The digital age has brought endless possibilities to start online businesses of all shapes and sizes, so there’s something out there for all types of people.
If you’ve got a knack for numbers and a good head for organization, starting a bookkeeping business might just be the right choice for you. It’s also a very in-demand area. All businesses need to keep bookkeeping records by law, and someone has to do that work for them.
It might sound overwhelming to start from scratch, especially if you have no previous experience with running a business or even with bookkeeping, but we’re here to break the process down for you. Starting a virtual bookkeeping business won’t help you become an overnight billionaire.
You can, however, make a respectable income working from home and providing a much-needed service. The fact is, EVERY business out there needs to keep accurate financial transaction records. Bookkeeping is a stable business option! But how do you start your journey in this virtual business?
Table of Contents: List of Free Remote Working Software
- What is A Bookkeeping Business?
- Starting A Bookkeeping Business
- Business Structure
- Bookkeeping/Accounting Software
- Is A Bookkeeping Business Profitable?
- Can A Bookkeeper Call Themselves An Accountant?
- Can A Bookkeeper Prepare Tax Returns?
- How Many Clients Can A Bookkeeper Handle?
- How Do I Find Bookkeeping Clients?
- Bonus Tip: Stay Updated with Industry Trends for Bookkeepers
- Recommended books to read before you start
What Is A Bookkeeping Business?
Essentially, bookkeeping is about accounting – helping businesses to ‘balance their books.’
The term encompasses a broad range of services, including the following:
- Managing accounts receivable and accounts payable
- Income tax and self-employment tax preparation
- Invoice preparation
- Supplemental financial reports (e.g. budget)
- Tracking long-term assets (e.g. equipment)
These services fall into three primary categories: balance sheet, income statement, and statement of cash flow. When the financial year ends, and it’s time to submit taxes, all businesses need accurate records of their income and outgoings.
But there’s more to bookkeeping than this – most business owners don’t just want to know the numbers, they want to understand them, too. This means looking at assets, liabilities, equity, and profit, and figuring out what they mean for the business in question.
As a result, a bookkeeping business offers the chance to help your clients grow their businesses by offering them advice as well as getting nerdy with the numbers. It can be an enjoyable and fulfilling career path for the right person.
Starting A Bookkeeping Business
Here are the steps to consider when starting your own bookkeeping business:
The good news is that there aren’t many costs involved in starting a bookkeeping business. Assuming you already have a good laptop, you won’t need to buy much – you can do the work straight from your computer. However, a laptop alone is unlikely to suffice.
Since most clients will expect you to work with their accounting software, you must buy or subscribe to the relevant programs. These can be relatively expensive, which is another good reason to only focus on one piece of software.
Errors and Omissions Insurance
Another must-have is insurance. Bookkeepers take on the role of serious responsibility since they take care of sensitive information for clients and promise to keep records accurately.
If you make any mistakes, this could have serious consequences, and your client might end up suing you. Insurance protects you in the event this happens. The name of the insurance policy you’ll need is Errors and omissions insurance.
If you’re entirely new to bookkeeping, there may be some further expenses involved. You might want to carry out training or take a certification to demonstrate your capabilities if you don’t have the experience to back them up. We’ll go more into this later.
Finally, there are a few optional, but not essential, costs you might want to consider:
- Business Cards
- Office Supplies
- Website Creation and Hosting
- Email account linked to your domain
- Computer Safety Software (disk encryption, password management)
- Business Start-Up Costs
There are a few different ways you could structure a bookkeeping business.
The simplest option is to start as a sole proprietorship – this means you’re a self-employed individual rather than a business. Although it’s easier to set up as a sole proprietor, it can also be riskier since you’ll be personally responsible for anything that goes wrong with the company.
For example, if someone sues you, you could potentially go bankrupt and lose all your assets. As a new business, you would have monetary limitations. While legal should not be ignored (documentation, in particular, is an area that start-ups ignore), registration costs should be kept as low as possible. An LLP is much cheaper.
It costs just around Rs. 11,000 to register and around Rs. 4,000 to comply with MCA regulations. Moreover, you only need to conduct an audit once you have a turnover of over a certain limit. This explains why LLP is a cheaper option than a private limited company and is recommended to you.
Since we are talking about accounting software,
Since you are starting a bookkeeping business, I’m sure that you have already given some thought (or made a decision) on which accounting software to use for your business. As you know, there are hundreds of options to choose from. However, my recommendation is that you use ProfitBooks.
Besides the fact that Profitbooks is one of the top small business accounting software used by small businesses, you can get the software free with their Bookkeeping services plan.
If you not only know how to use the program but also aim for an in-depth understanding, you can position yourself as an expert. Clients may be suspicious of somebody claiming to know how to use ten different programs. For this tactic to make sense, ensure you choose a popular piece of software!
Get A White-Labelling Partner To Maximize Profits!
