How to Start a Bookkeeping Business Step-by-Step Guide

Starting a bookkeeping business

You can also choose to become a certified public bookkeeper to market yourself better as a bookkeeping professional. Unlike certified public accountants, bookkeepers don’t file tax returns or audit financial statements. Bookkeepers are also not required to have an accounting degree. Unless they are a certified public accountant (CPA), bookkeepers should not prepare tax returns or sign the returns as a paid preparer. Just make sure you have a plan to pay off the balance before the introductory offer ends and a variable APR sets in.

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Every company needs to manage their finances, but you may want to narrow down your clientele to a specific audience. For example, do you want to work with big or small businesses? Is there a specific business niche that interests you (e.g. retail, automotive, or manufacturing)? The answers to these types of questions will more than likely drive the types of clients you end up working with.

Your Guide to Starting a Bookkeeping Business: Is it for You?

If you’d prefer not to bill hourly, you can set a fixed fee or retainer bill for each client. This method rewards you for working efficiently as long as you’re getting the work done. When you finish your work, you can stop for the day or focus on getting more clients. If you got into virtual bookkeeping for the freedom and flexibility, you might want to work off retainers, but you also have the option to bill hourly.

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This can help you organize and track the progress of client work and, in some cases, provide a portal to access your client’s books. QuickBooks and Xero offer the best accounting practice management software that’s integrated with their accountant software. The specific amount you charge your clients for bookkeeping services will depend on your certifications, years of experience and familiarity with the client’s business. You can look at freelance sites, such as Upwork, to see what others are charging for bookkeeping services, but you can also learn a lot by asking around. Talk to businesses in your area to see what they are currently paying for bookkeeping services. Talk to people in your network who are also bookkeepers and ask what they are charging.

Tips that will Increase Your Bookkeeping Firm’s Productivity

If you are someone who has some experience, it’s an added advantage. Let’s start with how you can start a bookkeeping business with no experience from home. A bookkeeper is primarily responsible for paying bills and collecting payments on invoices. You have to update financial records, create financial reports, post-financial records, and debit and credit to appropriate accounts. Adding services offers you an opportunity to expand your market and as well grow in the domain which will help you to attract new clients.

The next step is to go to your Secretary of State’s website and file “Articles of Organization.” It’s a fairly simple process and done online through a series of questions. Don’t exhaust yourself or your bank account by trying everything at once. Start with two or three affordable strategies and work your way up to more expensive ones.

Tip 2 – Create a Knowledge Base of Documented Processes

For example, both LLCs and corporations can choose to be taxed as S-corps if they meet the requirements. However, the limitations and risks of these business structures quickly become more apparent as your business grows. In both of these business types, you are your business, legally speaking. Your company’s legal business name is YOUR name—so you’ll need a DBA to operate under any other name. Planning will often be what makes or breaks a bookkeeping business.

Most people operating a part-time bookkeeping business with no employees will operate as a sole proprietorship, which works fine. However, if your business grows to the point of hiring employees, you need to consider becoming an LLC or corporation. In addition to tax consequences, your personal liability in the event of a lawsuit can vary dramatically by business structure, so be sure to consult with an attorney. Even if you don’t have formal education in accounting or bookkeeping, you can become a certified bookkeeper before starting your own bookkeeping business.

Many states require residents to have some level of health insurance coverage. Health insurance is a much sought-after benefit if you plan to hire employees. If your virtual bookkeeping firm has employees in several states, you may want to work with an insurance agent to find coverage that works for all your employees. Like a business bank account, a business credit card allows you to differentiate between personal and professional spending. It also builds business credit and gives you additional financing to help with the initial growth of your business.

Step 1: Create a Business Plan

Also, even though your business is brand new and hasn’t generated any revenue, you may still qualify for startup business financing. You’ll also need to choose a bookkeeping software for your bookkeeping business. Some accounting solutions offer a bookkeeper or accountant edition specifically designed for bookkeeping companies to use both for their books and as a portal to their client’s books.

Starting a bookkeeping business

Think of your niche as a clear and specific direction for your business. It can be as simple as serving local businesses under 10 people or companies with an entirely remote workforce. You will refer to it over time to help you make decisions and work toward your goals.

Ask current clients to refer you

Each state also has different rules for business taxes, so you’ll need to consider how state taxes would apply to your business. You may also look to become a limited liability company and potentially even office space at the time you hire on employees, so bear those regulations and costs in mind as well. Proper small business insurance is an important part of starting a bookkeeping business, but it’s also a pain for many. The process of finding and securing insurance at an affordable rate can seem overwhelming, but it doesn’t have to be. However, if you’re already a CPA or professional bookkeeper, then read on—you’re ready to start your bookkeeping business, and we’re ready to show you how. If you’re reading this, it means you see the opportunity, and you’ve already asked yourself the important questions every entrepreneur needs to answer.

Before you dive in, make sure you know what you’re getting into. Truth be told, I have made my share mistakes while building my bookkeeping business. I’ve struggled with many of the things that you’re probably struggling with right now in your own bookkeeping business. You might be able to leverage it into a lucrative bookkeeping business.

All-In on the Cloud When Wanting to Know How to Start a Bookkeeping Business

You do not need an expansive or expensive website to get started. You can create a simple website for less than $50, including the domain name. If you don’t have experience, you can find many predesigned websites online or have one put together for less than $500. Bookmark these resources to keep learning about what’s new in the bookkeeping industry, best client practices, and how to grow your business. An EIN gives you several benefits and is a necessary component of starting a bookkeeping business. In many cases, registering your business is as easy as simply registering your business name.

  • If you’d prefer not to bill hourly, you can set a fixed fee or retainer bill for each client.
  • A bookkeeper’s work is applicable across many different types of industries — after all, every business needs to track and optimize its finances.
  • This means it’s a good idea to incorporate your business to protect your personal assets.
  • Keep in mind that bookkeeping responsibilities are a bit different from those of a certified public accountant (CPA).
  • Once you’ve come to an agreement, it’s essential to sign an engagement letter.

Based on whether you go with Xero, QuickBooks Online, or both, the next thing you’ll want to do is get certified so that you actually know how to use the software. If you expect to find new clients in different geographical regions, consider getting a local Starting a bookkeeping business number in addition to a toll-free number. Most of these phone services allow you to install an app on your smartphone so that calls are routed there. While some companies use Slack with their clients, I typically advise against that in most cases.

You want to help businesses by starting your own bookkeeping business. And we want to help you figure out how to get out there and land your first client. It’s tough to stay on top of new trends and changes in the industry. This is a trend that’s changing how bookkeepers and accountants do business, so it’s important that you understand how it works since it’ll have a direct impact on your business. As a one-person operation, you may find it hard to get back to clients right away, especially during tax season. Sending prospective customers to voicemail when they need your services can cost you business.

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