Having the right qualifications and a business idea is one thing, but setting up the business is totally different. Just thinking about the steps involved in starting an online bookkeeping business can seem overwhelming and scary. But you don’t need to worry since you’re reading this post.
This guide will teach how easy it can be to set up a bookkeeping business with the right knowledge and processes. You will find out the things you need to get you started, including business structure, registering your business, operating your bookkeeping business, and how to get your clients.
Why Choose to Start a Bookkeeping Business?
We live in a fast-paced world, and the nature of businesses in the financial sector has changed a lot. However, bookkeeping is one job that will always be in demand, no matter how much the financial sector changes. For other businesses, bookkeepers are indispensable since they must keep track of all financial transactions to ensure the business thrives and grows. Watch: ADDING BOOKKEEPING TO YOUR TAX BUSINESS
Demand will always be present wherever humans exist, and others will rise to satisfy the demand by supplying either goods or services. To achieve that, new businesses are always popping up, and bookkeepers will always be needed for recording, auditing, book balancing, and handling many other financial responsibilities. Therefore, starting a bookkeeping business will mean a greater chance for you to get a well-paying job – besides, the law mandates all businesses to keep the records of their books, and someone surely has to help with this.
If you’re good with numbers and have a knack for getting things orderly and organized, you should consider starting up a bookkeeping business. Many small or medium business outsource their bookkeeping services to experts who can deliver the services they require. This is a good reason why starting as a bookkeeper for small or medium businesses will be an excellent choice. You can niche down or be proficient in tax preparation, accounts receivable, accounts payable, payroll, reconciliation, and other related services. If you’re unsure of the type of bookkeeping service to offer, read our post on The Best Bookkeeping Services You Can Offer.
Some of the reasons you should consider your own bookkeeping business include:
- There is a high demand for bookkeepers
- A minimal start-up cost for setting up the business
- You can enroll and be certified in a financial/accounting course and even specialize as an expert, which will improve your marketability and worth
- You can own an online bookkeeping business and work remotely
- You don’t need formal education in the accounting field to start (but it’s always a better idea to be certified; it gives you an edge)
Is a Bookkeeping Business Profitable?
If you ask me to name a profitable business to start with little capital and earn huge returns, bookkeeping is definitely top on my list. Bookkeeping is a profitable business, especially if you know how it works. If you don’t, you can still learn bookkeeping.
Bookkeeping is very profitable because all business owners require bookkeeping services to maintain their financial records and keep track of their finances. Without these records, most businesses can’t make important or credible financial decisions. If you have the resources and the right tools, you should consider offering bookkeeping services online or to small businesses around you.
According to ZipRecruiter (American Employment Marketplace), it was estimated that bookkeepers in the US make about $55,000 to $76,000 yearly, depending on their location. Statistic from California also shows that bookkeepers earn $76,170 /year and $6,348 /month. I believe we all agree now that bookkeeping is surely a profitable business with these statistics.
How Do I Start an Online Bookkeeping Business?
Starting a business from scratch can be overwhelming, especially when you don’t have previous experience starting up or running a business. However, like every other business, bookkeeping requires a process, but you will have smooth sailing once you get the hang of it. So, let’s break the process of starting up your online bookkeeping business into simple and easy to achieve steps.
8 Easy Steps To Get Your Bookkeeping Business Operational
- Get Certified
We mentioned earlier that you could start a bookkeeping firm without formal education or certification. However, it would help if you first considered getting a certification, becoming a certified public bookkeeper or niche down to any other related bookkeeping courses that will show people you’re an expert they can trust to handle their books. Clients will trust someone who is legally certified, proving they already passed the required test on acquiring a level of professional skills. This will be one of the best ways to stand out in the competitive market and one of the fastest ways to gain credibility with new or potential clients.
Even though you are already a certified public accountant (CPA) that already has the required proficiency to do bookkeeping, tax returns and payroll, you can still take up certifications in other software products like QuickBooks.
