Bookkeeping is an important aspect of any business because it makes budgeting easier.
The low overhead and startup costs, along with the high earning potential, make bookkeeping one of the most lucrative career paths out there. But getting started can be tricky.
In this guide, we’ll walk you through a step-by-step roadmap of how to become a bookkeeper. We’ll also discuss how much bookkeepers make and why to consider this career path.
- An Overview of Bookkeeping: A Primer
- What You’ll Need to Become a Bookkeeper [& Associated Costs]
- Is It Hard to Become a Bookkeeper?
- How to Become a Bookkeeper in 7 Simple Steps
- Reasons to Consider Becoming a Bookkeeper
- Frequently Asked Questions
- Similar Gigs to Check Out
- Wrapping Up
An Overview of Bookkeeping: A Primer
Bookkeeping is the process of recording and reporting the financial transactions of a business.
Bookkeepers handle the daily financial activities of a client. They are responsible for recording basic accounting transactions and financial records, such as issuing invoices, recording cash receipts, and paying employees.
Bookkeepers also protect their clients by ensuring that all financial transactions are under federal laws and regulations.
As a bookkeeper, you can work for businesses or individuals and even work from home.
At the most basic level, you need to have a good understanding of how to:
- Issue billings and pay invoices
- Process cash receipts
- Reconcile balance sheet accounts
- Construct account charts
- Track and record inventory
- Pay employees and suppliers
- Prepare financial reports
- File tax returns
How Much Do Bookkeepers Make?
According to Salary.com, a bookkeeper in the United States earns an average of $42,854 a year. The salary distribution typically falls in the range of $38,326 to $47,569.
As a freelancer, you can set your own rates and choose to be paid hourly. Individual rates may vary depending on the complexity of the job, location, and individual skills and experience level.
What You’ll Need to Become a Bookkeeper [& Associated Costs]
While you don’t need a college degree or a certification to start your own bookkeeping business, a relevant credential will help advance your career.
The more bookkeeping qualifications you can show in your online profile, the greater the variety of work you can expect.
Here are some of the important things to consider before starting your bookkeeping journey:
While a college degree is not required, a relevant bachelor’s degree in the field will help you climb ladders. Many entry-level bookkeepers don’t have a degree, but a relevant one would qualify them to work for clients with higher requirements.
Also, many states require at least a bachelor’s degree to be eligible to get a CPA license.
2. Certification or Licensing
Depending on your aspirations, you can earn a certificate in bookkeeping or accounting or pursue a 2- or 4-year degree in your area.
While it’s not mandatory to get a certification, most businesses will expect you to have a CPA license. Every state has its own eligibility requirements for obtaining a CPA license.
3. Tools and Software
Before you proceed, you need to decide what bookkeeping tools and software you’ll use to manage our clients’ books.
Apart from having good analytical and math skills, you’ll need knowledge of spreadsheets (typically Microsoft Excel) and popular accounting/bookkeeping software. This includes QuickBooks, Xero, and FreshBooks.
Before you can start keeping the books, you must familiarize yourself with basic bookkeeping skills and accounting terms, including balance sheets, assets and liabilities, profit and loss statements, ledger and journal, financial statements, and more.
How Much Does It Cost to Become a Bookkeeper?
Bookkeeping is one of the best stay-at-home online businesses. It has low overhead and startup costs since it requires minimal equipment, and you can work from anywhere you want.
From registering your business to setting up your own home office, hosting a site, managing phone and internet service, and everything in between, you can get up and running with little money.
You can expect a couple of hundred dollars to start your bookkeeping business.
Is It Hard to Become a Bookkeeper?
While bookkeeping doesn’t require a complex set of skills and abilities, you must have a working knowledge of bookkeeping and generally accepted accounting principles (GAAP).
If you enjoy math and numerical problem-solving, have good analytical skills, and are highly organized and detail-oriented, you might just have what it takes to be a bookkeeper.
While there are no qualifications needed to become a freelance bookkeeper, most businesses would expect you to have at least a relevant certification or license in the field.
How Long Does It Take to Become a Bookkeeper?
Your ability to land fulfilling jobs depends on the time and effort you put in each week, as well as your experience level.
The amount of time may vary depending on whether you’re doing it full-time or as a side hustle.
If you’re an accounting major, you can expedite the process, and it’s not going to take much. However, if you’re starting from scratch, it might take some time, from a few weeks to a couple of months.
How to Become a Bookkeeper in 7 Simple Steps
Starting and running a bookkeeping business is a step-by-step process that takes some time and effort. To help you in your endeavor, we’ve compiled a comprehensive guide on how to become a bookkeeper:
Step 1: Obtain a Bachelor’s or Associate’s Degree
While many freelance bookkeepers don’t have a degree and are doing well, most employers prefer candidates with at least a bachelor’s degree in business administration, accounting, or a similar field.
It’s one of the most demanding careers today, which makes it even more challenging for people without a degree to succeed.
