The Ultimate Guide to Starting a Bookkeeping Business in 2021
Did you know that bookkeeping is consistently named among the most profitable at-home businesses to start? Why? The start-up costs are minimal, and the earning potential is high, which makes for a great side hustle or full-time career.
Why bookkeeping is a hot career:
You can start out charging a pretty high hourly rate. As an entry-level bookkeeper, you can start charging around $40/hour, and as you gain experience, increase that to upwards of $80/hour.
Start-up costs for bookkeeping are relatively low, so it’s a great business to start if you are nervous about investing too much upfront. All you need is a computer, business license, and some visibility!
But how do you start a bookkeeping business without any prior experience?
Watch the video here, or keep reading!
Getting started (business set up)
The first thing you need to get started is a business name. This is a fun part of the process, and you can take a few days to brainstorm. Create a list of potential names and narrow it down from there. Make sure it’s something easy to understand and pronounce and that potential clients will know what you do. For some people, this is one of the hardest parts of the process, but don’t fuss over it too much. Pick a name and let’s get going!
DOWNLOAD START A BOOKKEEPING BUSINESS CHECKLIST
WATCH THE BEGINNER BOOKKEEPING MASTERCLASS
Making your business legal
In order to be considered a legal bookkeeping business, you need to decide what form of business entity to establish, and then file your company with your state. The most common forms of business are a Sole Proprietorship, Partnership, Corporation, and S Corporation. A Limited Liability Company (LLC) is a business structure allowed by state statute.
I am not a lawyer, so I can’t give you legal advice, but you want to decide which type of business will suit your needs best. If you need help, you may want to seek professional counsel. The process is fairly simple to do yourself, though, and you will save quite a bit of by cash figuring it out on your own. You can find additional information about each of these entities on the IRS website.
For me, it was recommended to form an LLC because it keeps your business finances separated from your personal finances, so for instance, someone sues you, they cannot take all your personal assets. I’ve been happy with my decision thus far.
Register your small business with the state
The next step is to go to your Secretary of State’s website and file “Articles of Organization.” It’s a fairly simple process and done online through a series of questions. The fees differ from state to state.
After you file your Articles of Organization, it’s time to get your business license, which lets you practice in your county, city, or state. You’ll need to do some research to see which one of those you may need a license for.
All the licensing can get confusing, so here’s how it breaks down:
The LLC (or other business entity type) is to form your business into a legal structure, and you only need to do the set up one time.
The business license usually needs to be renewed every year so you can keep up practice in your given location.
Note: None of this has to do with bookkeeper licensing (that will come later)
Do you need an EIN?
An Employer Identification Number (EIN) is from the IRS, and there are certain specifications as to if you need an EIN or not. If you plan to have employees, you definitely need one, for example.
An EIN is a unique, nine-digit number that identifies your business for tax purposes. Think of it like your social security number for your business, but then you don’t have to use your personal one for business purposes. You may need an EIN to open a business bank account, apply for business licenses or file your taxes. This is why you’ll want to research if you should, indeed, register for one. This process is free!
Tips on opening a business bank account
Even if you haven’t started making money yet, it’s important to set up that bank account so it’s separate from your personal finances and ready to go once you do start bringing in the cash.
I recommend putting in an initial owner’s investment of around $400, and then as you incur small expenses of setting up your business, you can pay for them directly from your business account. This makes accounting clean and organized for the future.
Insurance
You will want to get some kind of insurance to protect you even further since you are in the service industry and working directly with clients. You can just call around to various insurance companies, let them know you’re opening a business, and share with them that you want to be protected with business insurance. You can compare rates and snag the one right for you.
This is just protecting you in case something goes wrong with one of your clients, and they want to sue you for a mistake. The chances of that happening are probably slim, but it’s best to be protected in the case that it does.
What office supplies do I need?
The main thing you need starting out is a computer, otherwise it’s just basic office supplies! As a virtual bookkeeper, your computer is 95 percent of what you will use, but other than that you may want a printer, paper, pens, and things like that. This is one reason the overhead is so low when starting bookkeeping. You don’t need fancy gadgets or office spaces to start.
