Bookkeeping is essential for any business, regardless of size. Some people prefer to do it themselves, while others prefer to leave it to an experienced professional. Working with a trained bookkeeper has huge advantages. It gives you more confidence that your books are correct and takes some work off your plate.
Some people are so proficient at it that they decide to provide it as a professional service. You've come to the right blog if you're wondering how to start your own bookkeeping business. If you have a talent for statistics, this can be an extremely profitable side hustle with the potential to grow into a full-time business.
Can a Bookkeeping Business Generate Profit?
If you want to succeed as a bookkeeper, you must have a strong knowledge of correct bookkeeping procedures and a passion for numbers. Even if you don't plan to offer accounting services at first, it's still important to know the local tax laws. However, if you have what it takes, you can make good money running a bookkeeping service.
It's possible that things move a little slowly at first. Depending on where you live, not many nearby businesses may have an immediate need for another bookkeeper. Providing digital services that can be done remotely is a smart way to reach more potential customers and interact with them.
When you get into this line of work, you should always have a long-term goal in mind. A good bookkeeping service can quickly attract a lot of attention, and if you're not ready, you may have to turn away potential customers.
The ability to be flexible is one of the best aspects of this work. Depending on other obligations in your life, you may choose to work on this full-time or part-time. Many bookkeepers start out doing it on the side of their main jobs and decide to go full-time once they've built up a large client base.
How Much Can a Bookkeeper Make?
Most states pay bookkeepers between $40,000 and $50,000 per year on average when they work for other people. However, this varies a lot from place to place. If an independent bookkeeper has built a good reputation, they can usually charge more per hour. Once bookkeepers have carved out a solid niche in the market, it's not uncommon to see them charge more than $40/hour.
This can still earn you a great deal of money even if you only work part-time at it. Working only 20 hours per week, you can easily earn $3,000 to $4,000 per month. Once you get to that point, you can decide if you want to scale things up. Also, if you can get high-paying clients from big companies, these clients will probably make up a big part of your total income.
Is it Better to Work for Someone Else Than to Start Your Own Bookkeeping Business?
Learning bookkeeping requires patience. If you're new to the job, it makes sense to start by working for someone else until you know what to do. However, this is a more limited possibility. Since most accountants and bookkeepers would like to hire you on a full-time basis, you would rarely be able to accomplish this alongside a full-time job.
As a beginner, you could choose to work as a freelancer for a few clients. This is a more balanced strategy with a decent safety net, but it will be very sluggish.
Once you have enough experience and are sure you can do your own job without being watched, you should strongly think about going it alone. This is the best way to make as much money as possible as a bookkeeper and build a stable career.
How Much Does a Bookkeeping Business Typically Cost?
There are different costs that come with being a bookkeeper. It's not as easy as opening an Excel spreadsheet and writing down what your clients have done. Depending on where you live, you may need to get different licenses, and you should also buy professional bookkeeping software. Insurance is also essential, particularly when working with small enterprises that lack significant capital.
You must first register your business. This can cost anywhere between $50 and about $500, depending on the legal form you choose to use. In this industry, creating an LLC (Limited Liability Company) is the most common approach. Even if there are some additional expenses and overhead involved, the benefit of keeping your personal funds separate from your business operations is worth it.
Instead of performing everything manually, a competent bookkeeper should rely on appropriate software applications. Depending on the services you require, QuickBooks can cost anywhere between $150 and $300 per year. If you wish to offer digital services, which you definitely want to do, you'll also need a dependable file hosting solution that offers safe exchange. You can pay between $200 and $300 a year for this.
A CRM solution may not seem necessary when you're just starting out, but as your customer base grows, you'll want to invest in one as well. For the most popular alternatives on the market, you can expect to pay between $250 and $300.
Invoices are required as your client base grows or even when you are just starting your own bookkeeping business. This will give your clients the impression that you are serious about your business, especially since you are dealing with large corporations. And it will help you file your taxes and meet other financial needs with the government.
Having a cloud-based invoicing system is essential, as you don't need to do it manually by writing down paper invoices that could potentially have errors and mistakes. It will send out recurring invoices for you, giving you more time to work on other parts of your business. There are many ways to send invoices online now, which makes it hard to choose the best one. This is where Blinksale shines; it's super cheap at just $19 a month, and you can start a free trial for 30 days with no credit card needed. You will get automated invoicing, recurring invoices, and estimates, and you can get paid with credit cards, bank transfers, or cryptocurrency.
