How To Start A Bookkeeping Business: A Guide for Beginners

Do you have a passion for numbers and organization? Are you looking for a way to start your own business? If so, starting a bookkeeping business may be the perfect venture for you! In this guide, we will walk you through the steps necessary to get your business off the ground.

We'll discuss what services you can offer, how to market your business, and what kind of equipment you'll need. So whether you're just getting started or you're ready to take your business to the next level, read on for tips and advice on how to start a bookkeeping business!

How to Start a Bookkeeping Business

What Is Bookkeeping?

Bookkeeping is the process of recording, classifying, and summarizing financial transactions to provide useful information in making business decisions.

The bookkeeper brings order to the chaos of business transactions by creating a system for recording and tracking them. This system can be as simple as a notebook where all transactions are recorded chronologically or an elaborate computerized system.

The bookkeeper's goal is to produce accurate financial records used to make sound business decisions. Businesses can use financial records to track progress, measure performance, and decide where to allocate resources. Bookkeeping is an important part of any business, large or small. Without accurate bookkeeping, it would be difficult to make informed decisions about the direction of a business.

These people are typically responsible for bill payment, payroll, sales, and other finance-related things in businesses. They keep accurate and detailed records of finances within a company, and sometimes may also prepare tax returns and financial reports.

What Services Can I Offer As A Bookkeeper?

  • Recording financial transactions
  • Preparing financial statements
  • Managing payroll
  • Preparing tax returns
  • Monitoring Cash Flow
  • Handling Accounts Payable & Receivable

As a bookkeeper, you can offer various services to your clients. The most basic service you can offer is recording financial transactions. This involves entering data into the accounting system and keeping track of receipts and invoices.

You can also offer more complex services such as preparing financial statements, managing payroll and preparing tax returns. The type of services you offer will depend on your skills and experience.

If you're starting out, it's a good idea to keep your services simple. As you gain more experience, you can add more complex services to your repertoire.

virtual bookkeeping business

Starting A Bookkeeping Business

Now that we've discussed what bookkeeping is and what services you can offer, it's time to start your own bookkeeping business!

The first step is to consider what qualifications you need. While you don't need to be a certified public accountant (CPA) to start a bookkeeping business, it is helpful to have some experience with accounting and bookkeeping.

You may also want to consider taking some courses or getting a degree in accounting or business.

What Qualifications Are Useful For A Bookkeeping Business?

In order to become a bookkeeper, you need to have at least a high school diploma or equivalent. Many people go from school to a job and simply learn everything on the job, but this is unlikely to be the case if you are starting your own business.

Even if you have experience in the field, having the right qualifications will make you more credible to your potential clients.

If you are new to the field of bookkeeping and have either limited or no experience, having qualifications is imperative to a successful career.

There are some key things that will help you be successful in your endeavor. They are as follows:

Become A Certified Bookkeeper

To be credible to your future clients, you should become a certified bookkeeper before throwing yourself into the deep end of starting your business.

Because certified bookkeepers are not regulated by the state, you need to choose where you get your certification from very carefully.

Picking a large organization that is reputable and well-known will be extremely important for your success. That way, the certification you get from them will mean something to the public, and you will be credible from the start.

Two professional bookkeeping organizations you can get certified with include the NACPB and AIPB. We will take a closer look at them below:

National Association Of Certified Public Bookkeepers (NACPB)

In order to become certified with NACPB, you will have to take courses in payroll, bookkeeping, accounting principles, and QuickBooks Online, and also pass an exam for each course you do. Before you apply for a license, you will need to have at least 1-year of experience.

For anyone who has done accounting courses in college, you will still have to pass each exam but may have the opportunity to substitute them for the required courses.

When you become certified, the credentials you earn will be CPB (Certified Professional Bookkeeper), which you can place behind your name on official documents and business cards.

This will be a way of displaying your bookkeeping skills and letting people know of your qualifications and accomplishments.

American Institute Of Professional Bookkeepers (AIPB)

In order to become AIPB-certified, you will need to meet the 3,000-hour requirement for work experience.