Learn bookkeeping
In order to be a quality bookkeeper, you need to learn the tricks of the trade. There are a few tools that will come in handy as you begin this journey.
Pick a software
You will need to decide on an accounting software, and I highly recommend Quickbooks Online Accountant. You will want to make sure you register with the accountant version.
This is a website you and your clients can log into, and you’ll be able to see each of your clients in your account.
You could also look into Xero if you’d like, which is the second most popular accounting software as of now.
Resources and classes I recommend to learn bookkeeping.
My Bookkeeper Business Coach class walks you through the starting processes if you’re looking for some accountability and help walking through setting up your systems and your business specifically. It’s a shorter and inexpensive class to get you going.
Sign up for QuickBooks Accountant, and they have a free certification you can do. Once you complete it, you are considered a QuickBooks ProAdvisor. It is an industry standard as well, and having various certifications can only aid in your credibility to clients.
I highly recommend Bookkeeper Launch, which is an amazing long-form course that provides teaching, support, resources, and community. It is my #1 recommendation for bookkeepers ready to invest time and money into their career. If you’re the type of person who wants to learn everything all at once and wants all the support, this is the perfect program.
DOWNLOAD START A BOOKKEEPING BUSINESS CHECKLIST
WATCH THE BEGINNER BOOKKEEPING MASTERCLASS
Market yourself to clients
The marketing piece is crucial because without visibility, you won’t gain clients. Here are a few things you will want to have as you work on marketing yourself as a bookkeeper:
You will want a website that you can direct prospective clients to as well as gain organic traffic from the web. This doesn’t need to be expensive. I recommend you check out Wix or Squarespace where you could start out for free. If you want to reserve a personalized domain name, there is a yearly fee associated with that, but it’s relatively inexpensive.
Order business cards (if you think you need them) and create a logo to begin branding yourself and your business. You can choose brand colors for your website as well. Canva is a great free option for creating your logo and other projects. I use it for many different reasons, and I love it.
Reserve a business email address. Google is one of the most popular for business, but it looks more professional when you can have your business name be in the .com of the email address.
Set your pricing! This can be a tricky part of the process, but I recommend as you start out charging by the hour. A great starting place is $40 an hour, and you can raise your prices as you go along and gain more experience. Eventually you’ll want to charge a fixed rate each month for your clients. This will depend on how large your client’s business is.
The big question, where do I find clients?
Many small businesses are looking for the right bookkeeper, so it’s really a matter of getting yourself around the right people. Talk to everyone you know, post on your social media that you’re a bookkeeper looking for clients. Ask your network if they know anyone who has a small business that could use some bookkeeping help. Some of my best clients came that way and ALL of my first clients came that way. Referrals are magical!
You could also use online posting sites such as Craig’s List or LinkedIn and share that you are looking for bookkeeping clients. One thing that will help you is creating a niche that you want to become an expert in. Maybe you want to serve piano teachers. Once you get into the network of piano teachers and learn that business really well, and, hopefully, your clients will suggest you to their friends for services.
There are so many different ways to market yourself and gain clients!
Ongoing maintenance of bookkeeping
Here are a few ongoing things you’ll want to think about as you get up and running:
Set goals and create a business plan for yourself. This helps you stay on track.
Create a contract of employment for new clients to sign. You want to set expectations of you and your client upfront so there are no surprises. Make sure you’re taking steps to protect yourself and your business.
Prepare and save for taxes. As a business owner, you will now be responsible to pay your taxes quarterly. Just remember that every dollar you make is not profit because a portion of it goes to Uncle Sam.
Think about using a password-saving program like LastPass or Keeper to keep clients’ passwords safe and secure and keep yourself organized.
WATCH THE BEGINNER BOOKKEEPING MASTERCLASS
I know this was information overload, but I wanted to create an ultimate guide for you as you start your online bookkeeping business. I’ve created an easy checklist for all the things we talked about today for you, so make sure to check it out.
What did you find the most helpful? Was there anything that you didn’t know you needed to consider?
