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How to Start a Successful Bookkeeping Business: 15 Steps

is bookkeeping services a good business

A large part of bookkeeping is knowledge of various tax laws including commonly missed deductions. Without bookkeeping keeping your finances tracked and organized, it can be difficult to find the items you need in order to become eligible to even apply for the additional money your business needs. Looking at your bank statements isn’t enough to properly budget and look ahead for your business. It’s essential for you to be able to know which ventures and clients are profitable over time, and which should be cleared out for new opportunities. He has helped dozens of for-profit companies and nonprofits with their marketing and operations. Steve has written more than 8,000 articles during his career, focusing on small business, careers, personal finance and health and fitness.

is bookkeeping services a good business

Regardless of the type of business structure you choose, you should open a separate account for your new business. The biggest reason is to prove to the IRS that you have a real business, not just a hobby (the IRS frowns on people who take business deductions but can’t prove that they’re running a real business). A business bank account also makes it easier to keep your financial records organized, makes it easier to file your tax returns, and helps protect your assets.

Business license and business email

A nice one-two punch to help automate accounting and bookkeeping services is to use cloud software coupled with an expense management app. If you plan to run your bookkeeping business or accounting firm off of Xero, then Xero Practice Manager could be worth looking into as it integrates very well into it. It’s not as user-friendly as the options above but it’s extremely powerful and many Xero users swear by it. Let’s take a look at the main categories of technology that you’ll need to set up at your bookkeeping business or accounting firm.

  • This is something I suggest you save money for each month in case you need to replace your old computer down the road.
  • In conclusion, partnering with a white label accounting solution can be a game-changer for your bookkeeping business.
  • Today we’ll break down what a typical budget is for bookkeepers and all the expenses you can expect – from office supplies to a virtual assistant to your QuickBooks Online subscription for your clients.
  • As you search for the right business name, check that the name is available as a domain for your website.
  • With more Americans starting their own businesses and more companies hiring contractors for services, you might find it relatively easy to find clients to launch your business.

This is a situation where it might be worth paying an attorney for legal advice and to help draw up the paperwork needed to register as an LLC if you decide to go that route. Errors and omissions insurance is a good investment regardless, but it’s especially important if you choose to work as a sole proprietor. The two best-known certifications are the American Institute of Professional Bookkeepers (AIPB) and the National Association of Certified Public Bookkeepers (NACPB). Both these organizations offer classes that can help prepare you to take their exams.

Easy Steps to Start a Bookkeeping Business

If your business is moving into a growth stage, you need to consider graduating to full accrual based accounting, with financial and management reports that help you scale. Typically you will need this level of financial management not only for yourself but for your key stake holders including banks, investors and advisors. If you can manage your job and some of the accounting each month but need a little extra help, a part-time bookkeeper might be a good fit for your business.

Bookkeeping services provide financial reports that show a detailed overview of your company’s finances at a specific point in time. While writing your business plan, you’ll decide what you want to charge based on estimated expenses and how much you want to earn. You’ll create a launch budget and a one-year operating budget with monthly income and expense bookkeeping for startups projections. As you grow your client roster, you’ll want to make sure you’re tracking them effectively and completely. You can use a CRM and project management tool in which you can set up your own workflow. You can also look into specific accounting practice management software, some of which integrate directly into software such as QuickBooks Online.

Implement a Project Management System

You can learn more about the solution in our in-depth QuickBooks Online Payroll review. No certification is required for a paid preparer to sign a client’s tax return, but I highly recommend not preparing returns unless you’re a tax professional or willing to put in the work to become one. Many bookkeeping firms prepare financial statements that their clients take to CPAs or other tax pros to prepare a return. You may find yourself working closely with their tax preparer, and together, you can provide outstanding service to your mutual clients.

According to the Bureau of Labor Statistics (BLS), the average bookkeeper makes about 40,000 USD per year. However, the most successful bookkeeping businesses can make their owners 100,000 USD per year or even more. To be on the higher-earning end of the bookkeeping spectrum, you will need to minimize costs, attract a more sophisticated client base, and also position your business to quickly scale up.

Have someone create a website that lists your services, qualifications and rates. Some clients shop on rates, so if you’re going after higher-paying clients, ask potential clients to contact you for rates. After you do some work for one or two local businesses or charities, add testimonials or case studies to your website.

  • The right workflow management system can save you hours and allow you to monitor your team without micromanaging it.
  • Once you’ve been accepted into these social media groups, you’ll have access to the exact kind of new business clients you’re looking for.
  • It’s important to understand what the differences are in clientele based on the size of their company and the number of accounts you are reconciling.
  • Bookkeeping gives you a clear picture of your business financials and standing and can help with forecasting, applying for access to capital, actively managing your business, and optimizing cash flow.
  • Once you decide on the services you want to offer, look at the competition.
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