- Create A Business Plan
You should draw up a business plan regardless of the type of business you plan on starting, including bookkeeping. Just as the name suggests, a business plan contains all the plans you have for your company. By outlining these plans, you have a map to guide you. It’s also a comprehensive document containing the products or services you intend to provide, your competitive advantages, how you will market your product, your financial plans, projected cash flow, and growth plans.
- Choose a Business Name
Remember to choose a very good and catchy business name. It is an important aspect of planning because your business name represents you as the first point of contact with potential clients. When considering a business name, think of what you communicate with the name (first impression matters). Is it communicating your personality, your expertise, or your ideas?
Make sure no one else is using the name you’ve chosen. You can ask a few close friends or relatives for their opinion on the name you’ve decided on. When you have resolved, run the name through the business name database of your state’s secretary to be sure of its availability.
- Register Your Business
After deciding on a business name and confirming its availability, you should register your business to make it official and legal to operate. This process will depend on how you intend on structuring the business, the type of business entity you want to register as, and the location of the business. Depending on the state you are registering, the rules and regulations for starting a business will differ. You may want to look it up on the state’s website or with your secretary of state’s office.
Choose a Business Entity
Starting a bookkeeping business online means you will probably be working alone, at least while starting up newly. Registering as a sole proprietor or LLC should be a choice to consider. If you plan to bring people into the business later on, you can look up LLCs.
Errors and Omissions Insurance
As a bookkeeper, you will be taking on a huge responsibility by handling sensitive information for clients, and they all hope you will keep accurate records of their books. Hence, the errors and omissions insurance is a must-have in case of mistakes, which could have severe consequences, especially if your client decides to sue. The error and omissions insurance is meant to protect you should such an event occur.
- Set Up a Business Bank Account
It is imperative to separate your personal finances from your business finances. As a bookkeeper, you should understand what this means. Don’t wait until your business starts generating cash before tracking your business expenses; the earlier you start tracking your business finances, the better your business strategies.
- Choose The Right Tools And Set Up Your Office
Starting up and running a business requires that you have tools to work with, and bookkeeping software acts as one of the foundations of your new business. When choosing your bookkeeping software, there are several options to choose from, so do your research and decide on the best one that fits your need and skills.
The good thing about setting up a bookkeeping business is that you can use your room as an office space if you can’t afford to rent an office space. The internet and the digital age are filled with opportunities and infinite possibilities, including starting an online business of any size. So, as long you have a roof covering your head with a traceable address, you can cut down the cost of paying rent and operate from your room.
Think about setting up the following:
- A website
- Client database management
- File-sharing App
- Email and phone
- Market Your Business
Marketing is important to every bookkeeper, and like every other business, you need to figure out who your clients are and where to find and meet them. Businesses that thrive are the ones that are keen, knowledgeable about their customers, and can advertise to them directly.
You will need to niche down and advertise appropriately. For instance, what are your qualifications? What is your area of specialization? What industry does your expertise cover? What is the focus of your business – online or local business owners? Are you targeting small, medium, or large businesses?
Asking and answering the right questions will help you identify and market yourself in the most creative ways possible.
When you have all the right answers, you should consider online marketing using social media platforms, leverage your contacts, and never underestimate the influence of word-of-mouth referrals. Keep a good relationship with your current customers and communicate effectively with them about how you can help them.
Can I Start a Bookkeeping Business Before Going for a Certification?
You can start a bookkeeping business before going for certification to back up your practice. On the condition that you’re good with numbers, you have experience working on taxes related to bookkeeping, perhaps as an accounting assistant, or worked in the financial sector.
It is good that you’re starting your bookkeeping business, but make sure you grow your business. Growth can be in different forms, and it might not necessarily mean taking on more clients. Grow your network, improve your knowledge, join communities that offer similar services as you do and learn from them, attend professional events, invest in yourself and your business, take up new certification courses, and keep your skills up-to-date. Never stop evolving your practice!