A career in bookkeeping can be a good fit for you if you’re organized, love numbers, and enjoy assisting others.
It is possible to work part-time or full-time from home.
And getting your company off the ground doesn’t require a large investment.
Even when the nature of business changes, bookkeeping is a career that is constantly in demand.
Other firms can’t exist without bookkeepers.
These professionals ensure that their financials are in order and that they’re on the proper track to thrive.
We’ll go through how to establish a bookkeeping business in this post, including
- What you’ll need to get started,
- How much to charge for your services,
- How to locate customers,
- and how to fund your business.
What Exactly Does A Bookkeeper Do?
A bookkeeper is an essential component of any organization.
A business needs a bookkeeper to handle and organize its accounts, which includes meticulously documenting and classifying all transactions.
They assist small-business owners in managing their cash flow, which is one of the most crucial indicators of a strong company.
They’ll also frequently assist organizations in preparing important financial statements like the profit and loss statement and balance sheet.
Keep in mind that bookkeepers are not the same as accountants because they cannot file taxes or conduct audits as certified public accountants can.
Bookkeepers aren’t necessary to hold a bachelor’s degree in accounting.
While they can obtain credentials through training programs, they can also create their bookkeeping business by simply gaining on-the-job experience.
The following are examples of typical bookkeeping services:
- Managing accounts payable and receivable
- Producing financial statements
- Managing an enterprise’s finances with accounting software
- Assisting businesses by honing their financial habits
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The Stuff You’ll Need To Start A Bookkeeping Business.
Luckily, starting a bookkeeping firm is pretty inexpensive, especially if you operate from home.
They’ll be considerably lower if you start your bookkeeping business as a side hustle before becoming full-time.
Before you begin, I recommend that you source the following for a successful bookkeeping business:
Training and Certifications
I’ll assume that you don’t have any formal training or work experience in bookkeeping.
If you do, then kudos; you can skip ahead.
If not, it would be prudent to enroll in some classes to ensure that you grasp the principles and are up to date on legislation.
Training will also help you figure out whether you genuinely enjoy what you are doing or not.
Certification might give you an added boost of professionalism if you already have some experience.
I recommend that you become certified with one of two major professional bookkeeping organizations:
National Association of Certified Public Bookkeepers (NACPB)
Before applying for the license, you must have one year of experience.
You might be able to replace college accounting classes for needed courses, but you’ll still need to pass each exam.
You will acquire the credentials CPB (Certified Professional Bookkeeper) if you are certified.
These letters can be used to display your accomplishment to future clients on resumes, business cards, and other items.
American Institute of Professional Bookkeepers (AIPB)
To become AIPB-certified, you must first complete 3,000 hours of work experience and then pass a certification exam.
Once you’ve been certified, you’ll be able to put the initials CB under your name and show them on your resume and business cards.
This should give you an advantage with future clients.
If you have no formal education in the field of bookkeeping and accounting, this certification is suitable for you.
A paid preparer does not need to be certified to sign a client’s tax return.
However, I strongly advise against doing so unless you are a tax expert or prepared to put in the effort to become one.
Many bookkeeping services create financial statements for their clients, which they then submit to CPAs or other tax professionals to have them file a return.
You may find yourself collaborating closely with their tax preparer, allowing you to give exceptional service to your shared clients.
If you’re not a CPA and wish to prepare tax returns, I recommend applying to the IRS to become an Enrolled Agent (EA).
Enrolled Agents must first pass a test and then undergo annual continuing education every three years to maintain their certification.
While no formal schooling or classes are required, the exams are challenging and will verify that you have the knowledge to handle tax customers appropriately.
To get started, all you need is a laptop and a printer—you may already have both.
When dealing with a large number of receipts, a scanner can be quite useful.
For your dedicated workspace, think about getting a filing cabinet, a desk, and a comfortable chair.
You’re OK to go as long as you have a place to work and a technique to keep things organized.
There are numerous bookkeeping and accounting software programs to choose from.
