Is It Difficult To Start A Bookkeeping Company?
Are you interested in gaining knowledge on how to launch a successful accounting firm in the year 2020?
These are some steps to follow that will aid you in bringing your company with a strong emphasis on bookkeeping from inception to completion in a span of only five years.
Bookkeeping is something that many owners of small businesses would rather not learn or do themselves since it is either not something they love doing or something they do not want to do. Because of this, working as a bookkeeper for other people who operate small businesses can be a lucrative business option.
Bookkeepers for small businesses may assist with a wide variety of tasks, including accounts receivable, accounts payable, reconciliation, payroll, reporting, and the preparation of income taxes.
You are required to have prior experience working in an accounting or bookkeeping capacity and have familiarity with accounting software such as QuickBooks. In addition, when handling the financial records of another company or organization and possessing a high level of accuracy, dependability, and honesty in your job, you need to be extremely exact.
A bookkeeping service includes all aspects of managing a company’s income and, collectingnd collecting payroll, and submitting tax returns for the company’s customers. To get started, some of the things you’ll need to do include developing a company plan and studying the best ways to attract customers. You might be able to skip through several phases if you plan on using accounting as a supplementary source of money for yourself. When it is necessary to do so, we will bring attention to these locations.
As a result of the growth of the digital era, there are now an infinite number of chances to launch businesses of any sort and scale online; thus, there is something for everyone. If you are good with numbers and have a well-organized mind, going into business for yourself as a bookkeeper can be the right move for you to make. Additionally, it is an extremely competitive field. It is required by law for all businesses to keep records of their bookkeeping, and they must hire someone to perform it for them. If you have no past experience with managing a business or even bookkeeping, starting from scratch may seem like an overwhelming task, but we are here to guide you through the process and help you become successful.
Whether you have years of experience in accounting or are mulling over the idea of starting a bookkeeping firm from scratch, this article is for you.
Bookkeepers for small businesses may assist with a wide variety of tasks, including accounts receivable, accounts payable, reconciliation, payroll, reporting, and the preparation of income taxes. To get started, some of the things you’ll need to do include developing a company plan and studying the best ways to attract customers. Whether you have years of experience or are mulling over the idea of starting a bookkeeping firm, this article is for you. Bookkeeping fulfils the same function that accounting provides for companies by assisting them in maintaining accurate records. Take the following steps to get your bookkeeping service up and running.
What Is A Bookkeeping Business?
Bookkeeping fulfils the same function that accounting provides for companies by assisting them in maintaining accurate records.
Have you given any thought to starting your own accounting business? If you are good at organizing financial information and are interested in pursuing a career in finance, bookkeeping is a field that is always looking for qualified candidates. Take the following steps to get your bookkeeping service up and running.
Discovering something that people are capable of doing but don’t have the time, knowledge, or personality type to perform successfully is sometimes the best way to come up with a notion for a new business. It’s possible that this is why there is such a strong need for bookkeepers.
Others have a greater capacity for the organization than others. For example, you could know someone who is really clever, but if you take a quick look at their workstation, you’ll see that it’s a complete mess. On the other hand, it’s possible that you’re the sort of person who likes organizing gatherings. You could believe that having a disorganized closet or a mountain of unpaid invoices and bank statements to sort through is a fun way to spend your time. If this is the case, you could find that working as a bookkeeper is a job that you really like.
The term is used to refer to a diverse array of services, some examples of which are as follows:
- Management of both payables and receivables for accounts
- Preparation of personal income taxes and taxes relating to self-employment Reporting on the payroll
- Making up bills for clients
- Additional financial details are given here (e.g. budget)
- Monitoring of assets throughout the long term (e.g. equipment)
- The balance sheet, income statement, and cash flow statement are the three sections that make up these services.
When the fiscal year comes to a close and it is time to pay taxes, every company must have accurate records of their revenue and expenses.
But that’s not all there is to it; most business owners wish to comprehend the numbers and just know them when it comes to bookkeeping.
This requires examining the company’s assets, liabilities, equity, and earnings to identify what they signify for the business as a whole.
As a consequence of this, operating a bookkeeping company gives you the opportunity to aid your customers in expanding their firms by providing counsel and getting obsessed with numbers.
If you have the right personality, this line of work might be both enjoyable and lucrative for you.
Where To Start?
