How to Start a Bookkeeping Business in 8 Steps

Tracking revenue and spending, processing payroll, and filing tax returns for company customers are all part of a bookkeeping service.

Bookkeeping is an excellent business venture that requires very little capital to get started. Our eight stages will help you get there, whether you’re trying to generate some extra cash or create a company to support you and your family.

The eight stages to starting your own accounting firm are outlined here.

1. Obtain Certifications

Proving that you have the skills to conduct accounting, payroll, and maybe tax returns is one of the easiest ways to acquire credibility with prospective customers. You generally won’t profit from being a Bookkeeper with a Certification if you’re a certified public accountant (CPA), but you should still explore getting certified in any accounting software you use.

Certification

Even if you don’t have formal education in accounting or bookkeeping, you can become a bookkeeper with certification before starting your own bookkeeping business. Unlike CPAs, these certifications are not regulated by the state, so be sure to choose a large, reputable organization so that the certification is meaningful and respected.

We propose that you get certified with one of two major professional bookkeeping organizations:

• American Institute of Professional Bookkeepers (AIPB): To become AIPB-certified, you must meet the 3,000-hour work experience requirement and pass a certification exam successfully. Once certified, you will earn the right to put the letters CB―for Bookkeeper with a Certification―behind your name and display this on your resume and business cards, which will give you an edge with potential clients. This certification is ideal if you do not have any formal education in the bookkeeping and accounting field.
• The National Association of Certified Public Bookkeepers (NACPB): To become NACPB certified, you must complete courses in bookkeeping, payroll, QuickBooks Online, and accounting concepts, as well as pass an exam for each subject. Before applying for the license, you must have one year of experience. You may be able to replace college accounting classes for needed courses, but you’ll still need to pass each test. You will acquire the credentials CPB (Certified Professional Bookkeeper) if you are certified. These letters may be used to promote your success to potential customers on resumes, business cards, and other items.

Certification for Accounting Software

Some of the best small company accounting software suppliers provide a certification program for bookkeepers who want to show they know how to use the software. The majority of certificates are free, and some even provide free accounting software for your business. Here are a handful of the most widely used accounting software packages and their associated certification programs:

• QuickBooks ProAdvisor: QuickBooks is by far the most popular accounting software for small businesses in the United States, and you will almost certainly have customers who use it. ProAdvisor certificates are available for both QuickBooks Online and QuickBooks Desktop. The Online certification is free, however, the Desktop certification costs $449 per year and requires the purchase of QuickBooks Desktop Accountant software. By completing self-paced lectures and examinations, you may acquire your certification.
• FreshBooks Partner Program: FreshBooks is a popular accounting program for service-based firms that need advanced invoicing capabilities. FreshBooks provides accountants with a partnership program that includes FreshBooks certification and skills training.
• Xero Partner Program: While not as well-known as QuickBooks, Xero offers a similar service at a lesser rate. Xero provides a partnership program that includes Xero certification, similar to FreshBooks.

Certification of Taxes

A paid preparer does not need to be certified to sign a client’s tax return, but I strongly advise against doing so unless you are a tax expert or prepared to put in the effort to become one. Many bookkeeping services create financial statements for their customers, which they then submit to CPAs or other tax professionals to have them file a return. You may find yourself collaborating closely with their tax preparer, allowing you to give exceptional service to your joint clientele.

Avoid pitfalls:

Preparing a client’s tax return without signing it as the paid preparer is prohibited. This implies you won’t be able to prepare client returns using do-it-yourself (DIY) software like TurboTax or TaxAct since they don’t allow for a paid-preparer signature. Instead, you’ll require expert tax software.

If you’re not a CPA and wish to prepare tax returns, I suggest applying to the IRS to become an Enrolled Agent (EA). Enrolled Agents must first pass a test and then undergo yearly continuing education every three years to maintain their certification. While no formal schooling or courses are necessary, the exams are challenging and will demonstrate that you have the expertise to appropriately handle tax customers.

2. Put together a business plan

Everyone should write a business plan before starting their own company. While a business plan might help you get finance for your company, the true value is in the thinking that goes into creating one.

You should consider every area of your company throughout the business plan writing process, including what goods and services you will offer, how you will promote those products and services, and who your competitors are. A 12-month profit and loss prediction expected cash flow, and a projected balance sheet should all be included in your financial plan.

The following are the essential components of every business plan:

• A brief overview
• Overview of the Business
• Analyze the competition
• Marketing strategy
• Costs
• Financial forecasts

3. Registering and Organization

Before you can begin serving consumers, you must make a number of essential choices. This step is crucial because it demonstrates the legitimacy of your company and may assist to reduce your personal culpability if it is ever sued. You don’t want to miss this phase, whether you’re doing it part-time or full-time.

