How Much Does it Cost to Start a Bookkeeping Business? (it can be cheap!)
Have you ever wondered how much it would cost to start a bookkeeping business? Maybe you’re considering bookkeeping as a side hustle to earn some extra money, but you’re concerned it may take too much capital to get started. Well, good news! In most cases, you can start your business for a couple hundred dollars. In this article, I am going to break down the essential and optional costs that go into starting your bookkeeping business.
I live in Oregon and the 2 essential things I needed were an LLC, which cost $100, and a business license from my city that cost $50, so I was able to start a business for just $150! However, this startup registration can vary based on where you are located. These low start-up costs are why I started my bookkeeping business 9 years ago.
Also, right now, you can start out charging your clients an hourly rate of $50 per hour as a bookkeeper. You can earn back those start-up costs super-fast with just one client.
Watch the video here, or keep reading!
Essentials for Starting a Bookkeeping Business
Legal Entity (LLC) and Other Licensing/Fees
To start a bookkeeping business, you will want to become a legal entity. There are different types of business structures that you can choose from, but I found getting an LLC to be the best and easiest way to start my bookkeeping business. The fee for an LLC is going to vary state by state, but most states charge around $100. You can find out what your state charges with a simple Google search.
You then want to check your local area for what the rules are for where you live. There may be additional state, county, or city licensing fees. For me, there is a business license for my city, and I pay $50 a year. The range I have found for most of these fees is $50 - $300 annually.
These are the absolute necessities that you need to call yourself a bookkeeping business! Be sure to check out my free Start a Bookkeeping Business checklist, where I explain this in a bit more detail.
Download the free checklist: Start a Bookkeeping Business
Optional Costs for Starting Your Bookkeeping Business
QuickBooks Online Accountant
The first thing you need is QuickBooks! I recommend using QuickBooks Online Accountant, which is free for you as a bookkeeper. When you start taking on clients, either you or your client will need to pay the monthly fee for QuickBooks Online. If you are trying to start your bookkeeping business for as cheap as possible, you can definitely pass that subscription fee onto your client.
One of my really old videos showed exactly how many dollars I spent when I started my bookkeeping business and my grand total was $419. Much of my expense was buying the program QuickBooks. I bought the QuickBooks Desktop version and also took a QuickBooks class at my local community college for $150, which you probably don’t need anymore if you use QuickBooks Online.
Training
Training is a big one! Training can vary a whole lot depending on what you are looking for. I took a $99 class on QuickBooks and then I did a lot of self-teaching. I used some free resources, watched some YouTube videos, and did a lot of on-the-job learning. You can certainly go the more DIY approach like I did if you’re not wanting to spend a lot of money upfront. I also have a video on the free QuickBooks ProAdvisor certification, you will definitely want to check out, as this is one great way to begin to build your credibility as a bookkeeper (for free).
Maybe you are ready to invest in a more comprehensive training program. I recommend incorporating official training if you are able because it can be a huge benefit in the long run. My favorite program that I recommend is Bookkeeper Launch. Be sure to check out my video, 8 Different Ways to get Bookkeeper Training, in order to find more training options.
Get the free series: Bookkeeper Launch
For the purposes of our spreadsheet today, I put $0 - $3000 for training. If you think about it, $3000 is a lot, but if you compare it to a college degree, it’s really not that bad. And again, with a profitable bookkeeping business you can earn that money back pretty quick (with just a couple of clients).
Computer
You most likely already have a computer, but if you don’t, you can get one for about $200. Check out my video where I talk about which computer I recommend. If you’re just getting started, use whatever computer you have. Don’t spend a lot of money on buying something special. However, if you’re looking to upgrade or need options, here is a link to my technology tips.
Download the PDF: Technology Tips
Website
I wouldn’t make this your #1 priority, but I do recommend creating a website. It adds a professional element and helps you boost your credibility. However, there can be a huge range of website prices.
When I started my business, I used Wix, but now I use Squarespace. Here are both Wix and Squarespace price lists at the beginning of 2023.
On my spreadsheet I put $22 a month for a website, and that does include the domain name. However, if you're tech savvy, I bet you could probably make a website even cheaper if you buy the domain name and then create your webpage on a free site. If you use a site such as Wordpress, you’ll still need to have a monthly hosting fee from a third party host.
Office Supplies
I added office supplies, but you don’t need that many at all. Maybe around $20 to get started in case you want to buy some pens and paper. Really as a bookkeeper you just need a computer. 99% of your work will be on the computer. Eventually, you may want to invest in some better technology or dual monitors to make your office more comfortable, but consider starting simple and adding as you go based on what you determine you need.
Insurance
I know insurance is not a favorite topic, but it is best practice to get business insurance. I do have a video that talks about business insurance. I recently renewed mine, so the video explains all about the cost and the process that I went through. As with all of these things mentioned, there is a range, so I put $30-$70 a month for insurance. You can use your own judgment and risk tolerance to decide if you’re the type of person that wants to initially skimp on insurance and then add it in once you start earning money. If you register as an LLC, that will at least protect your personal assets. As for me, a lot of my clients starting out were friends and people I knew, not with the biggest businesses, so I wasn’t super stressed about insurance, but it is best practice, so get insurance as soon as you can.
Extra apps or tech
The only other expense I was able to come up with is third-party apps that help you run your business. Some people pay for work-flow and bill pay apps. I like LastPass to save passwords securely.
You might also want to look into encryption to keep your computer safe or a VPN if you’re working in other places outside your home so other people can’t access your network. Again, these aren’t essential when you’re just starting out and you can invest in these things as you grow.
Business Bank Account
It’s important to keep your personal and business finances separated for organizational purposes. You will need to open a business bank account, but you can almost always find a bank that does not have fees to start. You may have to put some cash into the bank to open an account, but that can be considered equity in your business and not an expense since you can pull it out later if you want to repay yourself for the initial deposit. Therefore, for this section, I said it cost $0.
Total Costs for Starting Your Bookkeeping Business
Let me know how much it costs YOU to start YOUR bookkeeping business. For me it was $419. I think the cheapest you can do is $50 (if you live in OR), but there are a lot of different choices you can make depending on what priorities you have. Which areas do you think you could cut costs?
And of course, the cost of all these things is going to change over time, so let me know if you see other prices.
