How to Start a Bookkeeping Business
- 12 Mar 2021
- 5 minutes read
If you are detail-oriented, love to balance multiple projects and have a strong knack for numbers, then perhaps starting a bookkeeping business is perfect for your skills.
Also, the digital age has brought many possibilities. You can start an online business of any size and shape from anywhere in the world, so there's something out there for all type of individual.
Statistics of Small Business Administration (SBA) estimates say that each year almost 627,000 and more businesses need their records accurate by, here someone has to handle this task for them.
This makes the bookkeeping business a very high on-demand business.
But starting bookkeeping business from scratch is overwhelming, especially when you are new to business or even in bookkeeping.
No worries! We have broken down the process for you.
There's something for you to learn in this blog post. Ready? Let's go!
In this blog post, you will learn
- Costs involved with a bookkeeping business
- Starting a bookkeeping business step by step
- Step #1 – draw a business plan
- Step #2 – Decide the business name & business structure
- Step #3 – Get business licenses and permits
- Step #4 – Open a separate business bank account
- Step #5 – Select accounting software
- Step #6 – Consider business insurance
- Step #7 – Set up a marketing plan and get clients
- Step #8 – Hire employees & grow
- Bookkeeping business benefits
Costs involved with a bookkeeping business
Generally, a bookkeeping business has a low startup cost, especially when you decide to run your business virtually; you will only pay roughly $2,000 to $3,000 to get started if you already have a laptop.
This will cover a website cost, business insurance, and the subscription fee of bookkeeping software such as QuickBook, Xero, etc.
Hence, the virtual bookkeeping business is one of the lowest-cost startup business in existence.
On the other hand, a large business with a rented office can carry the startup cost of closer to $50,000 $100,000.
Here are the common large business startup costs,
- Office furniture & filling cabinets
- Computers and printers
- Bookkeeping software
- Project management software
- Phone & internet
- Office supplies
- Working capital to cover salaries, internet, utilities for initial months
Okay, so we just finished a talk about how much money you'll spend – ICK!
Now, let's talk about how you'll MAKE the money – YAY!
But before, visit our blog top accounting skills you need to master.
Starting a bookkeeping business step by step
Step #1 – Draw a business plan
Once you are ready to start a bookkeeping business, the very next thing you should start working on is a business plan.
While you may not require a fund, you can consider other crucial aspects of a business, like ways of marketing, projection of income and expenses, targeted industry and so on.
When drafting a business plan, you must include,
- Your strengths, weakness, opportunities & threats (SWOT)
- Market research – competitors, industry, targeted clients
- Research related to problems your service will solve
- How you will provide a cost-effective solution to your clients
- Your projected cash flow, profits – as you are a bookkeeper after all!
- Growth strategies
- Marketing strategies
Step #2 – Decide the business name & business structure
You will have to go with a business structure whenever you decide to start your own business.
In the US, there are four business structures,
- Sole Proprietorship (Schedule C)
- Limited liability Company (LLC)
The business structure you select determines your tax liabilities and the personal liabilities if your business ever gets sued.
Mostly bookkeeper go with LLC, but if you are just starting out and have limited funds, you can consider a Sole Proprietorship.
Though, PROCESS WITH CAUTION! And get advice from an attorney before making any final decision.
With the business structure, you will also need to decide on a business name that has to be available to use and also resonate with your clients.
Step #3 – Get business licenses and permits
For bookkeeping, there is no particular licensing but a national certification from the National Association of Certified Public Bookkeepers – Certified Public Bookkeepers (CPB), which will provide credibility in your skills to potential clients.
In addition, before a bookkeeper business launch, you should consider other licenses and permits according to your business location, some local, state and federal registrations, home-based business license, Employer Identification Number (EIN) etc.
Step #4 – Open a separate business bank account
In order to track your business expenses and income, you should keep all the personal and business finance in a separate place.
Whenever you start a business, consider opening a business bank account and credit card account.
Step #5 – Select accounting software
When it comes to stay on top of your customer's bookkeeping and manage the workflow swiftly, good bookkeeping software can make a huge difference.
Bookkeeping is easy nowadays – all thanks to digitization, there's no need for a paper trail; just log in and make proper data entries, retrieve statements, reconcile accounts, and more.
There are numbers of accounting software available such as,
- Wave accounting, and the list goes on…
If we look at the fundamental aspects of all these software, then all do the same thing, so it's good to familiarize yourself with all in order to gain flexibility.
Step #6 – Consider business insurance
For your bookkeeping business, it is wise to consider purchasing professional liability insurance.
Such insurance can cover mistakes you or one of your employees make or a perceived mistake when handling a client's financial data.
Costs can vary depending on variables such as where the location of a business and the number of employees on staff.
In order to get the most accurate idea of what insurance will cost, request quotes from multiple providers and compare all the quotes while looking at factors such as coverage limits and exclusions, premiums, etc.
Many insurance providers in the US offer professional liability policies with $1 million in coverage for less than $50/month.
Step #7 – Set up a marketing plan and get clients
To make your services known and make it a brand, you'll need to promote them.
In this competitive business, promotion is crucial to the success of your business as well as the success of your strategies.
Marketing yourself on social media is the best way to gain exposure. You just have to be careful which way you go about it.
If you are going to the market on social media, make your profile focused only on bookkeeping tips and information related to it.
Also, fill in all the sections in your social media bio. This will help clients get all the details they need from you.
The more your business is visible, the more like your services are to sell.
The marketing should be professional looking – you can try a few tactics for marketing like,
- Join online forums
- Advertise with Facebook, Instagram, LinkedIn etc.
- Get published on guest blogging websites
If you are worried about how to find clients!! Don't panic; leave it to Experlu.
When it comes to getting clients and marketing hustle, Experlu gets you covered as we provide a platform to make your brand visible and match you to our millions of quality leads so that you can do the thing you do best – Bookkeeping and grow your business.
Step #8 – Hire employees & grow
You will add value to your bookkeeping business overtime.
As your business grows, it may be time to welcome additional employees.
With the employees, you will also need to consider their salary expenses.
According to statistics by PayScale, bookkeepers earn an average amount of $42,806/year, while experience bookkeepers can earn around $60,000/year.
In addition to salary, you will also need to budget for expenses such as paid time off, health insurance contribution and workingman's comp insurance.
Bookkeeping business benefits
If you are impressed with everything mentioned above, let me impress you more by dropping some of the benefits of starting a bookkeeping business:
- Minimal startup cost.
- For increased marketability, you can become a specialist in one accounting application.
- It is consistent work that typically takes place on a regular schedule.
- You can work remotely and broaden your reach to the globe.
- You do not need any certifications or training (it's not a bad idea to become certified, though!).
Let's sum it up
After reading this, if you feel like it's something you should do, do it! The market is there for you; every small and large business needs a bookkeeper. Bookkeeping is evolving with new cloud technologies, which are giving the comfort of working from anywhere. With this in mind, you can make an action plan - start as an online bookkeeper and team up with Experlu today! To get clients easily. Moreover, starting your own bookkeeping business now might be the best thing you ever do for yourself.