Normally, accounting software is provided by companies as a general product. Examples could be Quickbooks, Sage, Xero, or even ProfitBooks. These companies decide the product features, pricing and have control over the product branding.
With private-label or white-label accounting software, you get the freedom to customize the application as per your needs. You can host it on your server, distribute it under your brand and sell it at your price.
So, a white-label solution provider acts like your technology partner and your customers get the feature-rich application under your company’s banner.
How Your Bookkeeping Business Can Benefit From Whitelabelling?
Starting a bookkeeping business can be challenging, but partnering with a white-label service provider can offer numerous benefits. From leveraging their expertise and technology to enhancing your brand and expanding your service offerings, a white label partner can give your business a competitive edge.
Check out how you can grow your practice with a branded accounting solution:
- Stand Apart From The Competition
Differentiate your company’s offerings by providing your clients with custom-branded accounting software.
- Increase Average Revenue Per User
Bundling your accountancy or bookkeeping services with accounting software can help you charge more.
- Scale Your Business
You can strengthen your brand and start offering your services beyond geographical boundaries.
- Recurring Revenue Model
With company-branded accounting software, you can charge your clients monthly.
- Improve Client Retention
Serve your clients beyond the tax period. Custom accounting solutions can help you engage your clients.
- Be In Complete Control
You can decide your price and features. You no longer need to depend on companies like Quickbooks, Xero, or Sage.
In conclusion, partnering with a white label accounting solution can be a game-changer for your bookkeeping business. With custom-branded software, you’ll stand out from the competition, increase revenue per client, scale your business globally, and enjoy a recurring revenue model.
Say goodbye to dependency on other companies like Quickbooks, Xero, or Sage, and embrace the power of your brand!
Is A Bookkeeping Business Generally Profitable?
When you start a bookkeeping business, there are a few different approaches you can take. You can approach your business as a chance to be self-employed and create work for yourself, or you can aim to hire employees and eventually create a self-sufficient business.
If you choose the latter, the average salary of a bookkeeper in India is above 16000 Rs/month. You can easily earn above 2 lakhs per year individually.
The earning potential of bookkeepers and their businesses proves that it’s certainly a profitable area. At the end of the day, businesses will always need to record their profits, and doing this requires a bookkeeper.
It’s about as safe an industry as you could find, and having a steady flow of clients means there’s a good chance of making a healthy profit.
On the other hand, if you create a self-sufficient business, the earning potential of your business will be unlimited – you can continue to hire employees and expand your operations without even having to do anything yourself! Of course, this is a challenging route that not many people will be able to take.
Of course, you can’t run a profitable business unless you’re good at what you do, no matter how much potential the industry has. Before you decide to pursue a bookkeeping business, you need to make sure it suits your skillset and strengths.
Can A Bookkeeper Call Themselves An Accountant?
Accountants are meant to be qualified individuals who can financially study and forecast the business. Generally, Bookkeepers are not certified with a degree or diploma. Bookkeeping by itself is a part of accounting, and cannot be compared with accounting as a whole.
So my answer to if a bookkeeper is an accountant or not is Yes and also a No. An accountant’s task is more complex and goes beyond bookkeeping and marking transactions. An accountant most certainly performs other tasks too.
Some of the prominent ones to name include:
- Financial planning
- Financial Advising
- Asset management
- Public accounting
Management of financial statements takes more than just calculating numbers, managing books, or keeping books. It requires core knowledge of finance, accounting, and taxation.
These skills and knowledge are not necessarily to be found in proficiency with a person who just practices bookkeeping or is a bookkeeper.
Can A Bookkeeper Prepare Tax Returns?
A bookkeeper is a person who is entrusted with keeping your books current and complete, so that your accountant, banker, investors, or you, yourself, can glean useful, up-to-date information at any time.
While most people think of their financial records in the context of tax preparation, having up-to-date, accurate books can become a valuable business tool in itself, helping a business owner avoid bank overdraft fees, better manage their operations, secure financing, and maximize their company’s future growth.
A bookkeeper may be able to prepare some of the tax forms required by Income Tax Services. Even though bookkeepers do not prepare tax returns, having books up-to-date can bring significant savings.
A recent survey indicates that 54 percent of accountants say their clients don’t have up-to-date records, which results in accountants having to charge those clients for up to 20 additional hours to prepare their tax returns.
Some accounting firms also offer bookkeeping services, though they typically outsource their bookkeeping, resulting in significantly higher costs than if you were to use a dedicated bookkeeping company.
While most businesses go to accountants to prepare tax returns, their advice may extend well beyond tax preparation, and will likely include future tax planning and ongoing evaluation of business performance, including ideas on improving the operating results, as well as advice on staying compliant with the many financial regulations.
As per the laws, there is no problem at all having a tax person handling your bookkeeping.
How Many Clients Can A Bookkeeper Handle?
As with most services, the amount of clients for your bookkeeping business depends on your level of skill and experience. For a basic idea, the average number of clients once you are up and running, per bookkeeper is 30. Now you can have either the big 5 or small 50.
