How to start a bookkeeping business?
Thinking of starting up your own bookkeeping business? You’ve come to the right place. Whether you’re taking the leap from corporate into self-employment, or are an industry newbie, here are steps you should take to ensure your new venture is a success.
What is it, and who is it suited to?
Bookkeeping involves the recording of financial transactions of a business, whether manually into ledgers or by entering everything onto a computer.
If you are well organised and systematic, like working through documents and enjoy seeing a set of figures add up properly, bookkeeping could be the career for you. According to the ICB, people of all ages are becoming bookkeepers.
For young people, fresh out of school or university, bookkeeping could be the first step to becoming a qualified accountant.
For more mature people, who bring years of experience to their role, bookkeeping can be an ideal way to keep working without having to face the daily grind.
Many bookkeepers are mothers wanting to find a well-paid career they can run from home whilst bringing up their young family.
Bookkeeping tasks can range from setting up a companies chart of accounts, opening balances, creditors, debtors, bank and loan accounts, transaction accounts etc. This work, however, is normally performed in conjunction with an accountant who understands the needs and structure of the business.
Bookkeeping tasks were often performed in small businesses by the owner’s wife (for small trades) or a trusted worker because there wasn’t an expectation of professional accounting or taxation knowledge, but it’s now considered a profession particularly because it ties in with heavily regulated areas of our financial lives like superannuation.
Bookkeeping is considered a profession since financial performance information is now lodged with the ATO more regularly in the form of BAS’s for GST reporting. Because this information is lodged directly with the ATO, the person who performs this work must know what they are doing and sign off on the accuracy of the information.
Steps on How to Start a Bookkeeping Business
Although there are opportunities to buy a franchise bookkeeping business, there are compelling reasons to go out on your own and start one up from scratch. A bookkeeping business is based mainly around your knowledge of accounting and accounting software programs. Your success will also depend on how well you get on with people and how efficient and cost-effective you are, particularly if you are a virtual assistant.
If you are a people person and a hard worker you might find that you can pick up your first customers by word of mouth marketing with your friends.
Rules and regulations
Anyone who is thinking about starting their own bookkeeping business in Australia needs to be aware of the rules regarding BAS Agents. They are eligible to provide Business Activity Statement services for a fee.
Any bookkeeper wanting to provide BAS services must be registered as a BAS Agent. To become a registered BAS Agent, a bookkeeper must have 1400 hours of experience and a minimum qualification of a Certificate IV in Bookkeeping or Accounting.
Professional Standards for Bookkeepers
If you are accepted to join National Bookkeepers, you’ll need to agree to the National Bookkeeping Code of Professional Conduct and offer a Professional Services Agreement for the work you perform for your small businesses clients.
This way, you understand the commitment required to run a first-class bookkeeping business while saving on the costs of being part of a franchise.
These professional standards are also important for our licensees because there is an expectation that their own invoices will be paid for promptly and that they are highly regarded as a contractor to small businesses.
Training and Quality
When you join National Bookkeeping, you’ll go through our training and induction programs, so your accounting software knowledge and industry knowledge is at a confident and competent level.
Your membership provides you with ongoing education on many different aspects of bookkeeping, accounting and taxation, business and marketing support and introductions to practising bookkeepers & BAS Agents.
Bookkeeping qualifications are available from hundreds of different RTO’s (Registered Training Organisations) in Australia, and these skills are important for all bookkeepers, so they remain current in their skills and legislation. Still, also so they can increase the services they offer and the rates they receive as a result.
New National Bookkeeping Licencees are offered the Small Business StartUp and Admin Course, which comes with a bookkeeping business plan created by our BAS Agent Jacci, to use as a template in their studies. This course not only helps licensees operate their own business professionally but enables them to share this knowledge with their small business clients.
We are strong believers in education for our members as well as for our members to deliver to their clients so as a member you’ll have access to digital marketing and course material support as well as offers for your clients.
Your Bookkeeping Business Plan
If your goal as a bookkeeper is to evolve and become more valuable to your clients, it needs to be part of your plan, and you’ll want to constantly upskill and learn about the accounting industry but also about the technology and needs of small business.
View the contents of the existing business plan (created by our Registered BAS Agent) and modify it to suit your own circumstances and goals, then follow it to achieve success in your own business.
Sales and Marketing for Bookkeepers
Many bookkeepers dread the idea of selling because they are almost seen as opposing job roles. Still, marketing and selling your services is just as important in a bookkeeping business as any other business.
The internet has changed how businesses use accounting software, and it has also changed the way businesses find bookkeepers and other service providers to help them manage and grow their business.
If you want more one to one help in marketing your services or closing sales for new clients, we have dedicated support packages to do just that as well.