Additionally, there will be an exam you will need to pass. When you become certified through your training and exams, you will be able to use the credentials CB (Certified Bookkeeper) after your name.

This way of getting certified is perfect for anyone who does not have a formal education in the accounting or bookkeeping field and would like to learn about it. As with the NACPB credentials, you can put the credentials you get from AIPB after your name on official documents and business cards.

There are other ways to become a certified bookkeeper. These methods include either online or traditional training courses.

Going this more traditional route is a good option if you would like to have access to instructors while they are learning the skill. This will help expand your knowledge of bookkeeping further, as well as the ability to learn differently.

For many people, having access to an instructor can make a big difference, so this option should be considered if you learn best this way.

Certification For An Accounting Software

It is important to get an accounting software certification to prove that you can effectively carry out your job. While many accounting software for small businesses offers a certification problem, not all of them do.

A number of these are free, and also some with free accounting software for the firm, but this will vary from place to place. There is some popular accounting software that is well-loved, as well as their certification programs. We will take a closer look at them below to get a better idea of what they are and how they work.

Xero Partner Program

This accounting software is reasonably priced and is similar to FreshBooks. You can get a certification as part of the Xero partnership program.

QuickBooks ProAdvisor

This is probably the most popular option when it comes to small business accounting software in the US. With this software, you will become certified by finishing the self-paced lessons, as well as taking exams at the end.

FreshBooks Partner Program

This is a popular choice for service-based businesses. You get great invoice features, and the partnership program with accountants includes gaining certification and plenty of skills training.

Become An Enrolled Agent To Do Tax Returns

CPAs are typically the ones who deal with tax returns, but if you want to work with them, you need to be prepared to do extra work.

In order to do this, you should become an Enrolled Agent via the IRS. Tax clients are very different from the regular clients you would work with, and extra skills are required to ensure that you can properly do your job.

By becoming an Enrolled Agent, you will have additional education once you pass your initial exam every three years. This ensures that you stay up-to-date with everything you need to know.

Although there is no formal education needed for this role, the exams that you need to pass are difficult enough to prove whether you have the required skills for the job or not.

NOTE: Preparing a client’s tax return and not signing it as the paid preparer is illegal. Because of this, the DIY software (such as TaxAct or TurboTax) cannot be used to prepare client returns, as there is no option to sign as a paid preparer. To do this work, professional tax software is needed.

Create A Business Plan

The next step to building a successful bookkeeping business is creating a business plan. Not only will putting a business plan together help you have a better understanding of your bookkeeping business, but it could also help you get funding.

When you are doing this, you need to consider every aspect of your business and ultimately make sure that it makes sense.

You will need to decide how you are going to market your business, what services you are going to offer, and also figure out who your competition is.

On top of that, you will need to create a 12-month financial plan, which includes a profit and loss projection, projected balance sheet, and cash flow.

In order to create a good business plan, you should include the following in detail:

Executive Summary

Your executive summary will need to include all the key sections that are a part of your business plan. These key sections are the points mentioned below.

Cover Page

This will be used to provide an overview of all the key information about your bookkeeping business. Your company name, logo, and all other important business-defining details will need to be in this place (such as the address).

Company Overview

You will need to have an overview of your company so that you fully understand what it is and what will be expected. Without having a company overview, you may stray from your plans and encounter problems you can avoid.

Startup Costs

Knowing your startup costs is imperative, as it will cost money to start any business.

Before jumping into the deep end, you will need to know how much money you are going to need. These costs can include office space if you cannot work from home, as well as software prices, which can vary depending on your choice.

Marketing Plan

You need to know how you are going to market your business to the public. If you are not able to effectively market your new business, you will not be able to bring enough money in.

Your marketing plan will include things like advertising, referral programs, and websites to let the world know that your bookkeeping business exists.

Financial Projections

To create a financial projection, you will need to use either estimated or existing financial data. You will use this data to forecast the future expenses and income of your new bookkeeping business.

To cover all bases, you should go through various scenarios and possibilities to get a good idea of what effect these changes can have on finances.