Here’s a rundown of everything you’ll need to do to get your firm off the ground at the municipal, state, and federal levels.

Choose a Company Name

Choosing a name for your company may be both enjoyable and difficult. Because a prospective client will see your name before they sit down with you for that first consultation, it must represent your brand. Make sure your company name accurately describes what you do. This isn’t the time to be adorable unless you’re also clear on what you’re doing.

Here are some helpful ideas for naming your company:

• Aim for clarity: Your name should clearly indicate what you do. Include the specialization in your name if you’re centering your accounting firm on one.
• Use a well-known term: For example, you may use the name of the city where you’re based, such as Scranton Bookkeeping.
• Obtain feedback from others: Involve your family and friends in the decision-making process. Make it entertaining by announcing on social media that you’re searching for ideas for a company name.
• Put it to the test: To check what prospective consumers think, try it out on them. Check your name against those of your competitors to determine whether it sticks out enough, but not too much.

Choose a Business Model

Sole proprietorship, partnership, limited liability company (LLC), and corporation are the four most prevalent business formations. The structure you pick will influence your personal culpability, tax liabilities, and capacity to obtain funds if the business is ever sued.

The majority of individuals who run a part-time accounting firm with no staff do so as a single proprietorship, which works well. If your company expands to the point that it has to hire people, you should consider becoming an LLC or corporation. In addition to tax implications, the extent of your personal exposure in the case of a lawsuit varies substantially depending on the company structure, so speak with an attorney.

4. Setting up operations

Now that you’ve established your company, you can begin setting up operations such as obtaining the necessary insurance and creating a separate business bank account. To make accounting simpler and possibly affect your responsibility in the case of a lawsuit, it’s critical to keep your company and personal funds separate.

Use an answering service.

You may find it difficult to respond to customers quickly as a one-person firm, particularly during tax season. When potential clients need your services, sending them to voicemail might lose you money. Go Answer is a multilingual answering service that links your customers to live customer care representatives through phone, text, online chat, or email, 24 hours a day, seven days a week. With a 30-day free trial, you can get started right now.

Set up a bank account

It’s important to separate your business finances from your personal finances. While most people think they should wait until the business starts to generate cash flow, it’s important to track expenses immediately so that they can be deducted as Costs of starting a business. It’s easy to establish a business checking account.

Create a mailing address

If you want to rent office space, your postal address will be the location of your workplace. If you want to set up a home office, though, you’ll need to get a company postal address so you won’t have to use your home address. This will give your company a more professional appearance while also protecting your privacy.

There are a few alternatives available. To begin, go to your local post office and rent a post office box. You’ll spend $60 for six months or $120 for a year on average. The price will, of course, vary depending on your location.

Alternatively, you might rent a UPS mailbox. The UPS Store will provide you with a valid street address. Some shops will not deliver to P.O. boxes and will demand a street address, thus having a UPS mailbox has many advantages.

Bookkeeper Insurance

You should obtain liability insurance as a bookkeeper in case you are sued for a mistake on your client’s books. Both the expense of settling a lawsuit and the costs of defending a lawsuit may be covered by insurance.

5. Obtain the Appropriate Accounting Software

Determining which software to employ to handle all of your business’s numerous parts may be a daunting undertaking. To help you get started, here’s a list of areas of your organization where you’ll need to determine which software package to utilize.

Accounting/Bookkeeping Software

Because you’re establishing a bookkeeping firm, I’m sure you’ve already given some consideration to or made a choice about which accounting software to employ. There are hundreds of possibilities to pick from, as you are aware. However, I would advise you to utilize QuickBooks Online, which we ranked as the best small company accounting software overall. When you sign up for the QuickBooks Online ProAdvisor program, you can get QuickBooks Online Accountant for free.

Payroll Software or Payroll Service Provider

Depending on the Accounting/Bookkeeping Software you choose, there will generally be a payroll processing option you can turn on when you are ready to hire employees. If you decide to go with QuickBooks, it offers a variety of payroll options from which to choose.

Practice Management Software

Another tool that will make your life easier is Software for Practice Management. This software can help you organize and track the progress of client work and, in some cases, provide a portal to access your client’s books. QuickBooks and Xero both offer Software for Practice Management that is integrated with their accountant software.

Sharing and Managing Electronic Files

A document sharing application will enable you to share information with your customers from anywhere, such as bank statements, copies of receipts, invoices, and accounting files.

Dropbox is a well-known document-sharing service. You may set up a dropbox for each customer, and they can begin providing data. This approach is much more secure than emailing data or utilizing a USB drive. A user ID and password are required to access the information. Because all files are saved on the cloud, there is no need to back them up.

