What Does A Bookkeeper Do?
Bookkeepers play a vital role in any business operation. A bookkeeper is hired to manage the company’s finances.
They can help small-business owners manage and organize their cash flow. This is one of many essential indicators that a business’ health will be.
They often assist small-business owners in preparing critical financial statements, including the balance sheet and profit & loss statement.
Remember that bookkeepers cannot file taxes, audit like certified public accountants, and are not the same as accountants.
Bookkeepers are not required to hold an accounting degree. They can earn certifications through training, but they can also get experience on the job in bookkeeping to set up their business.
Bookkeeping services typically include:
- Manage business finances using business accounting software.
- Manage accounts payables and receivables.
- Provide assistance to businesses by providing an overview of their finances to help them understand how they spend their money.
- Generate financial statements.
Costs To Start A Bookkeeping Business
Bookkeeping businesses tend to have low startup costs, especially if they start out in a home rather than renting office space.
You can expect to spend around $10,000 to open a new business from your home office. Small businesses that are set up in rented offices will incur higher startup costs. This could be as high as $20,000.
Typical startup costs for a bookkeeping service include:
- Filing cabinets, office furniture
- Equipment such as computers or printers
- Bookkeeping software
- Office supplies
- Office phone and internet service
- Working capital for the first three months of salary, internet, and other utilities.
Steps To Starting A Bookkeeping Business
It’s not difficult to learn how to start your own bookkeeping business. These are the steps you need to get your bookkeeping business started quickly.
1. Pick Your Market And Niche.
The work of a bookkeeper can be applied across many industries. All businesses need to track their finances and optimize their financial performance.
A specialty may be necessary to differentiate your business from its competitors and help you market it better.
This can help build your credibility in that market as well as improve your skills. It’s easier to pinpoint your target audience if there is a specific niche.
Also, it is essential to research the market to find established bookkeeping businesses and industries that serve your niche.
2. Write A Business Plan.
No matter what business type you have, every business owner needs to make a plan. This also includes bookkeepers.
A business plan is a plan that outlines your company’s goals and objectives. It’s a comprehensive document that covers what you do, how your market works, and your business’s competitive advantages.
The plan will include projections and growth plans. This document can be lengthy, but it’s essential. It will help you stay focused and allow your business to run smoothly from the start.
Two parts of your business plan deserve extra attention.
Choose A Business Name.
Your business name is likely to be the first impression clients get about your company. What do you hope your name will communicate? Are you referring to your expertise, a particular area, or your personal style?
To avoid confusion:
- Make sure no other business is using your name.
- Run the name through a few people to gauge their perceptions.
- Once you have the names of your finalists, make sure they are in your secretary’s business name databases.
It is not necessary to be certified to operate a business in bookkeeping, as we said above. You might want to become a certified private bookkeeper. This certification signals to clients professional-level skills and maybe an essential way to distinguish yourself in a crowded market.
You can also obtain certification within certain software products.
3. Register Your Business And Get Insured.
Once you have selected a business name, the next step in your business registration process is to make it official. The exact procedure will depend on how you intend to structure your business and where you plan to go. Check out the specific rules on how to register your corporation with your secretary.
Choose A Business Entity.
When you register your business and open up shop, a major step is selecting a business structure. This will determine how taxes you pay as a small business owner, how much liability protection your business has, and how you structure your business.
For the initial stages of your bookkeeping company, you may only be working alone. You may have a limited liability company (LLC) or a sole proprietorship when you start looking for business entities. If you think that you might require some help later on, this could be a great option.
Although it isn’t mandatory, you might want to get insurance for bookkeeping businesses. It can protect your business from potential financial liability. Bookkeepers typically have business insurance policies that cover professional liability and general responsibility.
4. Choose Your Bookkeeping Software.
This one is simple: Your bookkeeping system will be the backbone of your business. There are many different options for the best bookkeeping software. Be sure to look at them all.
QuickBooks Online is an excellent option for anyone who is overwhelmed.
Xero may be another popular option. However, there are many bookkeeping applications to choose from.
These programs are available for certification, which can help you be an expert in your field and allow you to market yourself.
5. Set Up Your Business Infrastructure.
If you’re looking to start a bookkeeping service, there are several vital pieces of infrastructure that you’ll need. The following are some of the things you should consider when setting up your bookkeeping business:
Your website is the best place for potential clients to learn about you and share their experiences. A website is essential if you have a completely virtual bookkeeping business.
This can help clients see your expertise. You can create your website with ease, thanks to a variety of website builders.