Consider things such as lower operating systems or higher sales, and see how they affect your business’s profitability.

Competitive Analysis

You will need to carry out a competitive analysis, which means that you will analyze and assess all the strengths and weaknesses of companies you would call competitors.

To do this, you would analyze their marketing strategies and the products or services they offer.

Learn The Law

Before you jump into a bookkeeping business, it is imperative for you to learn the law on the topic.

As mentioned before, there are some things that you, as a professional, will not be allowed to do that the layperson can. You need to be aware of the law and work with it so that you can avoid trouble.

It is likely that you will work with clients who are unaware of the law themselves, so it is up to you as the professional to know your boundaries and rights.

business structure for a business owner

Registering And Organizing Your Bookkeeping Business

In order to serve clients, you need to have a legitimate bookkeeping business. To do this, there are a number of things you need to do.

Once you have carried out all the previously mentioned points, like planning out your business plan, you can start thinking about registering and organizing.

Of course, some of these points are things you will need to have done in the planning stage, but it is always possible for things to change as you continue to work.

If you fail to do any of these things, you will not be able to be registered and established on any level.

Choose A Business Or Company Name

The name of your bookkeeping business is one of the most important things to figure out. Your business name is the first thing that potential customers will see or hear, so it needs to work.

There are a number of things to take into consideration when deciding on a business name. If you do not have a name for your business, it cannot be registered.

Get Other Peoples’ Opinions

It is easy to be biased, so asking for other peoples’ opinions on the name of your business is critical. The people in your life will be honest about suggestions and will hopefully be able to give you feedback on any ideas you might have.

Pick A Name That Tells Customers Everything They Need To Know

There is nothing worse than having to explain the name of your business, so picking one that tells clients everything they need to know without stepping food inside is the best.

If you want to work with a particular niche, incorporate that niche in your company name and let them know exactly what it is you can do to help them.

Use an Established Brand Or Location Name In Your Title

Using location names is a great way to help with the business, too. Including the name of the city you live or work in can be a very helpful tactic, and it makes it clear where clients can find you.

Test The Name with Potential Customers

If you have a few names in mind, why not ask individuals who would potentially end up being your customers?

Get their opinions on your names and have them give you constructive feedback. This will let you know what they like about your name choices, and what will not work for the field.

Decide On A Business Structure

The business structure is important when aiming to register your business, as it will determine how liable you will personally be in the event of being sued or involved in any other legal matters.

There are four main business structures, and the one you go with will depend on the size of your company and a few other things.

To find out more about small business structures, and make the best decision for you, this guide is perfect.

The four main types of business structures:

  • Partnership – a partnership
  • Sole Proprietorship – no employees
  • Limited Liability Company (LLC) – with employees
  • Corporation – with employees

Setting Up Business Operations

Once you have organized your business and know what it’s all about, you can start focusing on setting up business operations.

In this stage, you will need to pick the right insurance for your business, as well as set up separate bank accounts.

Setting Up A Business Bank Account

It is important to set up a business bank account for a few reasons. The first reason is that doing this will make it easier to keep track of business expenses.

Having one account could also affect your liability in a case if there was ever a lawsuit against you.

Before you start generating money, you should make a business account so that you can keep business finances separate. Doing this from your personal account will be very difficult as there will be more expenses and outgoings.

A Business Emailing Address

A business mailing address will help you come across as more professional if you will be working from home.

If you are working in an office, the mailing address will simply be wherever the office is located. You will need to get a business mailing address if you work from home, which will help protect your privacy.

To get a business address, you can rent a post office box.

Answering Service

Hiring an answering service is especially important if you will be working alone. Chances are, you will be unable to answer every phone call and have a conversation with every caller, so having someone who is able to do that for you will be beneficial, especially in the tax season.

You should hire an answering service to deal with queries and calls 24/7.

Many people will want to either call, text, email or even video call you if they are in need of your services, and simply sending them to voicemail will undoubtedly cause you to lose potential clients.

