookkeeping practices, thanks to the high concentration of small and large modern businesses. In most parts of the world, 50% of accounting processes are automated. This means that these processes rely entirely on computers and there’s always the problem of fraud and security breaches. Therefore, companies rely on bookkeepers, not just for sake of operating the software tools used for bookkeeping but also for analyzing available data and suggesting ideas and solutions as needed.
Given the rise in industrial businesses, the need for bookkeeping services is fast-growing in Nigeria. Due to paltry of available records, it is difficult to place the national value of the sector but areas such as Lagos, Port-Harcourt, Ibadan, Benin City, Abuja, Kano, Kaduna and Jos are witnessing a boost in industrial companies and businesses, which calls for more bookkeeping services. If you’re looking to start a bookkeeping service in Nigeria or any other part of Africa as a whole, here is a detailed guide to help you start on the right foot.
What Is Bookkeeping?
Bookkeeping is the process of storing financial information into a database and analyzing and summarizing such information to arrive at a viable business decision that could advance the goals of the organization.
What Is A Bookkeeping Business?
A bookkeeping business refers to the process of rendering bookkeeping services to firms and organizations on a commercial basis.
Business Opportunities In The Bookkeeping Business In Nigeria And Across The World
1). Consultation Services:
The demand for financial advisors and consultants is on the rise. New and existing business owners are always in need of vital advice on how to keep their businesses alive. Furthermore, individuals need financial advisors and consultants to advise them on how to overcome debt, plan for retirement, or save more money.
2). Selling Bookkeeping Software:
Many businesses are now embracing automation to save the cost of hiring in-house accountants and bookkeepers. You can make money from this trend by selling software packages created for business owners to handle accounting, bookkeeping, and related tasks themselves. Suppose you are innovative and have a broad idea about accounting. In that case, you can develop a software package and make even more money by selling it to businesses and individuals.
3). Microfinance Business:
With hundreds of new businesses surfacing every day, many business owners need funds to start and expand their business. They often approach microfinance banks for loans because they are more helpful to small businesses. If you have the required capital and technical know-how, you can make huge profits by starting a microfinance institution. On the other hand, you can help these startups access loans from various financial institutions.
4). Tax preparation service:
This business idea caters to virtually all businesses as well as business-minded individuals which makes it highly profitable. It involves preparing and evaluating the tax a company or other related assets is supposed to pay. As a bookkeeper with a solid background in tax preparation and evaluation, you can make money with these skills by starting a business that renders all services related to tax.
Facts And Benefits Of Bookkeeping
- Bookkeeping helps a business to build goodwill
- Financial analysis helps a company make better decisions
- Financial forecasting and budgeting becomes easier
- Bookkeeping helps to save costs through proper funds management
- It is a way of assessing the performance of a business
- Bookkeeping is different from accounting.
- Proper bookkeeping helps with prompt payment of taxes.
- Bookkeeping goes far back as 4000 B.C.
- The first book ever believed to have been written about bookkeeping is titled “Everything About Arithmetic, Geometry, and Proportion” by Frater Luca Pacioli in 1494.
- Bookkeeping is an essential practice for accountants as well.
Types of Bookkeeping
Bookkeeping may be classified based on entry systems and methods. The classification used below is based on entry systems.
1). Single Entry Bookkeeping:
This system involves using one entry for every transaction or financial activity carried out by the organization. It is used for recording daily receipts and is useful for small institutions with simple transactions. Transactions in this system are basically bank statements, cash sales journals, etc.
2). Double Entry Bookkeeping:
The double-entry bookkeeping involves double entry for every transaction entered. This is a way to provide checks and balances for every transaction. As a transaction is entered in the debit entry, for example, a corresponding record is made in the credit entry. This system is particularly useful for organizations with complex financial transactions and accounts payable and receivable.
How To Start A Bookkeeping Business In Nigeria: A Step-By-Step Guide
1). Conduct A Feasibility Study:
To start a bookkeeping business, it is important to get the basics sorted before setting out. Identify your ultimate aim and targets for the business. Determine your business scope – helping small businesses, real estate, government, or any other service area. Also, identify your target market and conduct extensive research on the possible success rate of the business in your selected area.
2). Draft A Business Plan:
It is important to write a business plan before you start taking further steps towards starting your bookkeeping business. Every successful business in existence started with a business plan. Ensure to include all your long and short term business goals.
3). Register Your Business:
You should register your business with the Corporate Affairs Commission (CAC), the recognized body responsible for registering companies in Nigeria. Customers see registered companies as legit and trustworthy. You should also get insurance for your business in order to cover up for possible circumstances.
4). Get A Business Site:
Getting a business site for a bookkeeping business does not require many efforts. An office space or a full building with multiple offices will do, depending on the size of your team. If you’re planning to start with a small team, a small office will serve just fine till you are ready to expand the business,
Challenges Of Starting A Bookkeeping Business In Nigeria
- AI is taking over basic bookkeeping services.
- Staying up-to-date with new technologies.
- High competition level.
- Constant changes to the taxing policies
- Issues with data security
- Problems with cash flow
- Difficulty in tracking organizational expenses.
To Sum It Up
Starting a bookkeeping firm is like starting any small business – it requires a lot of work. However, industry and consulting firms list bookkeeping firms as one of the single most profitable small businesses a person can start right now. The bookkeeping business in Nigeria can be a lucrative and profitable venture to start-up, due to its vast market demand and on your ability to build a wide network. If you’re looking for a lucrative business to venture into, the bookkeeping business in Nigeria is a great option to explore.
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