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How to Start a Bookkeeping Business In 7 Simple Steps [2023 Update]

When starting a bookkeeping business, you may have questions like:

  • Where do I start?
  • How do I find clients?
  • How do I keep track of my finances?

The list goes on.

While these questions can overwhelm and discourage you, starting a bookkeeping business can be lucrative and rewarding with proper guidance.

From years of experience and tons of research, our experts will provide you with a step-by-step guide on how to start a bookkeeping business from scratch.

This guide will cover everything from creating a business plan and registering your business to finding clients and managing your finances.

This way, you can start, grow, and 10x your bookkeeping business income.

How Profitable is Owning a Bookkeeping Business?

A bookkeeping business can make between $29,120 to $61,980 (the top 10% earners), depending on location, industry, level of experience, and services offered.

According to recent data from the Bureau of Labor Statistics, the average annual wage for bookkeeping business owners in the US was $45,560.

While the pay is a good starting point, there’s potential for earning more.

For one, you can set your rates and work with multiple clients.

You can also offer various services to your clients, such as tax preparation, financial reporting, and consulting, which can increase your income potential.

By building a reputation and a loyal client base, you can expect to earn a comfortable income while doing what you love.

What You’ll Need to Start a Bookkeeping Business [& Associated Costs]

From inception to getting your bookkeeping business running, we’ll highlight a few vital things you’ll need and the associated costs.

  • Register Business: Register your business and obtain the necessary licenses. Costs: from $50 to $500.
  • Hire Professional Services: Consult with attorneys, accountants, or business consultants to help with legal, financial, or operational aspects of your business. Cost: from $150 to $1,200.
  • Buy Software: You’ll need software programs for bookkeeping and tax preparation. Cost: from $9 to $1,000 per month.
  • Advertise: Invest in marketing and advertising by building a website, printing business cards, creating social media profiles, and advertising in local publications. Cost: Free to $500
  • Pay for Insurance: Pay for your business insurance to protect it from liability and other risks. Cost: from $30 to $350 per month.
  • Professional Development: Stay competitive and up-to-date with industry trends and laws by investing in ongoing education and professional development. Cost: Free to $2,500.

Do I Need a License or Certificates to Start a Bookkeeping Business?

The requirements for starting a bookkeeping business in the US can vary depending on the state and local jurisdiction where you plan to operate.

While there’s no federal requirement for a bookkeeping license or certificate to start a bookkeeping business, some states may have specific laws.

For instance, Texas law doesn’t require you to have a license to operate as a Bookkeeper.

However, you need to get a business license and register for taxes to be considered a legal business.

You can also demonstrate your expertise and credibility to potential clients by obtaining a professional certification like Certified Bookkeeper (CB) or Certified Public Bookkeeper (CPB).

These certifications may require passing an exam and meeting some educational and experience requirements.

For more clarification, you can consult with a lawyer or accountant to ensure you meet all legal and financial requirements for starting a bookkeeping business in your area.

Why You Should Consider Starting a Bookkeeping Business as a Side Hustle

As someone looking to start a side hustle, you aim to make extra income while maintaining a flexible schedule.

While several businesses can help you achieve this, here’s why starting a bookkeeping business as a side hustle can offer more:

  • Flexibility: With the increase in remote bookkeeping jobs, you can work from home and on a flexible schedule. This makes it ideal if you have other obligations or a full-time job.
  • Low Startup Costs: Starting a bookkeeping business costs less than several other businesses. You may need a computer, accounting software, and a website, but having an office space or employees isn’t necessary.
  • High Demand: Every business needs bookkeeping services. As such, there’s a high demand for qualified virtual bookkeepers.
  • Growth Potential: As you build your reputation and gain more clients, you can turn your side hustle into a full-time business.
  • Additional Income: A bookkeeping side hustle can provide extra income to help you pay off debt, save for a specific goal, or improve your financial situation.

How to Start a Bookkeeping Business in 7 Simple Steps

Below, we’ll highlight seven steps to becoming a bookkeeper today.

Step 1: Pick a Niche

Picking a niche can help you specialize, deliver quality, and attract high-paying clients.

You can start by assessing your skills, interests, and experiences to determine which areas of bookkeeping you’re most passionate about.

For example, if you know the real estate industry, offering a bookkeeping service in that line wouldn’t be a bad start.

Also, consider demand and competition in the niche you’re choosing.

While the unpopular opinion will be to choose a niche with high demand, we’ll add that you choose one with less competition.

A less competitive niche will likely have fewer experts, like bookkeeping for cryptocurrency firms.

Niching down in areas like this can differentiate you from other bookkeepers.

Step 2: Create a Business Plan

Your business plan should be a living document that evolves as your business grows and changes over time.

It doesn’t have to be elaborate at first, but you need to draft it to give you a sense of direction.

So, start by analyzing your target market to learn about size, competition, and trends.

This way, you can understand and draft out who your ideal clients are, where to find them, what services they might need, and how much it’ll cost to set up a service that meets those needs.

Also, outline steps to implement your plans, including timelines, milestones, and key performance indicators (KPIs) to measure your progress.

Step 3: Register your Business

Before registering your bookkeeping business, ensure you have a relevant business name.

