Bookkeeping is one of the most profitable and easy careers to get into. If you're good with math, organized, and detail-oriented, you may have the makings of a great bookkeeper. And because startup costs and overhead are low, starting your own bookkeeping business - where you can be your own boss, choose your own clients, and set your own rates - is very doable.
While you may wish to establish an office location and hire employees, you can also start a bookkeeping business working remotely from home as a sole proprietor. This article covers the ins and outs of what it takes to become a bookkeeper and how to get started with your own bookkeeping business.
Helpful Skills, Education, and Training
No certifications or degrees are required to become a bookkeeper. In fact, you can become one with little more than a high school diploma. However, you may find it difficult to obtain clients if you can't prove in some way that you have the know-how and bookkeeping experience required to take care of their books. Potential clients want to know that you have the attention to detail, math skills, organization, and integrity required to handle their books without issue.
Bookkeepers are responsible for updating financial records on a daily basis, creating financial statements, and generally tracking bank statements and all cash flow through a business. This is often handled by using bookkeeping software, such as Skynova's all-in-one invoicing and accounting software. At a minimum, you should be familiar with such software and be able to use it consistently and successfully.
If you have previously worked as a bookkeeper or accountant for a larger company and are considering branching out on your own, then you likely already have the skills and credentials needed and can leverage your past work experience when advertising for new clients. Otherwise, you may want to consider obtaining an associate or bachelor's degree in bookkeeping, finance, accounting, business, or a related field.
It may also be worthwhile to secure membership in the American Institute of Professional Bookkeepers (AIPB) or to become a certified bookkeeper through the National Association of Certified Public Bookkeepers (NACPB). Both organizations provide opportunities for ongoing learning and bookkeeping courses so that you can stay up-to-date with your skills.
Some bookkeepers decide to take the courses and testing necessary to become a Certified Public Accountant (CPA), though this isn't necessary. Accountants may do similar work to bookkeepers but the job description is not identical and CPAs often take on more responsibilities.
Preparation and Planning for Your Bookkeeping Business
Once you have the certification, training, or background experience needed to attract clients, you're ready to begin planning out the details of your bookkeeping business. The following list of things to consider can help you get started:
- Specify your services. Make a clear list of what bookkeeping services you will offer along with short descriptions of each. Not only will this help with your planning but you can use this list to sell future clients on your services.
- Identify your target market. Determine which types of clients you plan on seeking out. For example, you may wish to work with local small business owners or offer your services to a broader category of professionals remotely.
- Set your prices. Decide what you will charge for your services. You may wish to charge an hourly rate for all services offered, flat fees for specific services, or negotiate rates with individual clients. You might also want to work out retainer pricing. Check out what bookkeepers charge in your area to get an idea. On average, some bookkeepers offer tax preparation for $75 and up, for example.
- Set your hours. Determine how many hours per week you are willing to work. Will your business be part time? Full time? Are you willing to work 60-hour weeks? Also, look into how many hours per week you can expect to work for your average client and estimate how many clients you can reasonably take on.
- Set your budget. Identify all costs associated with your business, including startup costs and ongoing expenses. This may include things like the cost of a computer, internet, and office space, bookkeeping software, and more.
- Write a business plan. Drafting a detailed business plan is a great way to establish how your business will operate and what you need to do to keep it running before you open your doors.
Where to Start With Your Bookkeeping Business
Once you've done the prep work, you're ready to begin the process of legally forming, marketing, and running your bookkeeping business. Here we outline how to tackle each of those processes in detail.
Tips on Forming Your Bookkeeping Business
The requirements for legally forming your business will vary depending upon which state and city you live in. You can often find local information on your Secretary of State's website, including all requirements for paperwork, registration, and fees. That said, the list below explains the typical process:
- Choose a business structure. There are different business structures to choose from, each with different requirements and tax obligations. The choices include sole proprietorship, partnership, limited liability company (LLC), corporation, and S corporation. While a sole proprietorship or an LLC might be most common for a bookkeeping business, take some time to research the implications of each so you can make an informed choice.
- Decide on a business name. If you will be operating your business under any name other than your personal legal name, you will need to register the name when you register your business. Often, your Secretary of State's business website will have a searchable database of business names currently in use so you can make sure the name you choose is unique.
- Register your business. Complete all required paperwork for registering your business, as per the guidelines for your local area. This often involves filling out a few forms either electronically or by mail and paying a fee.
- Look up local licenses, permits, and regulations. Because laws vary widely, take some time to look up business laws in your area. Some cities might require that you obtain certain permits or a business license to operate a business in that area while others may have no additional requirements at all.
- Open a business bank account. Take your official business registration paperwork to a bank and set up a business bank account. This will make it easy to accept payments from clients and manage your business finances separate from your personal finances. Having a business bank account may be helpful if you want to obtain a business credit card or small business loan, as well.
- Understand tax obligations. Find out if you need to obtain federal and/or state tax ID numbers for your business. An employer identification number (EIN) from the Internal Revenue Service (IRS) can easily be obtained online. Also, look into when and how businesses like yours should be paying taxes. (For example, LLCs and sole proprietorships are often taxed as pass-through entities, meaning that the taxes are dealt with on your personal tax return.)
Tips on Marketing Your Bookkeeping Business
Once your business is established as a legal entity and you've made sure all of your paperwork is in order, it's time to start looking at how to attract clients. Below are several marketing ideas to help you get started:
- Make a website. A website is vital for most businesses these days. It both helps prospective clients find you when doing an internet search and also provides a landing page you can send people to in order to learn more about what you do and what you offer. You may wish to design your own website using common platforms such as WordPress or Wix, or you can hire a web designer to do the work for you.
- Use social media. You can place ads for your service on social media sites like Facebook and create pages for your business so prospective clients have another way of finding you. When it comes to bookkeeping, you might also find LinkedIn to be a great place for directly connecting with potential customers.
- Don't forget about branding. Look into getting a logo designed for your business. This helps people immediately identify your business, helps you appear more professional, and allows you to make your paperwork, such as invoices and statements, more easily recognizable. It will also look great on your business cards.
- Reach out. Consider calling, emailing, or sending fliers to any businesses that you think may be interested in your services.
- Seek reviews. Once you have a few happy customers under your belt, ask them if they'd be willing to write a review or offer a positive quote about your services. You can use these reviews on your own website or encourage them to enter them on Yelp or other sites people check when looking up your business. Happy clients may also be able to offer referrals for new clients, as well.
Tips for Keeping Your Bookkeeping Business Running
Before you start taking on clients, make sure you have everything in place for the day-to-day operations of your business. Not only will you need bookkeeping software to keep books for your clients but you will need it set up for tracking your own finances, as well.
Skynova, for example, offers customizable templates for quotes, invoices, and more. You can fill in the information, add your logo, and be ready to go when your first client calls. As a bookkeeper, you are likely already well-versed in how important it is to track invoices and payments and keep in regular contact with your clients. You just want to make sure you have all the products in place that you need before you get started.
Start Your Bookkeeping Business Today
Going out on your own and launching your own business can be both exciting and scary. Hopefully, this guide has answered some questions and helped you feel more confident as you start your bookkeeping business journey. If you're ready to hit the ground running today, let Skynova help.
Skynova has an assortment of software products designed with entrepreneurs and new business owners like you in mind, making it easier to take care of your own books while you help your clients with theirs.