How To Start An Accounting Business In Nigeria
For a business to become successful, it requires accounting processes. Some business owners have difficulties when it comes to keeping accurate records and some do not have the means to hire an accountant for full-time employment. For this reason, there is a tremendous opportunity for people who are skilled in accounting.
Accountancy comprises of keeping comprehensive records of income and expenditures, taxes, and other financial commitments as expected by an organisation.
I have attended countless accounting seminars and conferences within and outside Nigeria where attendees keep asking this question "How do I start accounting and bookkeeping business in Nigeria?". The answers I often hear from the moderators aren't very understandable for people hoping to start an accounting firm.
Do you want to start an accounting business in Nigeria? This well elaborated article will teach you how to start and run your own accountancy firm.
What Is Accounting?
Accounting can be defined as the systematic process of recording, classifying, analysing, summarising, and interpreting the financial statement of an organisation to their users to enable them make sound decisions. This means that accounting business involves assisting company owners understand their financial positions, accounting for their trade, income statements, preparing tax returns, suggesting remedies to business financial obstacles, etc.
Accountants helps companies to drive business decisions via reliable and orderly management of finances and cash flow.
What Are The Skills Needed To Start And Run An Accounting Business?
In addition to earning a degree in accounting or related field from a university, polytechnic or college and being good at arithmetics, here are other valuable skills that will help you provide a good basis for a successful accounting business.
- Strong organising skill: Since they work with numbers and great deal of paperwork that cannot be misplaced. As a result, accountants often keep neat desks.
- Great analytical skill: You must have good skills at reconciling data and numbers if you really want to start an accounting business.
- Discerning eye for detail: An out-of-place decimal point can wreak a financial report. So having a sharp eye for detail is necessary to become an accountant.
- Organized work style: To start an accounting business, the accountant requires tenacity, consistency, and professional competence.
- Technological competence: There are loads of accounting software an accountant must be conversant with to achieve success.
What Are The Financial Costs Of Starting An Accounting Business?
Basically, starting an accounting business in Nigeria is not very expensive. The essential prerequisite is possessing adequate knowledge on accounting and its application.
Generally, as a setup, the following are the main expenses you will incur in this business:
- Office Space
- Accounting software
- Computer systems
- Registration and license fee
- Internet
- Printer
- Furniture
- Stationeries
- Insurance
- Staff Salaries
Institute Of Chartered Accountants Of Nigeria (ICAN)
To gain recognition as a professional accountant in Nigeria, it is necessary to be licensed by ICAN, one of the recognised professional accounting bodies in Nigeria. Being ICAN certified gives you global recognition. Also, even if you don't have an accounting degree, you can still become a chartered accountant by registering and sitting for ICAN examinations. If you don't have a degree at all, don't worry, you can still become a chartered accountant even without a degree.
When you successfully pass the professional examination, you will be inducted and qualify as Associate Chartered Accountant (ACA). An ICAN member is not permitted to set up an accountancy firm until he/she has applied for, and given a license to practice by the professional body.
The license to practice as an accountant is issued only to members who have received training in professional offices and have acquired the minimum practical training: 36 months for candidates with accounting qualifications, while at least 42 months for those with non-accounting qualifications.
Who Are The Target Market Of An Accounting Business?
Your target markets are large businesses and companies with multiple revenue sources. Small business owners have a propensity to do their accounting tasks themselves through the available accounting software.
How Profitable Is Accounting Business in Nigeria?
The cost benefit of an bookkeeping and accounting business is influenced by variety of factors, in particular, the size of the company you are working together with, the scope of the task you are carrying out for them, your locality, and host of other factors.
Nevertheless, if you land a deal with a well-known company with high revenue, you can bill them hourly in thousands of naira. As a matter of fact, a single accounting gig can earn you six figures. So, profitability and charges are as you desire and are dependent on your professionalism.
Also Read: How Much Do Entry Level Accountants Make?
What are the Steps Involved In Starting An Accounting Business in Nigeria?
Step One – Choose An Accounting Niche
When contemplating on starting an accounting business, make sure you choose a niche you will specialize on. We listed some of the niches you can consider:
- Auditing: Auditing business involves a systematic review of the financial records of an organization to verify its accuracy. In actual fact, many businesses have yearly routine audits of their records and even if a company has an internal auditor working for them, they still hire an external auditor. To operate an auditing firm in Nigeria, you must first get an ICAN license.
- Pure Accounting: A pure accountant specialises in helping small and medium enterprises, and even large businesses with affordable solutions to their accounting, bookkeeping, tax and so on.
- Consulting: Accounting consultants play an important part in helping businesses improve efficiency and adhere to changing rules and regulations. In addition, they assist businesses assess their record keeping processes, figure out the best process that matches their type of business, detect financial problems, and propose achievable solutions to the issues identified. In contrast to auditing, you can run an accounting consulting business without an ICAN license.