Although starting an accounting business will need a significant investment of time and energy, the barriers to entry are now at their lowest point in history. You have access to a wide variety of helpful resources, and there are also a lot of individuals who are prepared to provide you assistance. Incredible things may be said about the community of bookkeepers.
Tips for Starting a Bookkeeping Business
Set Some Goals
Gabrielle Fontaine, owner of The Freelance Bookkeeper, suggests that the initial step is to devise specific objectives and make the effort to write them down. This will provide you with a list of milestones that may be accomplished as your professional life continues.
Before starting a business, you really have to have a good idea of why you want to do it in the first place.
This “why” is the objective of your firm, and you, your staff, and your customers all must have a solid understanding of it.
Before beginning any kind of company endeavour, a written business plan is something that absolutely everyone should do, even if they are only starting a side hustle. The act of writing a business plan is valuable in and of itself, regardless of whether or not it ultimately results in your being able to secure funding for your firm.
During the process of drafting a business plan, it is possible for you to think about every aspect of your company, such as the items and services you will offer, the method by which you will advertise those products and services, and who your rivals are. You will also compile a financial plan, which will contain a forecast of profits and losses for the next 12 months and a prediction of cash flow and a balance sheet projection.
The following are the primary aspects that are included in each and every business plan:
- Front Page
- A Quick Overview of the Company A Competitive Analysis the Costs Involved in Developing a Marketing Strategy Executive Summary
- Forecasts of the economy
Don’t Quit Your Day Job Right Away
Only one-third of all small businesses are still operating after 10 years, and half of all small businesses fail during the first five years of operation. This indicates that you should proceed with caution while starting a business related to accounting. Work part-time until the amount of money you make at that job at least matches the pay you make at the job where you are employed full-time.
Business Name, Structure, and More
In my opinion, you don’t have to be flawless right away. The more effort you put in at the beginning, the simpler it will be afterwards. However, keep in mind that I started on a shoestring budget. I began out as a sole proprietorship (Schedule C), but after a year, I was able to use Legal Zoom to invest and convert to an LLC. After that change, I was solely known by my first name. After I established my LLC, Iconis Group, LLC was formed. (The actual company name is Iconis Group; QBOchat is only a part of my brand.)
It’s also crucial to determine what you’ll require to manage a great business. Check to see if you’re breaking any local or state laws. I needed to get a local business license, register my LLC with the government (once I had one), and get my company’s EIN.
Additionally, you should create a company checking account. To open a business account, check with your bank to see what you’ll need. Note: This is a good time to create a relationship with a local lender who may be able to send you additional business in the future. Spending time with a professional banker may be advantageous in the long run because they may aid you. I like working for BB&T because it has the sense of a smaller, local bank while delivering all of the technology you’d expect from the big banks.
Your state’s rules may require you to have a structured business structure. A limited liability corporation, or LLC, is the most common type of corporate form for small businesses. In most states, it’s simple to get started and costs less than $100. Visit the website of your state’s Secretary of State to learn more. Additional services that can help with business registration are available.
Naming a business may be both pleasurable and challenging. Because a potential customer will see your name before scheduling an initial appointment, it must match your brand. So that clients aren’t left guessing, make sure your company name reflects exactly what you do. Unless you can reach “clarity” about what you’re doing at the same time, now isn’t the moment to be “cute.”
Here are some incredible ideas for naming your firm that successful businesspeople have provided:
- Strive for clarity; your name should make it very obvious what it is that you do.
- Utilize a term that is associated with a well-known brand. With instance, similar to what Stacey Giulianti did for his firm Lauderdale Comics, you might utilize the name of the city in where your business is located (located in Fort Lauderdale).
- Get the opinions and comments of other people – Make it a game, and announce that you are looking for suggestions for a business name on your social media accounts. Request information from family members and close friends. Award an award to the person who won.
- Find some potential customers to test it out on, and ask them what they think about it. Then, examine your brand by contrasting it to that of your rivals to see whether or not it stands out (but not too much).
The most common types of business structures are sole proprietorships, partnerships, limited liability companies (LLCs), and corporations. If the company is ever sued, the liability you face, the tax responsibilities you face, and your ability to acquire capital will all be affected by the structure you choose for it.