However, this can depend on your business structure—sole proprietorship, partnership, Limited Liability Company (LLC), or corporation.

For instance, you can’t use a tradename, like CC Taxes, if you’re registered as a sole proprietor unless you file a DBA (Doing Business As) certificate.

You’ll also need to submit a business address; you can use your house address for a start.

Step 4: Choose Your Tool Stack

To choose your bookkeeping software, consider those that are easy to use, align with your business needs, and are compatible with your computer.

You can also consider what fits your current budget but provides quality features.

Some of the popular accounting software for bookkeeping include QuickBooks, Xero, Wave, and Freshbooks.

You can use them for invoicing, expense tracking, bank account integration, and preparing financial records.

Step 5: Build a Business System

Whether you’re a QuickBooks self-employed or a freelancer, a business system can help you organize your processes, procedures, and policies.

While your processes refer to your bookkeeping services, like invoicing, your procedures and policies spell out how you plan to do those services in line with regulations and laws.

You can highlight these in your Standard Operational Procedure (SOP).

Also, develop a process for onboarding new clients by setting expectations for communication, outlining the services you’ll provide, and establishing a schedule for reporting and invoicing.

Step 6: Package Your Services

Packaging your services starts with developing a suitable pricing structure.

You can charge by project, monthly retainer basis, or hourly rate.

However, consider offering various pricing packages that include several levels of service to meet the client’s needs.

Also, create a branding strategy for your bookkeeping business to help you stand out.

This includes developing a logo, website, and marketing materials that convey your services, pricing, and brand values.

Step 7: Manage Your Finances

It’s easy to mismanage money when there’s no plan, but you can track your business successes with one.

You can manage your finances by creating a budget, separating your business and personal finances using a business bank account, keeping accurate records, and following up on overdue payments.

Also, check your income and business expenses to know what channels money comes and leaves.

You can learn to cut unnecessary costs and maintain a positive cash flow.

Things to Consider When Building a Bookkeeping Business

Consider these factors when building a bookkeeping business:

  • Can You Run a Bookkeeping Business By Yourself? If so, try starting small while you make expansion plans.
  • Regulatory Compliance: Ensure you comply with all relevant laws and regulations, including tax laws, data privacy regulations, and licensing requirements.
  • Business Structure: Choose a legal structure for your business, such as a sole proprietorship, LLC, or corporation.
  • Cost of Service: Develop a pricing structure that’s competitive and sustainable. Consider offering different services to meet your prospective client’s needs and ensure your pricing reflects the value of your services.

INSPIRATION: Bookkeeping Business Ideas

As a bookkeeper, there are several services you can offer, including:

  • Virtual Bookkeeping Business: With the rise of remote work, you can start a virtual bookkeeping service accessible from anywhere.
  • Personal Finance Management: You can run a virtual bookkeeping business that focuses on budgeting and savings to help individuals struggling with managing their finances.
  • Small Business Consulting: As a bookkeeper, you have valuable insights into the financial health of small businesses. Consider preparing financial statements to help business owners make informed decisions.
  • Training and Education: Several firms may not know how to manage their finances. You can run training and education services to help them understand accounts payable and other finance and business-related concepts.
  • Specialization: Instead of offering general bookkeeping services, consider specializing in a particular industry, such as real estate or healthcare. This can help you build a reputation as an expert in your field and attract clients with specific needs.

Frequently Asked Questions

Is it Easy to Start a Bookkeeping Business?

Starting a bookkeeping business can be relatively easy because it doesn’t require significant startup capital or complex technology.

There’s also a high demand for bookkeeping services, particularly among small businesses and entrepreneurs who need help managing their finances.

With some training, you can start a virtual bookkeeping business and gradually expand your services as you gain more bookkeeping experience and clients.

However, starting a successful bookkeeping business requires hard work, dedication, and a willingness to learn, adapt, and flow with the ever-changing laws.

How Do I Find Bookkeeping Clients?

You can find clients for your bookkeeping business at local events, where business owners and entrepreneurs needing bookkeeping services may be attending.

But if you don’t like attending offline events, social media platforms like LinkedIn, Twitter, and Facebook are another way to reach out to more people who’ll likely need your services.

You can share helpful tips and information on virtual bookkeeping business and engage with your audience to build relationships and establish trust.

While we’re no fan of online directories, listing your business on Yelp, Google My Business, and other local directories can increase your online visibility and make it easier for potential clients to find you.

Other ways to find clients include using paid adverts and introducing a referral program.

Similar Businesses to Consider Starting

Besides bookkeeping, here are other options you might want to consider:

  • How to Start a Credit Repair Business: Considering starting a credit repair business? You don’t even need a college degree to start.
  • How to Start an Ecommerce Business: The digital world is taking over. You can grab a spot in it with an ecommerce business and sell to millions.
  • How to Start a Marketing Business: Can you create marketing campaigns that drive sales for businesses? Tech startups are paying six figures to market their products.

Wrapping Up

A dream remains in your mind until you take action.

Some actions you can take to start your dream bookkeeping business include picking a niche, developing a business plan, registering your business, and learning to manage your finances.

You may not have what it takes to start big, but consistency and hard work can move you to any height.

Let us know your thoughts in the comment section below. We would love to hear from you.

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