starting a bookkeeping business

Canadian and American business owners need to determine whether they’ll use the cash or accrual method of accounting. The IRS and CRA are wary of people claiming personal activities as business expenses. Thankfully, your receipts also gross vs net provide a paper trail of your business activities while away. From the start, establish a system for organizing receipts and other important records. This process can be simple and old school , or you can use a service like Shoeboxed.

  • Although bookkeepers are often referred to as accountants, there are distinct differences between the two positions.
  • Whenever someone asks for your phone number, hand them a business card.
  • Because bookkeepers handle confidential information and financial data, clients will want to be sure they choose a professional who is knowledgeable, reliable, and trustworthy.
  • Any business licenses and permits needed to operate your business will depend on your location.

Business owners know other business owners and a personal referral goes a long way in this industry. In addition, you will have access to a private Facebook community just for students of the course. Being able to connect with other students and learn from those who are already running a successful bookkeeping business is invaluable. Are you ready to get started with your own bookkeeping business? This is where having the right tools and training can propel you to success and teach you the ins and out of running a profitable bookkeeping business. Starting your own bookkeeping business requires a set of skills beyond what you’d think. Bookkeepers are there to not only help entrepreneurs organize their finances but also to navigate the real-world problems of their business.

Recommended Books To Read Before You Start

Set up a Facebook business page that clearly outlines the services you offer. Present the packages in person or on a call, so you can walk your clients through them. Once you’ve agreed on a package of services, set the fees upfront. Don’t advertise fees on your website – remember it’s about pricing the client and not the service.

Otherwise, your certificate will be meaningless and may not be respected by prospects. You have the huge responsibility of looking after your client’s books and ensuring it stays secure and away from unauthorized eyes. Committing any error will put you at the risk of getting sued, ending with you paying hefty fines and penalties. It’s also possible you may be asked to shut down the business.

starting a bookkeeping business

Building your knowledge and skills by working for an accounting or bookkeeping firm can prepare you to branch out on your own. This step is critical in learning how to start a virtual bookkeeping business. Starting a bookkeeping business can be an easy way to supplement your income, and you’ll learn a lot of valuable skills that will come in handy for other aspects of life. It’s not too hard if you’re willing to invest some money upfront on equipment and professional services like accounting software setup – but it is important to note the cons as well!

Familiarize yourself with federal income tax, your state’s tax, and any local tax requirements. Any taxes and fees your business will need to pay will depend on the business structure you registered and your location. You will need to select a business structure for tax purposes and to limit your personal liability if your company is sued for any reason. The business structure you choose will directly affect the amount of taxes you pay and the extent of your liability protection if your business is ever sued.

When thinking about starting a bookkeeping business, many people get discouraged because they’re not a CPA and they don’t have a degree from an Ivy League school. But you don’t need either of these to start your own bookkeeping business. If you’re looking for a side hustle, or to make some extra money, consider starting a bookkeeping business. It’s not too hard and with the right training, you’ll be able to start your own side gig that will grow into something bigger.

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Make sure you’re taking steps to protect yourself and your business. 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. 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. 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.

However, others prefer to receive on-the-job training to learn how to start a bookkeeping business in a hands-on setting. As a beginner bookkeeper, you should set your rates based on the level of your experience and skills. You should also take into account your target clients when setting your rates. You can evaluate your rates from time to time as you gain more experience and/or offer specific services. You can choose to offer bookkeeping services to clients in a particular niche. For instance, you may choose to offer bookkeeping services to fitness coaches or instructors or local service businesses like locksmiths, florists, etc.

starting a bookkeeping business

You can use our small business loan calculator to find out the total cost. This number represents the total sales revenue that’s kept after the business incurs all direct costs to produce the product or service. Canadian store owners only need to start collecting GST/HST when they have revenues of $30,000 or more in a 12-month period. If you want, you can collect GST/HST even if you don’t earn this much in revenue, as you can put it toward input tax credits. When sales start rolling in, you’ll need a way to accept payments. If you’re a North American store owner on Shopify, you can use Shopify Payments to accept credit card payments. This saves you the hassle of setting up a merchant account or third-party payment gateway.

