Book-Keeping
Type of Business
How to Start a Bookkeeping Business
Bookkeeping is a recession-proof business you can start with low overhead. Bookkeepers manage income, expenses, taxes, invoices and financial statements for small businesses using accounting software. With some qualifications and marketing, you can build a profitable bookkeeping firm. Follow this guide:
Get Trained and Certified
Sign up for a bookkeeping certification course to learn skills like double-entry bookkeeping, payroll processing, reconciliations and QuickBooks. Get qualified as a Certified Bookkeeper through AIPB. Proven expertise attracts clients.
Get Essential Software
Invest in bookkeeping software like QuickBooks Online or Xero and get certified in using them. Cloud-based software allows you to work remotely. Also get a tax preparation program like TaxAct for filing client taxes.
Build a Business Plan
Create a business plan covering your services, ideal clients, operations, marketing strategy and financial projections. This will serve you as a reference base as you develop your business. Also analyse existing and future competition and differentiate your services accordingly.
Register Your Business
Choose and register your bookkeeping business name. Establish either a sole proprietorship, LLC or corporation depending on liability and taxes. Get an EIN from IRS if you are in USA, or from the HMRC, if you are in the United Kingdom. From there you need to open a business account which is free to do so.
Set Your Rates
Price services affordably when starting out as a new bookkeeper while covering costs. Bill either hourly, monthly retainer or by package. Offer discounts or value-adds to attract early clients. Increase rates as you gain experience.
Get The Word Out
Build a website showcasing services. Focus local SEO to rank high. Print brochures for networking events. Ask for referrals from established accountants or lawyers. Join trade associations and chambers to build connections.
Invest In Accounting Software
Get proficient in using leading small business accounting platforms. Offer bookkeeping services either on-site or off-site. Sign up for a payroll provider to handle tax calculations, payments and filings.
Deliver Excellent Service
Go above-and-beyond for first clients and get testimonials. Return files on time, be easily available for queries and build strong relationships. This converts clients into raving fans to refer others.
Being an expert in bookkeeping software and taxes while providing personalized services is key to satisfy clients. Focus on adding value, building long-term client relationships and keeping updated on accounting regulations. Stay disciplined in the first few years as business grows through referrals.
The major steps to start a bookkeeping firm are covered above. Hope this helps your business start-up decision.
Good Practices, Do’s and Don’ts for a Bookkeeping Business
Being a freelance bookkeeper comes with huge responsibility as you manage sensitive client finances. Follow these best practices to run an ethical, professional firm:
Do's
Specialize Your Services
Offer services matching your expertise like accounts payable/receivable, payroll, reconciliations, monthly closings etc. Specialized services let you command higher rates.
Get Insured
Protect yourself with adequate insurance like errors & omissions insurance which covers damages from potential mistakes. This builds trust in your services for clients.
Use Cloud Accounting Software
Leverage cloud platforms like QuickBooks Online or Xero for efficient multi-user access and collaboration. Cloud backup also secures client data.
Automate Where Possible
Automate repetitive tasks like bank feeds, monthly invoices or collections emails using software rules and reminders. This will save your time while at the same time boost your productivity.
Build Long-Term Relationships
Treat clients like business partners, not just account holders. Set regular meetings to understand their business and proactively offer ideas to help them cut costs or save taxes.
Don’ts
Don’t Ignore Continuing Education
Regularly update your knowledge by taking advanced certification courses. Attend seminars on the latest regulations and software versions. This helps accurately handle changing client needs.
Don't Compromise On Security
Guard client data with strict privacy protocols like secure connections, multi-factor authentication on accounting software, restricted staff access and regular third-party security audits.
Don't Miss Deadlines
Always submit compliance reports, tax returns, payroll returns and invoices on time. Missing deadlines risks heavy penalties or interest charges for clients.
Don't Go Beyond Your Expertise
Be transparent on the limits of your qualifications and don’t provide advice beyond accounting and tax regulations. Recommend specialists like auditors or lawyers for appropriate counsel.
In conclusion, build an excellent reputation over everything else in this close-knit industry. Word-of-mouth goes a long way, so focus on delivering outstanding service and value. Staying ethical, accountable and committed to clients' interests will make your firm stand out.
The above tips will help you in your business decisions. Happy business start!
How much capital is required to start a bookkeeping business?
The start-up capital required for bookkeeping business is modest unlike other types of activities. You can get started with around $2,000 to $5,000 minimum. This covers costs of bookkeeping and accounting certifications, accounting software licenses, laptop/computer, office supplies, marketing material, basic website development and working capital for the first 3 months. You can operate from your home office when just starting out before moving to a commercial space once you start scaling. As it is primarily a service business, your key investments will be in building expertise, getting accredited, using the right tools and putting in relentless marketing efforts in the initial years. With persistence and high-quality service delivery, you can recover your capital within the first year itself through monthly retainers from a small client base. The relatively low capital requirement makes a bookkeeping firm an attractive low-risk business to self-fund even while holding onto your regular job initially.
I’ve emphasized how launching a bookkeeping service business doesn’t necessitate substantial capital. Instead, the initial start-up costs primarily cover key expenses.
Here are some hints on income potential and suitability of operating a book-keeping business:
Here are some hints on income potential and suitability of operating a bookkeeping business:
Potential Income
- Bookkeepers usually charge $30-50 per hour, with experienced bookkeepers charging up to $75 per hour. Annual income could reach $30,000 to $60,000.- Income potential increases for bookkeepers who specialize (e.g. payroll, QuickBooks) or take on accounting tasks like financial reporting.- Building a solid client base is key for steady income. It may take more time for new book-keepers to achieve the higher income level.
Good Candidates
- Bookkeeping requires attention to detail, organization, analysis and computer skills for tasks like reconciliations and ledgers.- Some accounting education or bookkeeping certification is preferred. On-the-job training under an experienced bookkeeper can also be valuable.- Good time management and communication skills are important when interacting with clients and meeting reporting deadlines.- Independent bookkeepers should also have marketing abilities and business savvy to promote their services and handle back-office tasks like billing and collections.
These points provide helpful expectations on operating a bookkeeping business.