6. Financing

After completing your business plan, you will have a good idea of what your estimated costs of starting a business will be. In general, the costs of starting a business for a bookkeeping business can be low if you work out of a home office as opposed to leasing office space, which we will discuss in the next section. The experts say that you should always have at least six months’ worth of expenses in the bank.

Fill out an application for a business credit card.

You should get a company credit card as soon as possible. A business credit card is likely to be the first kind of financing you’ll qualify for, and it may be a useful financial instrument for managing cash flow and critical costs early on in your company’s life. A business credit card may also be a convenient method to keep track of your costs. This will go a long way toward helping tax season go as smoothly as possible.

A startup credit card is often used by accounting organizations to float working capital needs, collect incentives, and manage personnel.

7. Create a Home Office for Your Bookkeeping Company

Setting up a home office might help you save money when you’re just starting out. Plan to meet your customers in person or digitally if at all feasible. I would not advocate inviting customers to your home office unless you are extremely familiar with them and have a quiet space where you can work. To discover more about the dos and don’ts of setting up a home office, read our advice to consider while constructing your home office.

Don’t forget to claim your home office tax deductions as well. Repairs and upkeep to the space utilized for business, as well as a percentage of utilities and real estate taxes, may be deducted. as well as house insurance For additional information, see our Home Office Tax Deduction guide.

If a home office isn’t working for you, consider virtual office space or office sharing. This often includes real office space, a postal address, a local phone number, a receptionist to take calls, and access to a conference room that you can hire by the hour.

Establishing a professional company number with a professional voicemail greeting is another key component of setting up your home office. Getting a virtual phone number that can be forwarded to your current mobile is something I advocate. The virtual phone number may have its own professional voicemail message, allowing you to conceal your own phone number.

8. Promote Your Bookkeeping Service

One of the most challenging skills for accountants and bookkeepers to learn is marketing. You may obtain a website personalized for your business with a firm that provides specialist marketing services, such as CPA Site Solutions, whether this is a side job or a full-time business. It will send one of their webmasters to contact you for a fast 15-minute consultation before creating your website with your logo, graphics, and text.

CPA Site Solutions will concentrate on creating a website that boosts income, enhances customer loyalty, and raises brand visibility. It even provides a free 60-day trial to evaluate whether it’s right for your company.

There are various methods to promote your accounting firm besides a website:

1. Join the Small Business Development Center as a business counselor (SBDC).
2. Become an adjunct professor.
3. Become an expert in accounting software.
4. Join websites for bookkeeper freelancers.
5. Join a Meetup group for bookkeepers and accountants in your area.
6. Create a referral program for your clients.
7. Create professional-looking social networking profiles.
8. Choose a specific industry and become a member of its trade organization.

Keep up with industry trends

It’s difficult to keep up with industry developments and new trends. For example, in the software sector, one of the most prominent trends is that installed desktop software is being phased out in favor of subscription-based cloud software, often known as software-as-a-service (SaaS). This is a trend that is fundamentally altering the way bookkeepers and accountants do business, therefore it’s critical that you grasp how it works since it will have a direct influence on your company.

Here are a few things you can do to “keep up” with what’s going on in the bookkeeping/accounting world.

Conferences on Accounting and Bookkeeping

Attending a conference will not only provide you with the continuing education credits you need to retain your bookkeeper or CPA certification, but it will also provide you with the opportunity to learn about the latest business trends and what is becoming outdated. QuickBooks Connect, presented by Intuit and held in San Jose, California, in the autumn, is a fantastic conference to attend.

Subscribing to Blogs and Newsletters

Monthly blogs and newsletters may amaze you with how much useful information they include. You may not want to subscribe to every accounting/bookkeeping blog you come across, but here is a couple to consider:

Become a member of a professional bookkeeper organization.

At the very least, you should be a member of a professional bookkeeping organization. The main two organizations for bookkeepers are the American Institute of Professional Bookkeepers and the National Association of Certified Public Bookkeepers.

Membership in the AIPB is available for one, two, or three years. The annual membership price is $39 and includes a monthly newsletter subscription, free accounting, payroll, QuickBooks support on a member response line, and other perks.

The NACPB charges $200 per year for membership, which provides access to practice certification examinations, CPE, training videos, savings on certification exams, exam prep courses, and other perks.

Conclusion

Now that we’ve given you a road plan for starting your accounting company, I challenge you to set a date for when you want to be ready to take on your first customer! Then, using this guidance, make a weekly to-do list based on the instructions we’ve provided.

Frequently Asked Questions

How much money do you need to start a bookkeeping business?

You will need to budget at least a few hundred dollars for your start-up, and that’s if you’re doing everything yourself. If you decide to hire someone else to help manage the more mundane tasks of bookkeeping, then this cost can be much lower.

How do I start a bookkeeping business with no experience?

Please do not try and start a bookkeeping business with no experience.