Determine your market. When starting any new business, it is important to determine the market in which it is going to operate.
New businesses are often most successful when they pick a niche market, and with a bookkeeping business, you can pick to service many different industries. Every kind of company and business, across every industry, needs to keep track of its finances and make improvements to its operations based on bookkeeping.
To make marketing your business easier you should pick one specific industry and niche to provide bookkeeping services to, at least in the early years of your business. Doing this helps you to gain a reputation within one industry and possibly get referrals from similar clients or companies.
To find the right niche for your bookkeeping business you should do a fair amount of market research. This is also a critical step for developing a proper business plan.
You need to look into all types of bookkeeping businesses, and the markets they operate in. To not get overwhelmed you should try to narrow your research just to a few industries that you find appealing, or ones that you think could be underserviced in terms of bookkeeping.
Understanding your competition, who they serve, the price quotes they have, and their clientele, will help you determine how you can make a successful bookkeeping business that will stand out.
One great way to learn about competitors is to talk with their clients. Here you can get information on what they are doing right and what they are doing wrong, and you'll be doing customer research at the same time. This will be of great value later when you plan your business and decide on marketing strategies.
Develop a bookkeeping business plan. Your business plan should cover customer research, competitors, a startup budget, and financial projections for your bookkeeping business.
This document can be on the longer side and sometimes takes a while to craft, but it is very important. It will assist in focusing your business and its objectives, and provide a smoother startup process overall.
Other things you should list out on your business plan include the problems you will be solving for clients and customers, what sets your business apart from the competition, the resources your business will depend upon, and your mission statement and vision for the future of the company.
Your business plan is a critical document for yourself, especially if you are looking to get a small business loan or investors in your company. At this stage, you should also choose a name for your business. Pick something concise, catchy, and memorable. Remember, your business name will be the first impression for your potential clients, so it's actually really important to put a lot of thought into this.
It helps to come up with several different business names and run them by friends, family, and professionals to see which they like. Then once you have decided on a name, you should check in your secretary of state's business name database to make sure it is not taken already.
Get certified as a bookkeeper. Certification helps prove your qualifications and can be a selling point for your bookkeeping services to potential clients.
Technically, you are not required to gain certification to run a bookkeeping business, but it is encouraged. This will help your business stand out amongst competitors, and signal to potential clients that you are a professional bookkeeper.
The certified public bookkeeper (CPB) certification is a great option. You can also consider getting certified in specific bookkeeping software, such as QuickBooks.
Register your bookkeeping business and research insurance. The exact process of registering your business will vary, depending on how you choose to structure your business.
Depending on the size of your business, you have two solid options. If you are operating the business completely on your own you can form a sole proprietorship, but if you plan to have other employees now, or soon in the future, you might want to consider structuring your bookkeeping business as a limited liability company (LLC).
If you operate as an LLC, your personal and company information is entirely separate. While this changes your tax status, it does protect you from personal losses based on the company's performance.
Once you have this determined you'll also want to get a Federal Tax ID number. This helps you get a license to run your business. This is also referred to as an EIN or Employer Identification Number. Requirements will vary from state to state, so it's important to do your own research into your specific state's requirements.
Business insurance is necessary to protect you from liabilities, and other possible claims. Liabilities for a bookkeeping business include things like making mistakes on a company's financial books.
Purchase bookkeeping software. This is an essential element of any bookkeeping business. Your software is the foundation your business will be built upon.
There are many different options in this area. The most common one used in the industry is QuickBooks. Another popular software program for bookkeeping is Xero, but if you have one you are more familiar with or any kind of preference regarding this, that's fine too.
As was mentioned earlier, you can also gain certifications for most bookkeeping software, so if you have more experience with a particular one, you should probably choose that to be your standard software and get certified in it.
If you happen to be starting this business with a team of bookkeepers, take their opinions into account when making this decision, but it is ultimately up to you to choose.
Set up your bookkeeping business. This includes items like your website, your client database management system, file-sharing, and a business bank account.
A website is a great marketing tool for your bookkeeping business. This is where potential clients can go to find out about you, or your team, and your experience, services, and pricing.
Many bookkeeping businesses operate completely in the virtual space, so it's important to have a good website. If you have the extra money, you can also hire a professional to build you a website.
Your client database management system is a critical tool that you need to think about, especially if you want your business to grow. You need to be able to track your clients efficiently and effectively. A good client database management system and project management tool can help you to design your workflow.
You should also consider purchasing accounting practice management software; oftentimes these types of software easily integrate into your bookkeeping software, like QuickBooks.
File-sharing is a crucial tool for any bookkeeper.
If your clients are going to be emailing you receipts or other financial documents, you need a good tool to have them do so. Dropbox is perhaps the most common file-sharing tool, however, there are many options. The goal is to have a file that both you and your clients can access.
You also need to look into starting a business bank account, this should be separate from your personal bank account, and is a necessary step to take for tax purposes.
Determine your pricing. You should reference the market research on your competitors you performed when taking this step.
Business owners often find this step difficult. As they want to price their services low enough to attract new customers, yet high enough to make their business sustainable, of course, profitable.
The average charge for a bookkeeper in the United States is around $17 per hour. On the very low end, the average fee is $10 per hour, and on the high end it is $24 per hour.
Keep in mind you want an attractive rate when first starting out. Your pricing should also reflect your education, experience, and certifications. Other factors include whether you specialize in a specific industry's bookkeeping and the local average rates of bookkeepers in your area.
If you get overwhelmed with this step, don't worry, your rate does not have to be fixed, and you can always change it later if you feel you made a mistake.
Obtain clients. Marketing is crucial for any kind of business. Those with the most successful marketing strategies usually determine a target client base and create marketing strategies tailored directly to them.
Think about what sets your business apart from competitors and market accordingly. You should utilize the internet heavily by creating social media business accounts, and paying for social media ads, if possible.
Other ideas for marketing include email campaigns, direct mail ads, radio spots, as well as some other strategies.
Remember that one of the best forms of marketing for a bookkeeping business is word of mouth. Here you don't actually have to do much of the marketing at all, just simply provide excellent bookkeeping services to your clients and ask them to recommend you to other possible clients.
Determine your costs. Luckily, starting a small bookkeeping business is not a very expensive endeavor, especially when compared to some other small businesses.
The minimum cost can be as low as several hundred dollars, while if you are starting a larger-scale bookkeeping business, it might cost you $10,000+.
The high-end estimate should be used if you are hiring employees and running your bookkeeping business out of a physical office, meaning you would need the funds to lease out a space, and then also purchase all the supplies that go with that, computers, furniture, printers, etc.
However, a completely virtual bookkeeping business doesn't really cost much at all, depending on how prepared you already are with necessary items like a reliable computer, software, and other supplies.