Bookkeeping has been around since the creation of money. It is an essential task for business owners to keep track of expenses, payroll and profits, all this while also categorizing expenses. It’s no wonder why businesses always make this one of the first things they will outsource to a third-party company.
What Does a Bookkeeping Business Do?
Bookkeepers are different from accountants. Bookkeeping businesses will provide up-to-date information on spending, purchases, and payroll, helping them keep track and have a pulse on the business itself.
Whereas an accountant will analyze the financial statements and provide recommendations, bookkeepers maintain the day to day operations and transactions of the businesses.
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How To Start a Bookkeeping Business In 8 Steps
By the end of this guide, you will know exactly what you need to start making money from your bookkeeping business today.
1. Pick Your Market and Niche in Bookkeeping
Picking the right market and niche for your business can be one of the most crucial steps you do in this list. It is easier to have a clear vision on the type of client you want to work with, than to try to randomly outreach to any business you’d think could be a good fit. Besides, this step will allow you to go in depth into a specialized market in bookkeeping that you might enjoy. You might love working with online businesses, but hate working with restaurants. Niching down to a specific market will help you have a clear path on the clients you want for your bookkeeping business, and save you tons of headaches.
This in the long term, can also be your edge against the competition. If you specialize in a specific field, you will then understand the intricacies and nuances of the day to day operations, and you might be more valuable than a firm that has no target market.
2. Write a Business Plan For Your Bookkeeping Business
Having a business plan is more or less like having a roadmap. If there is no actual strategy you are following, that means you will be stuck doing a bunch of busy work.
Some of the things you can define with a business plan are:
- Defining your niche
- Market research
- Marketing strategy
- Sales acquisition strategy
- Projected expenses
- Business cash flow
If your business plan is successful, it will include a few things like:
- Understanding what your business will help others with.
- What is your unique value proposition
- Understanding your competitors and how to improve your business
- How people will get to know your business (marketing strategy)
- What will day to day operations look like?
- Lay out revenue goals and track expenses
3. Register Your Bookkeeping Business and Get Insured
Don’t try to run your business without completing this step first, although it might sound intimidating, it is very straightforward and simple to do. This will help you choose a business structure that is aligned with the current business you will run. If you want to operate as a solo bookkeeper, the business will most likely be considered a sole proprietorship. If you plan on having employees or more people working with you, you might want to consider one of the following:
- A Corporation
- A limited liability company (LLC)
- A partnership
For most cases, an LLC will be the right move for individuals that want to protect and separate themselves from the business entity. This will influence how you pay taxes, and the amount of liability the business will have over you. After you finalize your business structure, you will want to invest in professional liability insurance. This will allow your business to be protected in any mishap while managing clients or in the case of an unexpected event. Another good option is: general liability insurance which is a much broader insurance coverage that I’d recommend investing in. This will allow you to have peace of mind and be able to operate without fear of a lawsuit or unprecedented event, knowing you are safe and covered.
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4. Choose Your Bookkeeping Business Software
This is a fun step, if you are a SaaS geek like we are, and there are tons of options to manage your bookkeeping operations.
Here’s a list of bookkeeping software we have found useful:
4. Zoho Books
A lot of these softwares usually have certifications that you can get in order to add credibility to your bookkeeping firm and show expertise.
5. Set Up Your Bookkeeping Business Infrastructure
When running a business with tons of tasks and operations all over the place, an ERP software can be a great solution to keep everything organized. I hate to break it to you, but Post-it notes are not gonna cut it.
A few other things your business should establish are:
- A professional website or social media profile: to increase your authority
- A CRM: to manage clients
- HelloSign or Pandadoc: to send proposals and sign documents
- A business bank account: to process all payments and get your business credit
6. Price Your Bookkeeping Services
Prices can vary based on experience, results, location, and services that are being rendered. This is where your market analysis will come into play. Research bookkeeping firms that target similar markets and have similar certifications as you, and figure how much they charge. You can try calling some of these firms as an interested client and ask questions to inform yourself on what to offer and how to package your services.
Using competitive analysis you can inform yourself of things like:
- Packages of services being offered
- Design your service menu
- Prices of packages
- Length of Packages
- Start-up fees or recurring payments
- Will you charge hourly?
- Will you offer part time or full time services?
- Will you target small businesses or corporate clients?
7. How To Find Customers for Your Bookkeeping Business
This is why you have to define your niche first. Once you know what type of customer you want to work with, you now have two options: inbound or outbound marketing strategies to acquire them.
Inbound marketing: Is a good long term strategy to build a brand and attract customers to your bookkeeping business.
Some inbound marketing techniques include:
- Posting on social media platforms like Instagram or Linkedin
- Writing blog posts on valuable content for bookkeepers
- Make long-form videos on problems you can help other bookkeepers solve and post on YouTube to become an authority in the space.
Although all of these are important things to do and might attract clients, the fastest way to acquire a client will be through outbound marketing strategies. This means you’ll have to find the desired customer you want to work with and try to set up an appointment where you will offer your services to them and reach a win-win situation where both parties can work together.
These are a few outbound marketing strategies:
- Direct message potential businesses through Linkedin, Instagram, or Facebook
- Cold call local and online businesses
- Cold email outreach to potential clients
8. How to Fund Your Bookkeeping Business
Ideally, you would want to get the business off the ground without spending too much money. To offset some of the costs and cash flow, you’ll need a plan for handling your business transactions and expenses.
If you opened up a business bank account you might be able to get a business credit card to help you with cash flow until you get some money coming in.
If business goes well, once you are able to show some income, you could potentially even apply to a business line of credit.
This can help you leverage credit to make bolder moves that can get you to grow your business faster, but responsibly. With this in place, you can now invest into marketing material, or a sales acquisition team to get you closer to your first revenue goal.
Last Word on How To Start a Bookkeeping Business
Building a bookkeeping business is a natural next step if you enjoy and understand this service. It is an overlooked way to make a lot of money online, while having recurring clients. Very few other services can give you the flexibility and earning potential a bookkeeping business has to offer.
If you have decided bookkeeping is for you and you want to start your own bookkeeping business, follow this guide and start scaling your bookkeeping business today.
Each client can pay you upwards of $500 depending on the service and up to $3K-$4K a month for bigger clients. Stacking clients this way is a great way to scale your bookkeeping business revenue.
You don’t need a degree to start off as a bookkeeper although many do count with finance or accounting degrees. Certifications are also not necessary to start, but the average annual income of certified bookkeepers are usually higher.