At the simplest level, bookkeepers are paid to record daily financial transactions for their clients. But if you’re interested in becoming a bookkeeper and starting your own bookkeeping business, you need to know more than the basics. This article covers what bookkeeping businesses do (including high-value services), the difference between bookkeeping and accounting, and more.
Table of Contents
What Is a Bookkeeping Business?
Running a bookkeeping business means that you’re recording daily financial transactions for a business. Bookkeepers record how money moves in and out of a company on a daily basis, and it doesn’t require a college degree.
A bookkeeper’s responsibilities include tasks such as:
- Managing payroll
- Collecting payments
- Receiving and recording receipts
- Reimbursing work-related expenses
- Checking financial records for accuracy
- Updating financial records
- Creating financial reports
The most profitable bookkeeping businesses offer full-charge bookkeeping, which is everything above plus payroll items, managing fixed assets, and contributing to advisory conversations.
Additionally, your value rises when you’re better at customer service, data accuracy, and asking the right questions. Those things demonstrate your authority and credibility, often leading to increased compensation as you make yourself invaluable to your clients.
Make up to $5,000+/month as a bookkeeper
Go from, “I don’t know what I’m doing” to “I just landed my first client!”
Why Is Bookkeeping Important for Small Businesses?
Small business bookkeeping is crucial because it allows the business to organize, analyze, and store financial information. With that information, the business owner can make important financial decisions that affect their short and long-term goals.
Not only that, bookkeeping is important because the IRS requires that all businesses maintain certain records, including tracking income and expenses. A bookkeeper can help track and organize important records that are necessary for tax purposes.
What’s the Difference Between Bookkeeping and Accounting?
Many people don’t understand the differences between bookkeepers and accountants, but while they both play vital roles, bookkeepers and accountants aren’t the same. Bookkeepers mainly manage day-to-day finances, accountants interpret the financial transaction that bookkeepers track.
Accounting is a far more subjective role, and accountants are required to have at least a bachelor’s degree to complete tasks such as:
- Preparing financial statements
- Analyzing the cost of running a business
- Planning and preparing taxes
- Financial forecasting
- Helping business owners understand the impact of financial decisions
- Audit financial statements
How Much Do Bookkeepers Make?
Hourly rates for bookkeepers range from $15 to $40+ per hour depending on your experience and whether or not you’re self-employed. Here’s more on that:
- According to ZipRecruiter, self-employed bookkeepers average $38/hour
- Indeed reports a range of $15 to $30/hour for bookkeepers
While there are more expenses associated with being self-employed, you can generally make more per hour running your own bookkeeping business. The reason is because you can set your rates, determine what kinds of services you want to charge, and have overall flexibility in how you run your business and charge your clients.
What Are the Types of Bookkeeping?
There are two main types of bookkeeping: single-entry and double-entry.
Single-entry bookkeeping involves recording only one side of a transaction. For example, if you’re keeping the books for a business owner who just spent $1,500 on a new laptop, you’d record an expense account increase of $1,500.
Double-entry bookkeeping means you record both sides of a transaction. Take the example above with the $1,500 laptop: A double-entry bookkeeper would record the $1,500 purchase as a $1,500 decrease on the cash account and a $1,500 increase on the expense account.
How To Start a Bookkeeping Business
Now that you understand what a bookkeeping business is, here are steps to starting one of your own:
Step 1: Decide if you want to start a freelance bookkeeping business or work for someone else
Working as a freelance bookkeeper means you’re an independent business owner and contracting out your services to other business owners. There’s more flexibility and freedom if you’re running a freelance bookkeeping business — you set your rates, work on your own schedule, and grow your business how you want. However, you have to hustle in the beginning to find your own clients.
Working as a part or full-time bookkeeping employee is another path, and it’s easier to pursue once you’ve had some bookkeeping experience. However, companies often take on new and less experienced bookkeepers during tax season when they’re overloaded with work.
Step 2: Learn crucial bookkeeping skills
No matter which path you want to take, you must be trained on essential bookkeeping skills. All of your training and work can be done remotely — one of the things that makes this an excellent side job to start.
For your bookkeeping business, you need to learn how to:
- Create and use spreadsheets
- Use bookkeeping software, like Xero and Quickbooks
- Understand technical jargon
- Differentiate entity types for tax purposes
- Reconcile and balance accounts
- Communicate with your clients
You can find all of this information for free on your own, or you can invest in a comprehensive course, like Brilliant Bookkeeper, to learn necessary bookkeeping skills and how to start and run your own business. The free route, while great for your wallet, generally takes more trial and error, and the benefit of a course is that the instructor teaches you proven methods. They’ve put in the time, and you learn from their experience.
Step 3: Find bookkeeping work
Once you have the skills, it’s time to find your first bookkeeping business clients! Like other freelance-based online businesses, you’ve got several options:
- Job boards: There are dozens of job boards online, and some of the best choices for bookkeepers are FlexJobs, Indeed, SimplyHired, ZipRecruiter, and Hire My Mom. Learn more in our full FlexJobs Review.
- Freelance job platforms: If you’re more interested in working as a freelance bookkeeper, Fiverr and Upwork are solid options. Learn more in our Upwork Review.
- Use LinkedIn: You’ll have to do more than create a LinkedIn profile, but through some active work, you can develop connections with potential clients.
Step 4: Decide if you want to become a certified bookkeeper
Certification isn’t required, and it’s an expensive route, ranging from $1,500 to $2,500. The benefit for your bookkeeping business is that it tells potential clients that you have an industry-standard education. Certification programs are highly focused on the practice of bookkeeping and less on how to start and run your own bookkeeping business. You’ll also need to complete thousands of hours of bookkeeping work before you can qualify.
If you’re interested, you have a few options for certification:
- Local community colleges: Most have online bookkeeping certification programs that are affordable and flexible.
- American Institute of Professional Bookkeepers: The AIPB offers certification and continuing education. There is a national exam, and you’ll need 3,000 hours of work experience to qualify.
- National Association of Certified Public Bookkeepers: The NACPB offers Bookkeeper Certification by completing an Accounting Fundamentals course and passing the Uniform Bookkeepers Certification Exam. You also need at least an associate’s degree in bookkeeping.
What Is a Bookkeeping Business? The Final Word
Bookkeeping is a low-cost and profitable online business to start. There will always be a need for bookkeeping professionals because they fill a crucial role and help businesses and individuals manage their finances and reach their goals.
If you’re interested in learning more about starting your own bookkeeping business, check out Brilliant Bookkeeper, a self-paced online course that teaches you everything you need to reliably and consistently earn $5,000+ per month as a bookkeeper.
Yes, bookkeeping businesses can be very lucrative, especially as you focus on building strong relationships with your clients. A remote bookkeeper working less than 40 hours a week can realistically make $5,000+ per month, and there are full-time bookkeepers making six-figure incomes. Reaching the six-figure mark is possible as you grow a team and scale your business.
Examples of bookkeeping tasks include managing payroll and recording financial transactions, like posting debits and credits using cloud-based accounting software.
Yes, and this is what makes bookkeeping one of the most approachable online business ideas. All of the skills required to run a successful bookkeeping business are ones you can learn on your own. At the core level, you can learn basic bookkeeping skills by managing your own finances.