Don’t make a decision just on the basis of price.
Consider capabilities that allow you to keep the books for several or limitless organizations, as well as any industry-specific requirements.
Quickbooks Online is an excellent piece of software for a bookkeeping business.
It is one of the most extensively used accounting programs on the market.
It’s scalable, has a good amount of integrations, and comes with a mobile app that lets you work on the go.
Quickbooks also provides an extensive knowledge base and resources to help you find answers to your questions and learn more about the software.
It also comes with a 30-day free trial, so you can try it out before committing to a monthly plan that starts at $12.50 per month.
You should also consider file-sharing, client management, and document signing software in addition to bookkeeping software.
You want your clients to have a smooth experience throughout the process.
With any Gmail account, you can start using Google Drive for file sharing and organization for free!
Errors and Omissions Insurance
Bookkeepers handle clients’ confidential data, and a mistake on your part might be costly.
In the worst-case scenario, you could be subject to action.
If this happens, errors and omissions insurance protects you and your possessions.
Annual premiums should range from $300 to $1000.
Website Creation and Upkeep
Although having a website isn’t required, it does make it easier for clients to locate you and your contact information online.
A single page with your name, what services you offer, contact information, and a few testimonials is all you need.
Consider the price of having a website built (if you lack the necessary abilities), web hosting, and domain registration.
Some website builders offer domains and hosting as well.
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Phone and Internet Services
Of course, you’ll most certainly need access to the internet.
A business phone line is less important, but it’s a wise investment unless you want all of your clients to know your personal mobile phone number.
You’ll want your bookkeeping business to be reachable.
The registration of your company and bookkeeping business name is a crucial step.
Depending on your state and the sort of business structure you choose, the cost can range from nothing to several hundred dollars.
You may also want to budget in a lawyer who can assist you in determining which business structure is best for your situation and filing the necessary paperwork.
While you’re at it, double-check that your email address matches the URL of your website.
Make sure you have enough funds to pay your bills for at least three months when you decide to go full-time.
A six-month leeway is optimal.
When determining how much money you’ll need, consider your own business expenses, such as internet and software subscriptions, on top of your personal expenses, such as food, rent, and utilities.
How To Start A Home Based Bookkeeping Business: The Step-by-Step Guide
Now that we’ve covered the investments, this is probably looking a little bit more manageable.
Let’s move on to how you can launch and operate your own bookkeeping business.
Step 1: Settle On Your Market and Niche.
The work of a bookkeeper is applicable to a wide range of businesses.
After all, every company needs to keep track of and maximize its funds.
However, you may want to concentrate on a specific industry to assist market your company and set it apart from the competition.
This could help you gain credibility in that industry while also honing your talents.
Moreover, if you have a specialty, selecting your target audience will be simple.
You should also study the market to see what bookkeeping businesses are already established and which sectors they service to assist you in choosing your specialization.
Step 2: Pen A Business Plan.
Every business owner, regardless of the type of company they run, should prepare a business plan.
Of course, bookkeepers fall under this umbrella.
A business plan consists of a detailed outline of your company’s plans.
It’s a detailed document that discusses not only your services but also your market and how you’ll gain a competitive advantage in your industry.
You’ll establish estimates and plans for your future development.
This paperwork can be extensive, but it is necessary to complete.
It will assist you in focusing your firm and running it efficiently right away.
Step 3: Choose A Business Name.
Since your business name will be the first impression you make on potential clients, you should think about it carefully.
What do you want your name to say about you
Is it your knowledge, specialization, or personality?
Before you choose a bookkeeping business name, double-check that it isn’t currently in use by someone else.
Otherwise, clients get confused.
Additionally, have a few people check the name to see what they think of it.
Once you’ve narrowed down your choices, check your secretary of state’s company name database to see if the names are available.
Step 4: Register Your Bookkeeping Business.
The specific process and fees vary by state and are determined by the sort of business structure you choose.
If you want to establish a bookkeeping business as a sole proprietor, all you have to do is hang up your banner and get to work.
