How to Start a Bookkeeping Business

Accountants provide a higher level of financial analysis and planning. They may use the financial data bookkeepers generate to advise business owners on tax planning and budgeting. To set up a budget, you’ll need to gather your financial data, such as income statements, balance sheets, and cash flow statements.

This means assets like cash, equipment, and inventory (physical), along with intellectual property or patents (nonphysical). Bookkeeping is important because it gives you insight into where your money is going and how your business is performing, helping you make smart business decisions. It also keeps you organized for tax time and helps you find tax deductions and shows your credibility to investors and lenders so you can get funding. A trustworthy software will help you stay on top of your clients’ bookkeeping and better manage the workflow.

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For both sales and purchases, it’s vital to have detailed, complete records of all transactions. You’ll need to note the amount, the date, and any other important details to ensure you can accurately summarize your finances when it comes time for tax season. Purchase receipts should always be kept as proof that the purchases took place. Now that you understand how to become a bookkeeper, you are ready to get started on your new path.

• It can be produced for one period to gain insight into the month’s profitability, or produced for the year to period.
• Efficient bookkeeping involves foresight, meaning that a business should always plan for upcoming financial events, including tax time.
• Single-entry bookkeeping is simpler, and is usually used by businesses with few or no employees, minimal plans to scale, and no need for in-depth financial reporting.
• Quick note—every business is unique, so before you get started, it’s always best to speak with a professional who can help you decide what’s best for your business.
• Despite its name, good accounting software isn’t just for accountants.

These articles and related content is not a substitute for the guidance of a lawyer (and especially for questions related to GDPR), tax, or compliance professional. When in doubt, please consult your lawyer tax, or compliance professional for counsel. This article and related content is provided on an” as is” basis. Sage makes no representations how to build a bookkeeping business or warranties of any kind, express or implied, about the completeness or accuracy of this article and related content. That means you can work with your clients in real time to go over their bookkeeping and highlight any queries with ease. Remember, you’re selling your expertise and adding value to clients who need what you’re offering.

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Although all of these are important things to do and might attract clients, the fastest way to acquire a client will be through outbound marketing strategies. When it comes to bookkeeping tasks, there’s a great deal to learn. If you have mistakes to fix or transactions to track down, don’t stress. Most of the time, a qualified professional can correct or document these errors. It might feel daunting at first, but the sooner you get a handle on this important step, the sooner you’ll feel secure in your business’s finances.

• It’s no wonder why businesses always make this one of the first things they will outsource to a third-party company.
• You’ll find plenty of information about the bookkeeping profession on its website.
• It could be your comments on a recent new tax credit, it could be articles you share that you think group members might be interested in, or any variety of that.
• Operating as a virtual bookkeeping business increases a business’ access to potential clients, making for a larger client base.
• Many bookkeepers (and small service-based business owners, for that matter) transition into a LLC as they grow.

Bookkeeping businesses have the potential to generate substantial profits due to the relatively low overhead and startup costs of this industry. With the increasing complexity of tax laws and financial regulations, demand for qualified bookkeepers is on the rise. Over the last five years, the bookkeeping and payroll industry has grown at an annualized rate of 2.7% and in 2023 is expected to generate $66.2 billion in revenues. In casual conversation, the terms “bookkeeping” and “accounting” are often used interchangeably. Generally speaking, the responsibilities of bookkeepers and accountants consistently overlap, it is still a good idea to identify the differences between these two terms. In this guide, we will discuss the most important things you need to know about starting your own bookkeeping business and how you can get started.

Streamline your clients’ AP process and grow your firm

For each process, create a step-by-step account for what needs to take place from the beginning of the process until the very end. Again, with remote meetings, it’s important that your clients and team can see you very clearly. Based on whether you go with Xero, QuickBooks Online, or both, the next thing you’ll want to do is get certified so that you actually know how to use the software. Most of these phone services allow you to install an app on your smartphone so that calls are routed there. Down the road, you might want to consider a help desk software to communicate with your client base, but I wouldn’t recommend getting that fancy right out of the gate. Today, I believe most new clients like a subscription model where they pay one fixed monthly price in return for a total solution.

These expenses that haven’t been paid yet are categorized as accounts payable. You can ask your friends, family, and previous clients for referrals. You can also market your services on your own website, as well as through paid ads and email marketing.

To become a virtual bookkeeper, you should have the same essential qualifications as an on-site bookkeeper. Bookkeepers tend to be pretty good at accounting, have good math and basic computer skills. Virtual bookkeepers also make themselves available for discussions around budget planning, late customer payments, cash flow, and any other finance-related questions. Virtual bookkeeping is a way to record, store, and manage all financial transactions for a business from a remote location. This in the long term, can also be your edge against the competition. By the end of this guide, you will know exactly what you need to start making money from your bookkeeping business today.

• Once you have a long-term target set for how you want to start an accounting business, you’re going to work backward to create a 1-year plan for your full-time small firm.
• Small business owners don’t care about which automated software they’re on, so just pick the one you like best.
• As we mentioned above, you don’t technically need to be certified to run a bookkeeping business.
• It serves as a road map to ensure you correctly record and report  all necessary financial transactions are recorded and reported correctly.
• Like a business bank account, a business credit card allows you to differentiate between personal and professional spending.
• One of the great things about using a software is that the debits and credits involved in creating an invoice are all handled behind the scenes.

This is particularly true once the business accounts for its operational costs and recurring expenses. Once you’ve got a handle on how to begin bookkeeping for your small business, it’s time to set yourself up for success with an ongoing bookkeeping system. Intuit is dedicated to providing its employees with the ability to learn and grow throughout their time with our company. Once candidates are hired as employees, they will be provided with training assignments and other resources that prepare them for their positions. Intuit provides its employees with supplemental learning materials after training has been completed to assist employees in developing their skills.

This is a necessary document if you think you might seek financing from a bank or other investors. It shows that you know what you’re doing, why you’re doing it, and how you will continue to grow in a positive direction over time. Join our Sage City community to speak with business people like you. As we draw nearer and nearer to Black Friday and Cyber Monday, it’s more important than ever to make sure your customers have nothing between them and pressing that ‘pay now’ button. It’s important to do your research before starting out so you’re clear about the path you want to follow and the goals you’d like to achieve. And by using a cloud accounting solution, you’ll be able to access the numbers on any device, wherever you are.