At first, you can work from home, but eventually you'll want to establish an office of your own. Many clients prefer to conduct these transactions in person. There will also be instances where a client wants to directly hand you something, like a sizable folder of documentation. Even a modest office might serve to convey a more professional image. Office leasing rates vary widely around the country, but they typically range from $8 to $20 per square foot.
A reliable attorney can be extremely beneficial to the operation of a bookkeeping firm. There will be times when you have to deal with sensitive issues where a small mistake could quickly get out of hand, and it's helpful to have someone you can talk to about these situations. However, they are well worth the several hundred dollars an hour that good lawyers charge.
You won't need any staff at first, but it's a good idea to recruit someone to assist you once your business has gained traction. A skilled secretary and/or personal assistant can be quite helpful to a bookkeeper. Since many bookkeepers are independent contractors, finding more of them is not that difficult.
Refining Your Area of Expertise
Bookkeeping can be a great business idea in general, but at some point you should think about specializing. This will enable you to hone your expertise in a certain field and draw in even better clients with greater standards.
Contrary to popular belief, working solely for small businesses is frequently more difficult. Because these businesses don't have a lot of cash on hand, bookkeeping problems can hurt them more. Also, the owners of these businesses often don't know much about their field, which leads to more questions about your work and criticisms of it.
Companies and Other Significant Entities
Large companies are typically simpler clients. In the long run, you may not even speak to some of them. Once you've established the fundamental strategy, all you'll do is ask them for the pertinent information, prepare their books, and wait to hear back unless something goes wrong. Because of this, many bookkeepers want to work only for businesses and other similar organizations in the future.
Bookkeeping is the first step toward accounting. While it offers some new, more appealing opportunities, it is also much harder. Additionally, it requires some special certificates merely to get started, unlike ordinary bookkeeping. That's an excellent alternative if you appreciate what you do and want to expand into giving your clients even more specific advice. There is room for long-term career growth because the job often pays more than working as a bookkeeper.
Working with clients from other countries can be very challenging. Each country where you want to offer your services has its own rules that will require you to spend a lot of money up front. But it's also an excellent strategy to increase your competitive strength. On the global market, there are plenty of opportunities for freelancers.
It is a common misconception that bookkeepers prepare taxes. Since you'll be responsible for any errors in your clients' tax forms, working as a tax preparer is a completely different sector and a little more difficult than working as a bookkeeper. If you've never prepared tax returns for others, there is a steep learning curve, but some people find the grind to be well worth it.
How to Advertise Your Bookkeeping Business
Bookkeepers are no different from other businesses in need of effective advertising. If you want to carve out a niche for yourself on the market and keep it there, you should start thinking about marketing yourself right away. Here are a few of the most widely used strategies.
Social Media Platforms
An excellent place to advertise a bookkeeping business is on social media. People looking for skilled bookkeepers frequently post in Facebook groups for freelancers and entrepreneurs. Additionally, you can create a Twitter account and interact with other businesspeople there. At the very least, you should have a Facebook profile where you regularly post useful content.
Forums for Entrepreneurs
Particular people believe that forums are fading; however, for some niches, this is far from reality. There are countless forums for entrepreneurs where people may share ideas and help those who want to launch their own businesses. Join a couple of them and frequently offer informative stuff. You'll soon start to draw a lot of attention if you respond to inquiries (always in a non-binding manner, of course), offer changes when there's a chance, and do these things.
Make Your Own Website
Having your own website is one of the finest methods to market yourself and attract new customers, just like with many different kinds of businesses. It's not as difficult to set one up as you may think. Just a simple WordPress website with a few pages explaining your services, costs, and availability would do. For even greater exposure, you can connect this to your social media sites. If you build your website properly, it might even generate you some extra income.
If you use websites like Upwork and Freelancer properly, they may be incredibly effective. They do take a cut of your profits, but they make up for it by speeding up client acquisition. Before you use a platform like that, you should think about becoming an expert in international bookkeeping standards, since many of your potential clients will be in other countries.
Frequently Asked Questions
What is the difference between an accountant and a bookkeeper?
The work of a bookkeeper is easier than that of an accountant. They are exclusively in charge of managing the business's transactions. An accountant looks into these transactions in more depth and gives the business useful information that can help it move in the right direction. As part of their daily jobs, all accountants do accounting, but not all bookkeepers are accountants.
When should I consider recruiting employees?
When it comes to hiring employees, it is important to be one step ahead of your business's expansion. Once a successful bookkeeper has gotten some exposure on the market, they may quickly find themselves flooded with demands. Do your best to always have some free capacity available in advance because you don't want to turn down good clients. When you notice that things are moving quickly, consider recruiting at least one person.