Thinking of starting a bookkeeper business? The benefits are hard to deny. Bookkeeping is a business with few barriers to entry, relatively low upfront costs, and you can be selective about when and where you work and the types of clients you work with.
According to the research firm IBISWorld, there are more than 300,000 bookkeeping and payroll businesses in the U.S., although that number might be low. That’s because bookkeeping comes in all shapes and sizes – from Big 4 firms to part-time home-based businesses.
If understand a Bookkeeper’s job description, and you’re ready to jump in, here’s what you need to know about how to start a bookkeeping business.
Step 1: Consider your business model
Think about the types of clients you want to serve, the types of services you will provide, and how you will deliver those services.
According to Accounting Today’s State of Bookkeeping Survey, nearly 80% of the client base for most bookkeepers is made up of individuals and small businesses, with start-ups, midsize, and large companies making up the remaining 20%.
Bookkeepers serve a variety of industries, including construction, real estate, legal and professional services, retail and wholesale businesses, nonprofits, healthcare, and manufacturing. Most clients (42%) are local to the bookkeeper’s geographic area. However, cloud accounting technology, video conferencing, and secure client portals make it possible for bookkeepers to serve clients all over the world.
Many bookkeepers provide services other than just recording transactions. If you have the know-how, you may also want to offer tax planning and preparation, business consulting, and payroll processing. Expanding your skill set will make you more valuable to clients, and you can serve as a full charge bookkeeper. What is a full charge bookkeeper? It’s someone who does more than just keep ledgers. They may prepare financial statements and tax returns, handle accounts receivables and payables, and manage payroll and tax deposits.
Step 2: Create a legal business
Each state and local jurisdiction has its own rules for establishing a business. You’ll want to make sure you check with your Secretary of State to find out what licenses you may need. You’ll also want to apply for an EIN from the IRS.
It’s also a good idea to start a business checking account to keep your business and personal funds separate.
Step 3: Invest in technology
The great thing about launching a bookkeeper business is you don’t need a lot to get started. A computer, mobile phone, and internet access are the biggest upfront costs. Most bookkeeping software these days is cloud-based, so you pay a monthly fee to access it. When selecting your accounting software, make sure it offers excellent security. You’ll want to make sure your clients’ sensitive financial information is secure.
You might also consider investing in practice management software that will help you track time, manage workflow, and invoice clients. Look for ones that integrate with your bookkeeping software.
Step 4: Get trained and certified
While bookkeepers aren’t required to have any specific training or certifications, getting them can set you apart from the competition.
Invest in a quality bookkeeping course that will teach you how to bookkeep for small business. Bookkeeper Business Launch is a good option as it explains the technical side of bookkeeping, as well as how to start a bookkeeping business.
You might also want to get a certification from the National Association of Certified Professional Bookkeepers or the American Institute of Professional Bookkeepers.
Step 5: Invest in success
Beyond the initial costs mentioned above, you might want to invest in some other key items that can help you market your business and grow your client base. This includes:
- Business cards
- Office supplies
- A website
- A scanner and printer
- Errors and omissions insurance
- Password management software
Whether you’re starting from scratch or have a handful of clients, treat your bookkeeping business like a business from day one. Anyone can become a bookkeeper, but only those who meet deadlines, perform quality work, and provide value to clients can grow their efforts into a successful business.