Insurance Is Important For Liability Protection

Liability protection is of paramount importance when working as a bookkeeper.

On the off chance that you get sued by a client for a mistake, you need to be able to cover any costs it could result in. These costs include lawyers and settling the lawsuit, which insurance will cover.

If you feel like your business is ready to get running, but you have not gotten insurance, take the time to do it before doing anything else.

bookkeeping software

Accounting Software

There are a number of software products that you will need to have and know how to use. Chances are, you already know which software you want to use for your bookkeeping business, but there are plenty of options out there if you are still unsure.

This part of the business planning can feel very daunting, but as long as you know what you need, it is a simple enough task.

You will have to decide on a range of software for different purposes, so initially this could cost a lot of money. However, you will be able to make this money back with a successful business, so do not worry too much.

You will need to decide:

Your Bookkeeping Or Accounting Software

As previously mentioned, QuickBooks Online is the most popular and one of (if not the) the best choice.

For QuickBooks Online, you will get an account for free if you join the QuickBooks Online Pro Advisor program. However, you need to pick the software that you feel will work best for you.

You may find that you love another software, so you shouldn’t let your decision be made for you.

Electronic File Management And Sharing

You will need a program that allows you to share documents and other kinds of information like receipt copies, bank statements, and invoices. These documents will have to be shared with your clients, wherever they are.

Using systems like emails might seem like the easiest option, but they are not always the most secure. If you want a secure method of sending and receiving information, programs like Dropbox is one of the best.

For this program, the files are stored in the cloud (which means you will not need backups), and passwords and user IDs are needed to access the files.

Practice Management Software

Getting a practice management system will help you keep track of and organize your work.

Additionally, this kind of software will act as a portal so that you can access the books belonging to your clients.

Some bookkeeping software like Xero and QuickBooks offer practice management software as part of their systems, which could help you save money in the long run.

Payroll Provider Or Software

The payroll provider software you choose will depend on the bookkeeping software you pick. Most bookkeeping software will have an option for payroll precessing that you will be able to use if or when you have to hire employees.

Funding Your New Business

If you have gotten this far, you have already done most of the work and know enough to get your business out there – almost. It might feel like all the work is done, but there is more coming.

There’s more to a business than what it does, and something that is often overlooked is the funding. Without funding, your business will cease to be.

There are a number of ways that you can get funding, but they may not all be applicable to you and your personal situation.

As a general rule, you should always have at least six months of company expenses available to use in the bank, but for a new business, this is unlikely to happen initially.

Initially, you might depend on a business credit card to cover some expenses of your new business. These credit cards will probably be the first kind of financing that you will actually qualify for, so you need to make the most of it.

Not only will a business credit card enable you to cover a lot of initial costs, but it will also help you keep track of expenses.

There are other ways to get funding for your business, however. These methods can vary depending on where you are and your personal situation, but they may all be worth looking into if you are able to.

Ways to Get Funding For Your Business:

  • Business Grants
  • Crowdfunding
  • Equity Investment
  • Start-Up Loans
  • Personal Investment
  • Peer-to-peer Lenders
  • Venture Capital
  • Government Programs
work space

Setting Up Your Working Space

A home office is one of the best ways to keep expenses low when you are starting your business. It is a good idea to meet your clients either virtually or in their own offices.

If you bring clients to your home, it could end up being a danger and unnecessary risk, not to mention you would no longer have any privacy.

The only time inviting clients to your home would be suitable is if you already know them well, and you have an area of the house that is private.

Working in a home office also means that you will be eligible for tax deductions.

These tax deductions can end up helping you carry out repairs and maintenance work in your work space, as well as take care of a small portion of real estate taxes, utilities, and home insurance.

If, however, a home office does not work for you, there are other options.

You may be able to try office sharing. This would help you get a mailing address, receptionist to answer your calls, a conference room, local telephone number, and a physical office space to work from.

Some important things to figure out when sorting out your working space include:

Get a Business Number

Virtual phone number can be route to the phone you already own. This number can have its own virtual, professional, voice message.

Having this virtual number will allow you to keep your private number private, rather than being forced to use it as a business number.

