How To Start A Bookkeeping Business – Background Info:
Bookkeepers are responsible for maintaining records, invoices, and tax information for small businesses and individual clients. While the busiest time of year is always right around tax season (beginning April 15th), work can be year-round. Besides tax information, companies need help organizing payroll and accounts payable.
Bookkeeping Business Considerations:
There are a few things to consider before starting your bookkeeping business. An important decision to make is whether to become certified. Certification takes time and money but, can lead to quickly attaining more jobs.
Next, consider where to start. Starting at home means low overhead in the way of rent, however, some areas do not allow home-based businesses. You may also want to consider starting a franchise office, such as Sareen and Associates. This will give you more recognition as opposed to starting a home-based business but, will cost more in upfront fees.
Tasks And Skills Needed:
Whether you plan on hiring/subcontracting or doing it yourself, here is a list of tasks that are necessary when it comes to running this type of business:
Business Specific Tasks:
- Invoicing your clients
- Invoicing the clients of your clients
- Paperwork organization
- Answering phones and emails
- Money management
- Organizing and maintaining all client records
- Staying current with business matters such as licenses, insurance, permits, and tax laws
- Using bookkeeping software such as Quick Books
- Sending out payments and billing information to vendors and clients
- Assisting with tax preparation, end of year reports, and quarterly reports
- Data backup and storage
Approximate Daily Hours Needed:
General Hours of Operation: – Standard business hours (9-5), although some evening and/or weekend hours may be necessary.
Hours Needed to Prepare: – Before and after hours may be minimal. Perhaps an hour or two to complete invoices to your clients.
During the start-up phase: You can start this business yourself on a part-time or full-time basis.
Employees that you could hire once your business is up and running successfully:
- Additional bookkeepers
Necessary Job Skills:
- Exemplary math and calculation skills
- Knowledge of tax laws and regulations in business
- Promptness and dependableness
- Flexibility with hours to work with clients
You will need:
- A business license
- A Federal Employee Identification Number (EIN)
- Incorporation paperwork, such as an LLC.
Approximate Minimum Start-Up Cost:
Bare Essentials: Bookkeeping startup costs can be very minimum. Entrepreneur Magazine estimates between $2000 and $10000 USD. However, if you have a reliable computer and basic office supplies already, start-up costs will be minimized.
Necessary Start-Up Equipment & Supplies:
- Cell phone to be available to clients no matter where you are
- Bookkeeping software
- An external hard drive to keep information in a safe location in case your computer crashes
- Basic office supplies (paper, folders, staplers, pens, etc.)
- A form of storage for files, such as a filing cabinet
Monthly Expenses To Consider:
- Phone/cell phone bill
- Utilities if renting an office space (gas, electric, water)
- Rent/lease for an office space
- Office Supplies
- Software fees
- Paying staff (possibly)
Pros And Cons of Owning A Bookkeeping Business:
- You have the choice to work from home
- Flexible hours
- This business can be run alone which saves money
- Low overhead if working from home
- Stressful (especially around April 15th)
- Competitive field
- Must be good with numbers which can be difficult
Type of Customers You Need to Attract:
Small business owners often need bookkeepers the most. Becoming a member of the local chamber of commerce and going door to door can help increase business.
Bookkeeping Business Statistics:
Regarding certification, a Bureau of Labor Survey found that:
- 97% of certified bookkeepers recommend certification
- 41% of certified bookkeepers have been promoted and/or gotten a new job as a result of becoming certified
- 56% of freelance certified bookkeepers say certification brought new clients and 33% used certification to raise their rates
Your location, services, and clientele will cause your revenue to vary. However, according to an American Institute of Professional Bookkeeper’s (AIPB) article, Steven Hinds of Bookkeeping 2000, charges between $25 and $200 USD/hour for his services. This works out to over $150,000 a year.
Bookkeeping Business Resources: