Have a talent for crunching numbers? You might be able to leverage it into a lucrative bookkeeping business. So keep reading to learn how to start a bookkeeping business that you can count on to succeed.
Why should I start a bookkeeping business?
Math-savvy entrepreneurs can apply their talents to any number of financial ventures. So why launch a bookkeeping business? It offers:
- Universal appeal: Every profit-generating business has to maintain its books, which means that a bookkeeping business will not be difficult to market.
- Year-round demand: Businesses need bookkeeping all year. The idea is profitable as a full-time job opportunity.
- Location independence: You can do bookkeeping from a physical office or virtually with accounting software.
What's the average salary of a bookkeeper?
The average annual salary for bookkeepers in the U.S. in 2017 was $41,110, according to the Bureau of Labor Statistics. However, the industry in which one works can heavily influence one's pay. For example, the average wage for bookkeepers in the credit intermediation industry was $40,500 in 2017. But bookkeepers with the postal service enjoyed a higher average annual salary of $65,100. Other top-paying industries for bookkeepers in 2017 were scientific research and development, natural gas distribution, monetary authorities and metal ore mining.
What training do I need to start a bookkeeping business?
Bookkeeping businesses have a lower educational barrier to entry than accounting businesses. Becoming a bookkeeper doesn't require a bachelor's degree or professional certifications. But you will want to know the fundamentals of bookkeeping such as how to:
- Perform double-entry bookkeeping
- Enter transactions into bookkeeping software
- Reconcile discrepancies
- Generate financial reports like income statements
Some would-be bookkeepers prefer to do college-level coursework or complete an associate's degree in bookkeeping in a classroom or virtual setting master these concepts. However, others prefer to receive on-the-job training to learn how to start a bookkeeping business in a hands-on setting.
What licenses or certificates do I need to start a bookkeeping business?
Depending on the state in which you live, you might need to get a general business license to operate your bookkeeping business. When deciding how to start a bookkeeping business, it’s a good idea to consult the website of the state board of accountancy for your state to determine whether you need any other licenses to provide bookkeeping services. But entrepreneurs who perform bookkeeping services usually do not need to get a CPA license. The CPA license is issued by the board of accountancy to oversee the practices of public accountants. Professional certifications, while not generally required, may help distinguish you from other bookkeeping businesses so that you can attract more business. Getting these certifications will also show clients that you know how to handle the legal and ethical issues that may arise when managing the books for a company. The two most common professional bookkeeping certifications are the Certified Bookkeeper (CB) and the Certified Public Bookkeeper (CPB). Specifically, the American Institute of Professional Bookkeepers and the National Association of Certified Public Bookkeepers give out these certifications.
How do I launch a bookkeeping business?
Once you've picked up the necessary skills and certifications, follow these steps to start a bookkeeping business:
- Choose a niche. You can choose to do bookkeeping only in a specific niche like the healthcare services industry. But it's not required.
- Determine a business location. Do you want to run your bookkeeping business from home or an office building? Once you make the decision, scout out locations and buy or rent any real estate needed to hang your shingle.
- Develop a business plan. Every business needs to develop this outline of business goals.
- Get your legal situation squared away. Choose the legal entity for your business and get business insurance.
- Secure funding. Choose from traditional or non-traditional methods of financing.
- Put infrastructure in place. You will need at least an Internet connection, a business phone system and computers equipped with accounting software such as Microsoft Dynamics 365, Xero or spreadsheet software such as Microsoft Excel.
- Spread the word. Develop a marketing strategy to boost business.