However, forming a limited liability company (LLC) will provide you with greater indemnification.
This is a case where hiring an attorney for legal guidance and assistance with the paperwork required to register as an LLC if you want to do so may be worthwhile.
Errors and omissions insurance is a smart purchase in any case, but it’s especially crucial if you work as a sole owner.
Step 5: Get Your Bookkeeping Business Insured.
Insurance is not required when starting a bookkeeping business.
Still, it’s in your best interest to get coverage.
If you aren’t covered, you could face costly liabilities if you make a mistake on your clients’ books.
These events could be devastating to your bookkeeping business and, in certain situations, your personal finances.
Professional liability and general liability are two standard business insurance coverage for bookkeepers.
Step 6: Set Up All The Software That You’ll Use.
As you may have thought, your bookkeeping software will serve as the backbone of your company.
You have a wealth of choices when it comes to the best bookkeeping software, so please do your research.
If you’re overwhelmed or just want to go with the majority, QuickBooks Online is a fantastic choice.
It’s one of the most reputable accounting software suppliers on the market, and it’s utilized by both small and large enterprises.
Xero is another popular alternative, although there are many other bookkeeping programs to consider.
Each of these programs offers certification, which can help you not only become a power user but also advertise yourself as an expert.
When you’re ready to hire staff, you can usually turn on a payroll processing option in the bookkeeping/accounting software you’ve chosen.
If you go with QuickBooks, you’ll have a number of payroll solutions to pick from.
Practice Management Software
Practice management software is another tool that will make your life easier.
This program can help you organize and track client work, as well as give a connection to access your client’s books in some circumstances.
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Step 6: Get Funding.
If you’re starting off small, you probably won’t need a lot of capital.
You can always look into other choices later if, for example, you create a physical location and hire a lot of people.
For the time being, though, you’ll most likely need a business credit card to fund your bookkeeping firm.
This will allow you to set up your firm and keep track of all of your business expenses in one location.
This is crucial not just for segregating your bookkeeping business and personal income, but it can also assist you with your bookkeeping during tax season.
There are many various types of company credit cards to consider.
These include cards with 0% introductory APR periods, which can be used as an interest-free loan if you have a few initial fees that you can’t cover with savings.
Just make sure you have a strategy in place to pay off the balance before the introductory rate expires and a variable APR takes effect.
Getting A Company Credit Card and Business Bank Account
You should register a separate account for your new company regardless of the type of business structure you pick.
Your biggest motivation should be to show the IRS that you have a legitimate bookkeeping business and not simply a hobby.
People who claim business deductions but can’t establish they’re running a legitimate business are frowned upon by the IRS.
A business bank account also makes it easier to maintain track of your finances, file tax returns, and protect your assets.
It also appears more professional.
Make friends with your local banker when you’re opening your account—they might be a great source of recommendations for your company.
A company credit card isn’t required, but it can come in handy.
Having one solely for work purposes will assist you in keeping your personal and professional finances independent.
If you use your personal credit card for work spending, make it a routine to reimburse yourself.
It may seem absurd when you’re just a one-person operation.
Still, it will come in handy if you ever have to prove to the IRS that you’re serious about your bookkeeping business.
To keep organized, make sure everything is integrated with your accounting program.
Step 7: Build Your Bookkeeping Business Infrastructure
When learning how to establish a bookkeeping firm, you’ll discover that you’ll need a few critical pieces of infrastructure to get started.
Please take your time and be meticulous when setting up the following:
Many potential clients will go to your website to learn more about you and your background.
A website is especially vital if you’re running a completely virtual bookkeeping business because it can showcase your abilities to clients.
Thankfully, there are a plethora of website builders available to make the process of constructing your website a snap.
You’ll want to be sure you’re tracking your clients properly and thoroughly as your client list grows.
You can create your own process by using a CRM and project management tool.
You may find it challenging to respond to clients quickly as a one-person operation, especially during tax season.
When potential clients need your services, sending them to voicemail can cost you money.