Client Database Management
You must keep track of all clients you have as you grow your client base. You can set up your workflow with a CRM or project management tool.
Other options include specific accounting practice management software. Some even integrate with QuickBooks Online.
If you expect your clients to send you information such as receipts, statements, or other documents, it might be worth looking into the share file tool.
Dropbox is a popular alternative. With Dropbox, you can create shared folders that you both and your clients can access.
Business Bank Account
To ensure that your business finances are separate from your personal, you’ll need to open a bank account. This is vital for both personal liability and taxes.
Begin with a small business checking account. As your business grows, it may be possible to add a savings account to allow excess funds to earn interest.
Look around before you make a decision about where to deposit your hard-earned money.
6. Price Your Services.
A small-business owner faces the most significant challenge when deciding how much to charge. Too little can mean that you aren’t getting fair compensation for the work you do.
Too much can make it hard to compete against other bookkeeping businesses.
PayScale, an online platform that tracks rates and salaries of bookkeepers, shows that the average hourly rate is $17/hour ($10 for the low end and $24 for the high end).
Look into for-hire and freelance websites like Fiverr. People list their rates on these sites. Look for bookkeepers with similar skills and experience to help you decide what price range you should charge.
Be aware that your years of industry experience, specializations in certain industries, certifications you hold, and the area you work in should affect how much you charge.
If you feel that you are not being priced accurately, you can change your rate.
7. Find Your Customers.
Marketing is essential regardless of the business type. The smartest small-business marketers will know who their customers are and direct them to advertise.
The unique selling proposition you create for your company is essential.
Are you highlighting your experience?
Your area of expertise?
Your emphasis on local business This will help you think up creative ways to market yourself. You can use direct mail, radio ads (or other media), email campaigns, and social media ads.
Remember the power that word-of-mouth referrals have. Don’t be embarrassed to ask for them.
8. Understand Your Funding Options.
It’s unlikely that you will need large amounts of capital if your business is small. If you do open a brick-and-mortar office, you may explore other funding options.
However, for now, you’ll probably want to get a credit card for your business to finance your bookkeeping.
This will allow you to have the money you need to start your company and keep track of your business expenses. This is not only necessary for separating your personal and professional finances, but it will also assist you in your tax season bookkeeping.
There are many business credit cards available. Some offer 0% interest rates. Make sure to pay the balance off before the introductory period ends. The variable APR will then kick in.
How Much Can You Potentially Make Owning A Bookkeeping Business?
Bookkeepers will generally either charge an hourly rate of work or a monthly fixed price. It might seem appealing to set your rates low at first to attract the first few clients.
But, this could cause you to lose clients. Pricing is a complex task. However, it’s not necessary to price too low.
The average earnings for bookkeepers are $42,806 per annum, which works out at just over $21/hour. The amount of money you can expect from your business will depend on many factors.
Your income is affected by your location, what clients you have, how much work you take on, and how high your rates are.
As they can decide their rates and take on more work, freelance bookkeepers earn more than corporate bookkeepers. Your business can be a profitable and rewarding venture if your drive is strong.
Things You Should Understand Before Starting A Bookkeeping Business
To run your own business successfully, you need to establish systems and processes. These systems are consistent and prevent you from omitting crucial details.
They can also increase efficiency and help to ensure that everyone works together.
Bookkeepers often offer additional services to small business owners, including billing services, payroll services, tax preparation, tax returns, and more.
Consider working for a small bookkeeping business to get experience before starting your own company.
This can be a great introduction to the industry’s difficulties and will understand how well-run businesses function. As you learn on the job, your skills will be enhanced, and you can apply them to your own company.
The Bottom Line
A final tip on starting a bookkeeping company: Make sure you are growing as much as the businesses around you. This doesn’t mean that you must take on more clients. Instead, it means that you should expand your network and knowledge.
Keep up-to-date with your skills, increase your knowledge of your preferred platforms, and keep abreast of any changes in their features.
It is possible to attend professional events such as conferences or networking events. Remember that investing in your company is also investing in yourself.
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Sound too good to be true?
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How do you get paid and how much?
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A fair price to charge per lead, depending on the industry is 10-20%… let’s just use the tree service industry for example and go by worst case scenario.
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Now, I know you probably have tons of questions… So, check this out to learn more.
I appreciate that you explained the importance of gathering reports properly to prevent problems. My brother is looking for dependable bookkeepers that can assist them with payroll processing for their business and has asked if I have any suggestions. Thank you for the information; I’ll be sure to advise him that they may contact payroll services for assistance with their data and reports.