Your regional licensee manager is dedicated to help you develop all your business skills, and that includes the confidence to build a solid sales and marketing strategy to grow your business. You don’t have to be bold and brassy to sell your own bookkeeping services – you can be yourself – but the more you understand about the subtlety of selling the more you understand how to incorporate it into your daily conversations.
Directory Listing and Exposure
Licensees receive a legal pack (including template agreements), their unique directory listing and a phone number that can be used to show how much demand there is for their services.
You’ll go through most of your learning in the first year, so the ongoing costs are quite low.
A fantastic feature of a National Bookkeeping license is that it’s based on upskilling your in your first years of business and being rewarded for that and then provide a system where all members benefit by group-level marketing.
The Pros and Cons of Starting a Bookkeeping Business
The Pros of Starting a Bookkeeping Business
If you have those characteristics under your belt, here are some of the benefits of starting a bookkeeping business:
- Startup costs for a bookkeeping business are minimal.
- You can become a specialist in one accounting application for increased marketability.
- It’s consistent work that typically takes place on a regular schedule.
- You can work virtually and broaden your target market.
- There aren’t formal certifications or training necessary (although, it’s never a bad idea to become certified).
The Cons of Starting a Bookkeeping Business
Some of the potential challenges you may face if you start a bookkeeping business include:
- There could be significant liability issues.
- You need to take measures to ensure all client data is kept secure.
- It could be expensive to purchase and update various accounting software.
- You need to be comfortable with technology so you can access a client’s computer, if necessary.
FAQs in starting a bookkeeping business
However, there are a few questions that should be swirling around your head. And, you need to know the answers BEFORE you dive into the bookkeeping business pool.
How Long Will It Take Me To Start A Bookkeeping Business?
Our comprehensive bookkeeping business course, Bookkeeper Launch, is designed to be completed in ten (10) weeks. Some students even get their first client while still in the course!
While we design Bookkeeper Launch for you to start a bookkeeping business in 10 weeks, it’s really up to you. If you can focus full-time on starting your bookkeeping business, then it will take far less time to launch.
Look, bookkeeping is a simple business. But, that does NOT mean that it is easy. Nothing in life that has lasting worth is easy. Again, it is a short-term sacrifice for a lifetime of benefit.
Bottom line: you can be up and running in as little as ten weeks. It’s all up to you mi amigo! You control your own destiny.
How Much Are The Start-up Costs?
Starting your bookkeeping business costs a lot less than you might expect.
And remember bookkeeping is the #1 most profitable business. This is a virtual bookkeeping business so that you will need:
- a computer
- access to high-speed internet
- cloud-based bookkeeping applications necessary to start your bookkeeping business (and run it.)
Beyond these three key items, here are the other startup costs you can expect when you start a bookkeeping business:
- business cards (even though you hand them out on rare occasion), $20
- office supplies (ask Dwight Schrute for a deal, but they might run $100)
- the website domain name and hosting to get started, $50
- Do-it-yourself website, around $ 100…it’s mainly your time and effort. This cost estimate is for stock photography and the actual platform like Wix or Square Space. You can also use WordPress if you need more flexibility.
- Xero certification to show your clients you are a bookkeeper-bad-ass. This runs $249. But, I can get that cost waived. More on this later.
- Errors and omissions insurance down payment; around $200. What exactly are errors and omissions insurance? Well, in case something goes awry, you commit an error, or you omit ~ forget to do ~ something, this is your saving grace. Just like any other insurance, you hope you never have to use it. But, just in case, you MUST have this insurance. Don’t start bookkeeping business without it!
- Fancy pants computer safety software (like disk encryption, password management)…this runs about $185.
- Setting up your bookkeeping organisation, getting your business license and paying some other well-used taxes. This can vary SIGNIFICANTLY from state-to-state and county-to-county. But, I am going to benchmark it to be $300. You could begin your business without setting up as a corporation or limited liability company (LLC). But, like errors and omissions insurance, I stress the importance of you having it.
By the way, when you set up a business entity, there are several flavours. To understand what might work for you check out this helpful post about best business structure from FitSmallBusiness.com.
Okay, if I did my math right, that means your estimated startup costs are about $1,404.
If you’re a thrifty person, I know you can reduce that amount. And, some of the items I list above you can hold off on purchasing right away.
Most businesses cost tens if not hundreds of thousands of dollars to launch.
But not your bookkeeping business! Get going for less than $1,500 smackers…in the world’s #1 most profitable business.
What Tools, Technology And Certifications Do I Need To Start A Bookkeeping Business?
Every craftsman needs his handy-dandy toolkit. Why?
To help him finish the job to the best of his ability, in the least amount of time possible, to deliver a high-quality finished product.