You can always use an answering service like Go Answer.
It’s a bilingual answering service that links your clients to live customer care representatives via phone, text, web chat, or email.
You can try it out with its 30-day free trial.
Of course, those who rent office spaces will have an automatic mailing address.
If you want to set up a home office, you’ll need to get a business mailing address so you can avoid using your home address.
This will give your company a more professional image while also protecting your privacy.
There are a few alternatives available.
To begin, go to your local post office and rent a post office box.
You’ll pay $60 for six months or $120 for a year on average.
The price will, of course, vary depending on your location.
Alternatively, you might rent a UPS mailbox.
The UPS Store will provide you with a valid street address.
Some shops will not deliver to PO boxes and will demand a street address; thus, having a UPS mailbox has some advantages.
Your clients are likely going to be giving you their documents like statements and receipts.
You should prepare for this and think about the file-sharing platforms you’ll employ.
Dropbox is a popular choice since it allows you to generate a shared folder that both you and your clients may access.
As I mentioned before, you’ll want to open a company bank account to keep your bookkeeping business and personal finances separate.
This is crucial for both tax purposes and personal liability security.
Begin with a business checking account.
If your company expands, consider opening a business savings account to earn interest on your extra funds.
Traditional, brick-and-mortar banks as well as internet institutions both provide enticing banking options.
So, browse around before picking where to put your hard-earned cash.
Step 8: Determine The Price of Your Services.
The most challenging task for any small-business entrepreneur is determining how much to charge.
If your clients pay too little, you won’t be appropriately compensated for your services.
If they spend too much, you’ll struggle to compete with other bookkeeping firms.
According to PayScale, a website that records wages and rates, a bookkeeper’s average hourly rate is roughly $17.
That’s $24 on the high end and $10 on the low end.
You could also find bookkeepers with similar skillsets and experience to help you figure out how much you should be charging.
Remember that the price you charge should be based on your years of experience, industry specialization, qualifications you hold, and location.
And, of course, your rate isn’t set in stone. You can always modify it if you believe you’re being overcharged.
Step 9: Find Your Customers.
No matter what type of business you own, marketing is critical.
Small-business marketers who figure out exactly who their clients are and advertise directly to them are the most successful.
You should come up with a unique selling proposition for your company.
Are you, for example, particularly proud of your experience?
What is your area of expertise?
Is your primary focus on local businesses?
All of this will help you come up with the most innovative ways to sell yourself.
You could include these details in radio ads, direct mail, email campaigns, social media ads, or any other strategy.
There are plenty of resources online on small business marketing.
You can learn how to reach out to customers using search ads, SEO, social media, and other methods.
Finally, never underestimate the value of word-of-mouth referrals, and don’t be afraid to ask for them.
Step 10: Prepare Your Work Space.
Putting up a home office can help you save money.
That’s probably why you want to start a home based bookkeeping business in the first place.
Plan to meet your clients digitally if at all possible.
I would not recommend inviting clients to your home office unless you are very familiar with them and have a quiet space where you can work.
There’s no right or wrong way to set up your personal workspace.
It’s generally about efficiency and personal preferences.
Please don’t forget to claim your home office tax deductions, though.
You can deduct a percentage of your utilities, real estate taxes, and insurance on your home, as well as repairs and maintenance to the area utilized for business.
If a home office isn’t working for you, consider virtual office space or office sharing.
This generally includes physical office space, a mailing address, a local phone number, a secretary to take calls, and access to a conference room that you can reserve by the hour.
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Step 11: Streamline Your Bookkeeping Business Processes.
You’ll be able to guarantee quality control and organize your operations better by standardizing your business’ fundamental processes.
By going through the trouble of doing so, you’ll be giving your clients quality accounting services.
So, where do you start?
First, determine how you will perform your job.
Your process should include everything you’ll provide your clients.
It should be a streamlined set of services that don’t need a lot of steps. Here are a few suggestions:
- Preparing and filing sales tax returns
- Month-end accounting
- General bookkeeping services
- Client supplier payments
- Payroll processing
- And so on
Then, write down the A-Z procedures for completing your tasks.
Create a step-by-step breakdown of what needs to happen from start to finish for each process.
There should only be one method of delivering the work, not five.
All of the processes you document will become standard operating procedures for you.
Ensure that these are saved somewhere and available to everyone at your company so that they can complete these duties without your assistance.
You won’t have flawless workflows and processes right away.
When you identify portions of your initially documented processes that aren’t running smoothly, it’s time to adjust your process (and documentation) to remove these friction spots.
This type of preparation will benefit your company in the long run, especially if you intend to hire employees.
Bonus Tips For Running A Home Based Bookkeeping Business
Offer Productized Services
It’s time to put your accounting firm’s strategic strategy into action and start marketing your accounting and bookkeeping services.
But first, you’ll need to create a productized service that you can sell to attract customers.
So, what is a productized service, and how does it differ from other types of services?
Creating a productized service offer for an accounting firm is the combination of accounting and bookkeeping services, methods, and technology needed to produce an optimum result in a repeatable and systematic manner for the market you’re aiming for.
That’s quite a mouthful.
In short, this will be an all-in-one solution for small businesses and accounting firms alike.
It’s important to remember that your productized service should include all you need to create a stress-free accounting and bookkeeping experience for your client.
Your target market is likely going to be those who dislike or can’t do bookkeeping themselves anyway. You might as well monetize the convenience that you offer.
Go To Bookkeeping Conferences and Seminars
In addition to earning the CPE credits, you need to keep your bookkeeper or CPA certification current.
Attending a conference gives you the opportunity to learn about the latest trends in the field and what is quickly becoming obsolete.
Intuit’s QuickBooks Connect, customarily held in San Jose, California, in the autumn, is a worthwhile conference to attend.
Follow Blogs and Sign Up For Newsletters
Monthly blogs and newsletters may provide a wealth of helpful information. Even if you don’t want to join every bookkeeping or accounting blog you see, here are a few to consider:
- Journal of Accountancy
- Insightful Accountant
- American Institute of Professional Bookkeepers
- e-News Subscriptions (IRS)
- The QuickBooks Blog
- Xero Blog
Link Up With LinkedIn Groups
In order to get accounting clients, you could look for LinkedIn groups on social media where your target market hangs out, join such groups, and then contribute to their discussions.
Attempting to build a following on social media will help you attract more people to engage with your content and interact with you.
In time, some of these local companies and small company owners you meet could become new clients.
Start Your Own Blog
In the bookkeeping industry, this is one of the best methods for attracting new clients.
As a long-term approach, I advocate putting down roots now to enjoy the results later.
You could run a whole new business alongside your bookkeeping business.
Consider Paying For Ads
Pay-per-click advertising, like Google or Facebook ads, can be a terrific method to gain clients for your accounting firm right away.
This could sound appealing if you’re just starting out.
However, in addition to being prohibitively expensive, paid advertising on Google and Facebook may also bring in traffic that isn’t exactly what you’re looking for.
As a result, you’d be working with the wrong types of clients for your bookkeeping business.
Unless you have a comprehensive, compelling offering and really tight sales processes when starting your business, you could be wasting your money on Google and Facebook ads in the early stages.
Unless you’ve had prior experience with running paid advertising, it’s best to employ someone who is knowledgeable in this area to assist you in finding new clients and laying the groundwork for your marketing strategy.
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Following the guide above will help get your bookkeeping business off to a solid start, but don’t rest on your laurels.
Keep up with industry trends and keep improving your abilities.
I can’t stress enough how important it is for your company to expand along with the rest of the market.
This does not imply that you must take on additional clients, but rather that you should broaden your expertise and contacts instead.
Stay current with your skills and keep up with the changes in your favorite platforms’ capabilities.
Professionals like you can also attend conferences and networking events.
Please keep in mind that putting yourself into your business could make or break your financial future.