I would recommend reading our post on the Best Small Business Structure to assist you make this decision. In this guide, you will learn about the four most prevalent types of business structures. Second, I strongly suggest that you get in touch with a lawyer as soon as possible so that they can evaluate your situation and help you select the best possible course of action.
A firm that provides accounting services might have a number of organizational formats to choose from.
- The easiest way to get started in business is to establish yourself as a sole proprietorship, which essentially means that you work for yourself rather than for a corporation. Although it is less difficult to launch a company with only one owner, doing so carries a higher level of risk because you would be personally responsible for any issues that crop up. For instance, if you are subject to a lawsuit, you run the risk of becoming bankrupt and disposing of all of your assets.
- Limited Liability Company (LLC): If you wish to launch a full-fledged business, the most common choice is to establish a limited liability company (LLC), sometimes known as a “limited liability company.” You will not be personally responsible for anything that goes wrong, and you will be able to keep your funds even if the firm goes bankrupt. This is what the name of the arrangement indicates. On the other hand, starting a limited liability company (LLC) requires more money up front than starting a sole proprietorship does since you have to pay for a business license, taxes, and registration. Additionally necessary is a bank account for the business. On the other hand, your clientele will view you in a different light than they would a sole proprietor, which would unquestionably increase your earning potential.
- S-Corporation, sometimes known as an S-corp: A company is considered to be an S-corporation (S-corp) if it passes via its shareholders its taxable income, losses, deductions, and credits for purposes of the federal income tax. This may sound complicated, but all it means is that gains can be paid out as dividends, reducing the amount of tax you are personally responsible for paying. On the other hand, a C corporation is a large-entity form that is very improbable to be applicable to your organization in the not-too-distant future.
Create a business plan for your bookkeeping firm
Once you have your company up and running, you can go on to the next step: setting up your operations, such as getting the required insurance and creating a separate bank account for your firm. But, again, it is essential to maintain operational and financial separation inside your company if you want to derive the maximum advantage from the legal protection against liability that the incorporation process affords.
Hire an Answering Service
Because of the nature of a one-person firm, you can find it challenging to provide a prompt response to customers, particularly during the tax season. However, sending potential customers to voicemail when they immediately need your services might be detrimental to new business development when things quiet down. The solution is in using a bilingual answering service that provides customers with access to live customer support representatives through phone, text, online chat, or email 24 hours a day, 7 days a week. You may get started right now with a free trial that lasts for thirty days.
Set Up a Business Bank Account
One of the most important steps you can take is to keep your personal finances, and your business finances separate. I don’t agree with the majority of individuals who think that they should wait until the company starts generating a cash flow before investing in it. Before the money even starts coming in, it is a lot simpler to go ahead and create a checking account for the firm.
Maintaining the separation of personal and business finances is another important step in protecting limited liability. If you mix business and personal expenditures, you run the danger of losing control of your finances since it will be hard to determine which expenses are to your business and which ones pertain to your personal life.
Establish a Business Mailing Address
In the event that you intend to lease office space, the location of your office will, without a doubt, become your official postal address. If you intend to do business from the comfort of your own home, you will need to obtain a business postal address. Under no circumstances should you give out your personal address for business purposes.
There are a few different avenues to explore. To get started, all you have to do is visit any of the post offices in your area and rent a PO Box. On average, you’ll spend $60 for a period of six months or $120 for an entire year. Naturally, the price will change based on the location that you live in. The vast majority of people despise post office boxes due to the fact that they reveal to clients right away that you do not have a physical office, which then begs the question, “Are you a “real” business?”
Instead, if it is at all possible, rent a mailbox from UPS. As opposed to a Post Office box, an actual physical address is what the UPS Store will provide you as your mailing address. Having a real postal address rather than a PO Box eliminates the need for certain shops to reject delivery to their customers, which is another advantage of utilizing a UPS mailbox instead of a PO Box. A modest UPS box will set you back $72 for a period of three months and $240 for a whole year.
Get Bookkeeper Insurance
As a bookkeeper, you could require liability insurance in the event that you make an error while handling the financial matters of your customers. If you make a mistake that leads to a lawsuit, having this insurance can help protect you financially. Your accounting company might not be able to survive a legal case because of the amount of money you would have to pay out to both your client and attorneys in order to defend yourself if you did not have adequate insurance cover. This might cause your firm to go insolvent.