Before you dive into your discovery of the EXACT tools, technology and professional certification you need to start a bookkeeping business, there is a critical mindset you must adopt.
Bookkeeping is an honourable, time-tested PROFESSION. And while there are currently no laws or regulations in the United States that stipulate you must be licensed, you still must adhere to this truth:
“AS A BOOKKEEPER, I AM A PROFESSIONAL. AS A BOOKKEEPING PROFESSIONAL, I MUST CONTINUE TO DEVELOP MY CHOSEN CRAFT AND EACH DAY STRIVE TO BECOME BETTER THAN THE PREVIOUS.”
As we hold onto this professional’s mentality, let’s now shift our focus to the exact tools, technology and certifications you need.
Above, in the “how much does it cost to start” section, we covered some of the specific pieces of technology and tools you need to start a bookkeeping business.
Right now, I want to discuss the MOST important thing you need: a solid bookkeeping application.
A carpenter’s go-to tool is the hammer. Or, the nail-gun.
As a great bookkeeper, your go-to tool is the bookkeeping application. (BTW: from here out, I will call it your bookkeeping app.)
To begin, I want to give you some qualifications on ANY software you use to serve your bookkeeping clients:
- Cloud-based: you are going to operate a virtual bookkeeping business. That means you can serve your clients regardless of where you or they are located. Never rely upon applications that are location dependent. This limits your ability to serve.
- Military-grade security: you’re dealing with a lot of sensitive financial information. So, it stands to reason that the cloud-based bookkeeping apps you use to protect that info at great lengths.
Now that you know the criteria from which to judge bookkeeping and peripheral applications let’s talk about the work-horse application which I love.
If Cloud-based Bookkeeping Apps Are So Great, Why Do Small Businesses Need A Bookkeeper?
Yes, small business bookkeeping software is wonderful. These apps take care of the daily number crunching and data entry, but that’s ALL they do.
Bookkeeping apps can not replace YOU. You are an awesome human being, and use the reporting on financial transactions provided by the bookkeeping apps to help your clients improve their businesses.
This is a win-win for you and your client. They get better service, and YOU make more money.
Bookkeeping apps eliminate a lot of the busy work bookkeepers were required to complete even just five years ago and free you up to deliver premium service at premium rates.
When you take advantage of bookkeeping software, you can:
- Be efficient so you can serve more clients and serve them faster…this means more money and less work for YOU!
- Earn more money in less time
- Live your ideal life/work balance
The ability to go above and beyond number-crunching is crucial if you want to become a great bookkeeper and earn a great living.
The late Zig Ziglar – one of the most brilliant men on motivation and human relationships – said, “People won’t care how much you know until they know how much you care.”
A machine or app will never replace that care. This is all you as a great bookkeeper!
Remember that the #1 character trait was being personable and caring.
The bookkeeping apps can run the numbers, but only a great bookkeeper can interpret the data, and translate it into simple language that the client understands. And do these things in a personable and caring way.
How Do I Get Clients And Make Money While I’m Starting A Bookkeeping Business?
We just talked about how to spend money, let’s talk about how you MAKE money…
Because, without clients, you don’t have a bookkeeping business, you have a hobby.
There are many ways to get clients. What works for you may be different than what works for someone else, but there is ONE killer way that works for everybody!
It is the easiest and fastest way to get great clients. And the kicker it’s pretty much FREE!
Talk to people! Tell family, friends, acquaintances, business owners and anyone else you can. You’ll be shocked at how productive this is!
What Accounting And Bookkeeping Services Can I Provide To Small Business Owners?
Sitting at the core of small business accounting is the monthly preparation of the three main financial statements:
- Balance sheet
- Income statement
- Statement of cash flow
In addition to the preparation of these three main financial statements, you can also offer add-on services such as:
- Accounts payable management
- Accounts receivable management
- Prepare tax returns and self-employment tax forms
- Prepare invoices
- Payroll services
- Supplemental financial reports like a budget
- Helping to track long-term assets like machinery and equipment
Now, to perform these services for your clients, you do need to know accounting and bookkeeping basics, like:
- Double-entry accounting (think of this as a simple formula)
- General ledger preparation (made easier through online bookkeeping software)
- How to classify and record financial transactions
But these can all be learned!
To get yourself to the stage where you’re ready to start your own business, a combination of education, certification, and mastery of the work tools are a good foundation. And most clients are going to want to see that you have some experience, including an endorsement from business owners like themselves. On top of that, a desire to help others run their business well is a sound driver for starting a bookkeeping business.
You don’t need accounting qualifications, but some level of knowledge can’t hurt, especially when you’re often the messenger between the business owner and their accountant.