Start a Bookkeeping Business - Top Insurance Tip

By Julia Nitschke

When you commence your own bookkeeping business, one of the key insurances people often forget to organize is Professional Indemnity Insurance.

You can get some policies for as little as $500 per year paid annually, whilst earning fees up to $100,000. This cover indemnifies you so that if someone sues you, you have insurance for the claims. Many bookkeepers do not bother with this, however it really is critical to ensure you are acting in a professional manner and ensuring you have cover if you get into any hot water.

Having this type of insurance is another positive point for your business. If you want to be treated as a professional organization, you need the correct business coverage and professional indemnity is essential.

If you have a registered Tax Agent supervise your work from a BAS point of view to get around the legislation, they will be responsible for any BAS related issues. They will not however be responsible for your other work and therefore you will still require professional indemnity insurance for your other dealings with clients or you could be exposed to legal action if something goes wrong. It doesnt matter which business structure you have chosen or if you work at the clients premises or at home, professional indemnity is essential.

For example, you are providing bookkeeping services to a small business and are responsible for their accounting data file. As part of your role, you do backups of the system. The clients computer crashes and the hard drive can not be recovered. If you have not got a back up off site, on a memory stick or in another format, the client has lost all of the data. Who do you think they will blame if they do not have any data? If you then need to re-key in data and use 50hours of your time doing so, is the client going to be happy if you front up with an invoice for 50 hours of your time?

You can see with this example it is very easy for things to go wrong and even the best clients can get upset. This also demonstrates the need for specific systems with your clients, which we will cover in detail later in this book.

The National Institute of Accountants, to which I am a member, has a specific public practice certificate for bookkeepers and can also provide a competitive Professional Indemnity policy through bulk purchasing power of their members. Additionally, they also provide a public practice certificate which you can frame and have on display for clients if you have an office, or home office set up. Once again this assists in making you look professional and impress your clients.

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About the Author

Julia Nitschke is an Accountant, business consultant and author of the book My Bookkeeping Business, how to Start, Run and Grow your Bookkeeping Business. Visit http://www.mybookkeepingbusiness.info for more information and for a free bookkeeping e-course

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