- Forensic Accounting: This is completely different and the professionals involved in the business are particularly well-trained for it. Primarily, forensic accounting is a blend of accounting and investigative skills to uncover financial fraud. Furthermore, forensic accountants interpret the kind of the financial fraud to the courts.
- Training: Accounting training is another business area to explore. There are a number of accounting platforms provide training to people. You can create a social media account with an objective of training people in accounting.
There are many people in the neighborhood who have no idea on how to deal with their personal finances and as an enterprise. Hence, you can propose to give them trainings on areas such as savings, investment, and how to operate accounting software (MS Excel, Peachtree, Quickbooks, Sage Intacct, etc).
Additionally, you can commence a lecture center for ICAN, ACCA students, and other accounting-related professional exams.
Step Two – Register Your Business With Corporate Affairs Commission (CAC)
Corporate Affairs Commission (CAC) is the government agency saddled with the responsibilities of registering business in Nigeria. Without beating around the bush, clients see registered businesses as reliable and dependable.
For this reason, you will have a higher chance of building the trust of your customers if you have a registered business. Moreover, you cannot open a corporate account in any bank without your certificate of business registration. The good thing is that it is simple and seamless to register your business in Nigeria if you know your way.
Firstly, you should carry out a name search availability to make sure that your special business name is yet to be registered by another person. The next line of action is to reserve the name if it is available on CAC’s portal.
Subsequently, you can start the process of registration properly. Many businesses get trapped when the owners are trying to register it themselves. Therefore, it is strongly recommended to hire an expert to do your registration.
Step Three – Distinguish Your Business Among Competitors
Upon choosing the perfect niche for business, then it is time to set yourself apart. When starting a business, you should be in a position to answer this question affirmatively: Why would my potential clients do business with me rather than my competitors?
Frequently, vast majority of entrepreneurs fail because they refused to give deeper thought to this question. Before you respond to this question, do a proper research on the competition in the accounting market and see the spot where you belong. Since you do a service business, your customer support and professional competence must be first-class.
Step Four – Prepare A Business Plan
This particular step should not be underestimated. You must properly plan on how your accounting business will be successful. Remember, a person who fails to plan, is planning to fail. Contradicting the belief of many startups, a good business plan is easy to prepare. All you have to do is make sure that you write down your long-term, medium-term and short-term business goals.
In a nutshell, here are the information that must be written in your business plan to make your goals attainable:
General overview of your accounting business
- Executive summary
- General company description
- SWOT analysis
- Market research
- Your strategy
- The team
- A marketing plan
- An operational plan
- Financial projection
- An appendix
Step Five – Get Funding
Figure out how much money you need to start, depending on your choice of accounting niche. Propose for more funds to make sure that your new company is not cash-strapped before you start generating revenues.
Just if you cannot afford this amount of money yourself, then you should think about sourcing for funds. As a matter of fact, there are number of options business owners can explore when looking to raise funds outside.
The first option is to approach family and friends. Afterwards, you can seek funding from investors, commercial bank loans, and venture capitalists. Crowdfunding is another great funding option. You can do this by registering with different crowdfunding sites and seize the opportunity. No one knows if that’s where you will raise your capital from.
Step Six – Market Your New Accounting Business:
How Do You Market Your New Business?
Before you become thrilled about your new business, let me share with you the most determining factor of running a venture: MARKETING. As easy as it seems, marketing requires a great deal of hard work. You are on the path to enjoying high revenue in your business if you get your marketing is handled properly,
You need to understand that even marketing agencies get their marketing wrong in certain cases. All you have to do is carefully test several methods with small amounts of money. And when you find out the one that works perfectly for you, invest more money into it as you grow your brand.
Here is an easy way to reach your potential clients:
- Find what works for you (selling point)
- Assemble your sales material
- Search for potential clients
- Get in contact with them
- Follow up
The niche you choose will determine the marketing channel that will be efficient for you. Here are some of the frequently applied marketing tactics that produces result:
- Social media marketing
- Google Ad
- Partnership and collaboration
- Face-to-face interaction
- Offering giveaways
- Referral
- Influencer marketing
Final Word
In summary, accounting business is a noble venture that offers tremendous help to small, medium, and large enterprises. Needless to say, there are great financial rewards attached to it.
To recap, here are the six steps to starting an accounting business in Nigeria:
- Choose an accounting niche
- Register your business with Corporate Affairs Commission (CAC)
- Distinguish your business among competitors
- Write a Business plan
- Get funding
- Create awareness about your new accounting company
There we go, wishing you all the best as you commence your new company
If you have more ideas that can assist an aspiring accounting and bookkeeping firm owner to achieve success, do not hesitate to drop your in-depth knowledge via the comment section. You can also share this content with your audience.