If you want more information on the appropriate insurance coverage, have a look at our piece that’s all about bookkeeper, accountant, and CPA insurance.
Do Some Market Research
Conduct a thorough and dispassionate analysis of the market that you are considering entering. In this context, market saturation is an important factor. For example, will you be located nearby some of the major firms, such as H&R Block, or somewhere else entirely? To determine whether or not there is a need for your service in the region, count the number of small companies currently operating there.
Certified Public Accountant (CPA) Starting your own business might help you become more marketable in the job market. Employing a personal financial specialist is one thing that should be considered. A list may be found on the American Institute of Certified Public Accountants website.
Get the Right Accounting Software
It is possible that selecting software to handle all of the numerous facets of your firm may prove to be a challenging task. The following is a list of aspects of your company for which you will need to choose the appropriate software application before you can get started:
I’m sure you’ve already given some thought (or made a choice) about which accounting software to use because you’re starting a bookkeeping firm. As you are aware, there are hundreds of options to choose from. However, I strongly suggest that you use QuickBooks.
Aside from the fact that QuickBooks is the most generally used accounting software for small businesses, you can sign up for QuickBooks Online Accountant for free and have access to training materials and video lessons to help you prepare for the QuickBooks ProAdvisor certification test.
Certification provides a number of benefits, but my favourite is being included on the Find-A-ProAdvisor website. Millions of small companies use this service to discover a QuickBooks Pro in their region who can help them with QuickBooks.
While use QuickBooksthe majority of small businesses use QuickBooks. You should consider being certified in a few other accounting systems so that you may assist customers who choose not to use QuickBooks. See our list of the Best QuickBooks Alternatives for more information.
Payroll Software/Service Provider – When you’re ready to recruit employees, you should be able to switch on a payroll processing option in your bookkeeping/accounting software. You may select from a variety of payroll choices if you utilize QuickBooks. If you don’t want to deal with payroll, have a look at our list of 6 Payroll Competitors that are cheaper than ADP.
Tax Software Provider – It’s crucial to decide whether you’ll prepare your tax return yourself or hire an accountant. If you decide to do your taxes yourself, we recommend TurboTax.
The keeping of books is not something that interests or interests them enough to learn many owners of small businesses, therefore, they choose to hire someone else to handle it. If you are good with numbers and have a well-organized mind, going into business for yourself as a bookkeeper can be the right move for you to make.
Take the following steps to get your bookkeeping service up and running. Working in bookkeeping may be an enjoyable and satisfying career choice if you have the right personality. Although starting an accounting business will need a significant investment of time and energy, the barriers to entry are now at their lowest point in history.
You have access to a wide variety of helpful resources, and there is also a sizable population of individuals who are prepared to offer assistance. Before beginning any new endeavour, developing a business strategy is necessary for anybody. It comprises an estimate of profits and losses for the next 12 months and a projected balance sheet and cash flow statement.
The more specifics you provide in your company strategy at this stage, the simpler it will be to understand and implement at a later date. The process of naming a firm may be challenging as well as rewarding.
You should check with your financial institution to determine the requirements for opening a business account.
The limited liability corporation (also known as an LLC) is the most common form of corporate structure for smaller businesses. It is not difficult to get started in the majority of states, and it does not cost more than one hundred dollars. There are many various methods in which a company may be organized, and it is essential that you choose which of these options is most suitable for your particular situation. Make sure to get in touch with a lawyer as soon as possible so that they can evaluate your situation and help you pick the path that will be most beneficial to your company.
Learn about the four most prevalent types of business structures by reading our article on the Best Business Structure for Small Businesses. When using a multilingual answering service, your customers may communicate with live customer care representatives by phone, text, online chat, or email. 24 hours a day, 7 days a week. If you intend to lease office space, the location of the building where you intend to have your office must serve as your postal address. As a bookkeeper, you may be required to get liability insurance. If you make a mistake that leads to a lawsuit, having this insurance might shield you from the financial consequences.
Your business as a bookkeeper might be rendered ineffective or perhaps put out of business if you are sued. Carry out some market analysis to see whether or not there is a need for the services you offer. I cannot stress enough how important it is that you make use of QuickBooks if you are starting an accounting business. If you hold certifications in additional accounting software, you’ll be more equipped to assist clients that choose for different software. When you are ready to begin hiring employees, you should be able to activate an option that allows you to handle payroll.