It particularly depends on your style of client management. So, if you are a new company, you should focus on micro-businesses (staff count of less than 5). The turnover is not that important, it is the number of transactions and the nature of those transactions that matter.
You are not competing with accountants here. You should keep in mind, Accountants are your friends. They can help you get loads of work if you are new and struggling to find your clients. At last, Your efficiency is what matters, the number of clients is limitless!
How Do I Find Bookkeeping Clients?
In the business of bookkeeping, connecting with new clients to your business is a lot like making friends or even dating. It doesn’t happen in one day; it can take a couple of meetings before you both trust each other enough to commit to building a relationship.
Keep yourselves in this position, Will you ever share the whole financials of your company with someone unknown? Never, Right? The most important aspect is credibility.
Figure out who you are looking for:
Who is your ideal client? This question will clear out and squeeze down the client’s list. While marketing was the final solution for everyone ten or fifteen years ago, it doesn’t work today. Just like you won’t want to be friends with just anyone, you shouldn’t want to take on just anyone as a client.
Determine how you will attract the attention of the ideal client you are seeking:
You must have heard, Content rules the internet. Try to develop content that catches your prospects’ eyes. You should study the topics that help the clients solve a problem related to your services.
This can be an accounting problem, a payroll problem, a tax problem, or a financial problem. Impressive content will allow you to seek their attention, demonstrate your expertise, and make an initial connection between you and the prospect.
You have a plan and a core offering. Now it’s time to market your solution. With the right marketing in place, the leads will come to you, not the other way around.
Step 1 – Create Your Website
Your main purpose should be:
1) It will show that you’re a real business and give you some credibility.
2) Of critical importance, it will serve as a tool to turn visitors into prospects.
To set up your website:
Choose Your Website Platform
There are lots of website builders out there. GoDaddy, Wix, Squarespace, etc. For better SEO, there is no better platform than WordPress right now, especially if you plan on blogging.
Step 2 – Choose Your Web Pages
Whether you create your website yourself or hire a web developer, you’ll likely need to determine what you want on your website. Sometimes when you navigate to a website, you’re faced with a million links to click in the menu bar.
Step 3 – Write Your Webpage Content
Your website should not be novel. People don’t read websites, they skim. So the content needs to be quick and easy to digest for a website visitor –
When it comes to your home page, I love having one tagline that hits you right in the face. Something bold and to the point. Nothing fancy is required here. The more to the point, the better.
Your About page is a good place to demonstrate:
- Who you and your team are
- Your culture
- Why you’re capable of handling your target market’s problems.
Hit Up Local Networking Events
Your first few clients will always be from your friends and family. But you have to be ready to hit the street. To do that, there’s no better way than attending local networking events.
It’s just a matter of finding the events your target market hangs out at and heading there with some business cards.
Business Network International (BNI) is a platform where members meet weekly to discuss business and support each other’s businesses by sharing referrals. It is claimed to be the world’s leading referral organization. Such platforms will help you gain insights into the market and develop your business.
LinkedIn is my favorite social networking tool for those that want to know how to start a bookkeeping business.
It’s a great tool to:
- Build your network online
- Brand yourself
- Share content that engages your target market
Jody Padar, thought leader and firm innovator, now VP of Strategy at Botkeeper, has over 200,000 Linkedin connections (yes!) to help grow her brand. She says the following about using Linkedin:
“Use social media like it’s a golf course. Be professional but personal and build relationships. Deals get done over time because of the relationships built.”
Start a Blog
Interested in not only knowing how to start a bookkeeping business but also how to grow one?
Voila! This is my favorite marketing strategy for bookkeeping and accounting professionals.
Note: This is a longer-term strategy, but I recommend planting the seeds now to reap the rewards later.
Ditch Paid Ads
The great thing about paid ads on Google or Facebook is that they can bring you instant traffic, which might sound appealing when you’re just starting.
The bad thing is that it can be super expensive and the traffic you get may not be the traffic that you want. As you’re figuring out your business in the early days, I feel like unless you have a very clear offering and sales process, you’ll just end up wasting your money.
And if you do go down this route, unless you have experience running ads, make sure to hire someone competent in this area.
Bonus Tip: Stay Updated with Industry Trends for Bookkeepers
In a world where computers are obsolete within a few weeks after you purchase them, it’s tough to stay on top of new trends and changes in the industry.
For example, one of the most popular trends in the software industry is that installed desktop software is becoming a thing of the past and is being replaced with subscription-based cloud software, also known as software as a service (or SAAS).
This is a trend that is completely changing how bookkeepers and accountants do business, so you must understand how it works since it will have a direct impact on your business.
Recommended Books to Read Before You Start
This book will show you all the inside secrets that only experienced freelance bookkeepers know.
This book will help you get a better insight into the bookkeeping business. It will also clear all your doubts and questions.