To become a bookkeeper, basic knowledge of the best accounting practices and procedures is necessary. An associate degree in bookkeeping or a high school diploma will help you obtain that knowledge. A degree offers its own value based on your aspirations and goals.
Step 2: Get Certifications and Licensing
You don’t need any certifications or licenses to start a bookkeeping business, but additional credentials will enhance your credibility and help you stand out. A certification verifies the knowledge and skills you’ve gained around bookkeeping.
There are two major credentialing associations for bookkeepers: the American Institute of Professional Bookkeepers (AIPB) and the National Association of Certified Public Bookkeepers (NACPB). Both provide bookkeeping training and certifications to help you officially get a Certified Bookkeeper credential.
Step 3: Sign Up For Freelance Marketplace Sites
Search through popular freelance job sites to look for remote bookkeeping jobs. You can often find a variety of jobs posted across different platforms, from temporary contract-based jobs to long-term projects.
You can also go for internships to gain some valuable first-hand experience.
Bookkeepers work in virtually any industry. While the tasks are similar, each area provides a different working experience. There are thousands of jobs posted on freelance marketplaces such as Upwork and Fiverr.
Step 4: Create a Strong Portfolio to Attract Clients
An outstanding portfolio helps showcase your expertise and services to potential clients.
Create your website to highlight your qualifications and experience, work samples, testimonials, etc. If you don’t have any prior experience, you can opt for some bookkeeping courses to hone your skills.
Step 5: Set Up a Bookkeeping Business
Identify your target market to determine what types of clients you want to serve, whether it’s small businesses or individuals. Factor in startup costs, such as office equipment, software subscription costs, etc. Create a budget and estimate the total cost before proceeding.
Once you’ve figured it all out, obtain the necessary licenses and permits to register your bookkeeping business.
Create a professional website to showcase your services and attract clients. Focus on a particular niche if you’re just starting, and expand slowly going forward.
Step 6: Set a Reasonable Price
The famous saying “you get what you pay for” holds true for bookkeeping services. As a freelancer, you can set your own rates, but at the same time, you don’t want to oversell yourself. Study the market and set your prices accordingly.
Research and find out what other professional bookkeepers are charging for their services. When establishing fees, consider your business costs and expenses, and set a reasonable price that allows you to even out your expenses while earning a steady income.
Step 7: Market Yourself to Expand Your Reach
Devise a marketing strategy to expand your network and get more clients. Leverage all social networking channels, such as LinkedIn, Instagram, Twitter, and Facebook, to promote your services.
Ask friends and colleagues for referrals, get involved with freelancer communities and forums, network with other professionals or freelancers in your field, and invest in social media marketing.
Do it right, and your freelance bookkeeping business will begin to flourish.
Reasons to Consider Becoming a Bookkeeper
There are several reasons why you should go for bookkeeping, including:
- Flexible hours: The bookkeeping business provides a lot of flexibility in terms of working hours. Whether you’re a morning person or a night owl, you can work anytime you want at your convenience. Even if you have a nine-to-five job, you can fit it here and there.
- Low startup cost: Starting a bookkeeping business has low startup costs compared to other online businesses. With just your laptop and some accounting software, you can get started working from the comfort of your home.
- Choose your own clients: One of the best parts about the bookkeeping business is that you can choose your own clients, so you don’t have to work for people you don’t want to.
- High earning potential: Compared to how little it costs to start your business, the income potential is very high. Some people will pay you top dollar to manage their finances.
Frequently Asked Questions
What Is the Difference Between a Bookkeeper and an Accountant?
A bookkeeper is responsible for recording and managing financial transactions for a client, while an accountant is more concerned with analyzing and interpreting financial data like taxes and tax returns.
What Skills Do I Need to Become a Bookkeeper?
While you can benefit from having computer skills and analytical skills, you should also have strong organizational, interpersonal, verbal, and written communication skills.
Working knowledge of accounting software like Tally is also a must.
Similar Gigs to Check Out
If bookkeeping is not your cup of tea, you can always look for other alternatives that can pay as much.
Here are some other career options you could pursue instead:
- Become a Consultant: If you’re looking for a lucrative career path without a degree or extensive experience, you could become a consultant and get paid to share your valuable expertise.
- Become a Movie Critic: If you love watching movies and are looking to turn that passion into a money-making gig, you could become a movie critic and share your honest opinion with the audience.
- Become a Technical Writer: If you have a knack for writing and typing and are looking for a rewarding venture, then you could start a lucrative career as a technical writer.
While bookkeeping requires a specific set of skills and abilities, as well as great attention to detail, being a bookkeeper is not hard.
You’re bound to face some challenges in the beginning, but it gets easier once you’ve acquired the necessary skills and some real-world experience.
By following the steps detailed above, you can establish yourself as a reliable and competent bookkeeper.
Feel free to share your valuable feedback in the comments section below, and be sure to share this guide with others who may be interested in becoming bookkeepers.