Virtual Meetings

As previously mentioned, virtual meetings can be very important. This is especially the case if you may have clients from different places in the country. However, the main reason for having virtual meetings is your own safety and privacy.

Client Locations

Meeting clients in their office locations is another privacy and safety measure you can take.

Marketing Your Bookkeeping Business

No marketing means no business, even if you are only a small or new business. This is something that applies to every business in the world, and even the most well known companies do this, and they do it a lot.

One of the most important you can market your business is through a website, but there are other things you can do that are incredibly helpful, too.

Helpful marketing methods you can do to help your bookkeeping business include:

Get A Professional Website Running

A professional website is most likely the first thing any client will see when they look at your bookkeeping business. You need to ensure that it looks professional and reliable.

There are companies that can build a site for you (like CPA Site Solutions), but you can also build one yourself if you have the skills and the time.

Make sure that it is simple and attractive, but also easy to read and navigate. Having a website that is unappealing or difficult to navigate will only result in your losing customers.

Sign Up To Freelancer Sites

Signing up to freelancer sites will help get your name and bookkeeping business out into the world. This is a great way to find clients, as the people who come across you will specifically be searching for someone who offers bookkeeping services.

Set A Client Referral Program

A popular way to market a business is through referrals, so if you set up a referral program, your client number is likely to go up.

Join a Bookkeeper And Accountant Meetup Group

Meeting with other individuals similar to you will help you get your bookkeeping business name out there.

Social Media Marketing

Social media is crucial when marketing your bookkeeping services. A Facebook business page is an easy way to let people know about you and your bookkeeping business.

Software Programs For A Bookkeeping Business

Make sure that you are certified in everything that you need so that people know that you have the required skills to handle their concerns. If you do not have any certifications to back up your claims, no one will take you or your bookkeeping services seriously.

Help As An Adjunct Instructor

If you are able to establish that you are an expert in your field, people will be more likely to trust you with their finances

Become A Business Advisor With The SBDC

The free or paid workshops that the Small Business Development Center offer will help you become more known to potential clients

Useful Information

You would be surprised by how much you can learn from the world around you when you look for it. There are a number of things that happen every day that we simply do not pay attention to.

For example, the number of blogs and conferences that happen around us that we take no notice of.

There are plenty of things we can learn from, so if you want to learn about the people in the same industry as you, and how to be successful, all you need to do is look around.

A couple of things you can do to learn more and stay in touch with the bookkeeping business world include:

Learn About Trends In The Bookkeeping Business

Trends are always changing, so it is always important to know what is and is not popular. You need to know if people prefer desktop installed software, or subscription-based cloud software.

Paying attention to what is happening in the industry around you will help you be successful and learn what to expect.

If you are behind on trends while other businesses are doing their research and staying on top of them, you will inevitably lose money.

Sign Up For Newsletters

There is so much information available in newsletters. Find one that you like, and sign up to keep receiving invaluable information for your business journey.

Join Your Chosen Professional Bookkeeper Association

Being a member of at least one professional bookkeeper association can help you immensely. Not only will it help you get your name out there and meet people, but it will also give you the chance to learn more from others.

Two great professional bookkeeper associations include the NACPB and the AIPB. Although you have to pay for a membership, it is well worth the money.

Attend Conferences

You can learn a lot from conferences, so whenever you get the chance, you should attend them. Doing this will also help you meet and get in touch with more people in the bookkeeping business, which can be beneficial in itself.

Read Bookkeeping Blogs

Staying in touch with the industry through blogs is a great way to stay on track. You can either keep up with a blog about bookkeeping of your choice, or you could even start your own (which would eventually bring in more clients).

Final Thoughts On How To Start A Bookkeeping Business

Starting a bookkeeping business is no easy feat. It takes a lot of work and effort, but if it is something you are passionate about and have the time to do, it is worth every moment.

If you are interested in starting your own bookkeeping business, hopefully, this particle helped you get some clarity on the subject. There are so many things that need to be considered and planned, but this work pays off.