The Difficult Parts Of Starting A Bookkeeping Business

Tim Yoder is a subject matter expert at Fit Small Business focusing on small business bookkeeping, accounting, and tax content. Tim is a Certified QuickBooks Time Pro, QuickBooks ProAdvisor for both the Online and Desktop products, as well as a CPA with 25 years of experience. He most recently spent two years as the accountant at a commercial roofing retained earnings company utilizing QuickBooks Desktop to compile financials, job cost, and run payroll. 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 startup costs.

starting a bookkeeping business

To protect yourself in the unlikely event of a legal claim against your business, consider getting the peace of mind through insurance policies. Types of insurance many bookkeepers secure include professional liability (sometimes called “errors and omissions”) and general liability. It would be helpful to check with a trusted insurance agent to get recommendations, and also with the state to see if any type of insurance is required for your bookkeeping business. Core accounting software – The bookkeeping software you need will depend on what you and your prospective clients prefer.

When you’re first starting out, you should keep your costs low by setting up a home office. If possible, plan to meet your clients at their office or virtually. I do not recommend that you invite clients to your home office unless you know them very well and you have a private room where you can work. Check out our tips to consider when creating your home office to learn more of the do’s and don’ts when setting up a home office.

Why Consider A Bookkeeping Business?

Following its acquisition in 2018, I started Future Firm to help accountants fast-track the growth of a modern, scalable accounting firm of their own. Karbon ain’t cheap, but it’s certainly slick and very popular with certified public accounting firms & bookkeeping teams. When you run a fully virtual business, honestly, there’s not much need for a phone. But when you get bookkeeping clients, you may also need a phone service over and above this, I would recommend setting up a VoIP phone service, which is basically an internet phone service. This is my favorite marketing strategy for bookkeeping and accounting professionals to get bookkeeping clients. If you’re just starting an accounting firm, you may not have any, but add some later when you do get them. Now it’s time to market your solution to get bookkeeping clients.

I’ve been involved in small business for the past 31 years of my life, as a business coach, manager of a consulting firm, a seminar leader and as the owner of five successful businesses. This gets into the weeds about your services, pricing, and any upfront money you’ll need. If the market isn’t big enough for your planned services within the targeted location, you’ll have to make a change. Either shift the services you offer or widen the location you want to serve. It’s not uncommon to get started for less than a thousand dollars since the business doesn’t have a lot of required equipment.

If you and your spouse move a lot, you can work on your bookkeeping business from home. Stay-at-home parents can also benefit from starting a bookkeeping business.

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Rates can also vary based on the cost of living near you. Someone in New York City can charge more than someone in rural Iowa. However, working from an office may be a better idea if you get distracted at home. You can also more easily meet with clients in person, and having an office can look more professional. It’s also a great option for people who love working with others but still want to work from home.

There are both paid and free bookkeeping courses you can choose from to become a professional bookkeeper. Bookkeeping is the method of recording all financial transactions in a business.

How Do I Find Bookkeeping Clients?

If this sounds overwhelming or something new to you, check out our blog post about how we helped one entrepreneur start their own successful bookkeeping business with no prior experience. As you establish a client base and get more comfortable with your bookkeeping business, continue your learning and consider offering more services. And any time you add a service is a great opportunity at which to re-evaluate your pricing structure and sell your clients on those new packages! Developing a more robust set of offerings is also a solid way to attract new clients. Although bookkeepers are often referred to as accountants, there are distinct differences between the two positions.

Contact a company like CPA Site Solutions that will customize a website with your business logo, images, and content and offer you specialized marketing services. Professional liability insurance protects against allegations of negligence and is important because the main exposure bookkeepers face is an accusation of causing a client financial loss. When signed by both you and your client, this agreement will protect you against any liabilities. Most bookkeepers charge by the hour, others use a flat fee, and some use value pricing. As yet, there is no set or perfect way to charge for your bookkeeping services. Think about why you want to be a bookkeeper, who you want your clients to be, how you want to provide your services, and what your end goal is.

The basis for financial reporting comes out of generally accepted accounting practices or GAAP. Bookkeepers should familiarize themselves with the Financial Accounting Standards Board’s Accounting Standards Codification, which includes guidelines for recording specific transactions. That means you can work with your clients in real time to go over their bookkeeping and highlight any queries with ease. And by using a cloud accounting solution, you’ll be able to access the numbers on any device, wherever you are. Generally, you’ll charge either an hourly rate or a monthly fixed fee. You may even negotiate a retainer fee with some of your clients. Characteristics of becoming a bookkeeper include being accurate in your work and having a good understanding of financial topics.

Author: David Ringstrom

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