How to Start a Successful Bookkeeping Business in 2022

how to start a bookkeeping business

You’ve decided to venture out and launch your own bookkeeping business, and maybe you’re wondering what you need to do to get started. 

This list of steps will have you up and running in no time.

But first, a quick note…

Before you read through this guide, remember the most important thing for any new business is to get paying customers. Without customers, you don’t have a business. 

Many of the administrative tasks can be handled along the way. So, while these steps are all important in establishing your business, just keep in mind they don’t need to be done in this specific order. 

With that out of the way, let’s get started!

14 Steps to Start a Successful Bookkeeping Business

1. Create Your Company

You need to determine the business structure you want for your business. Many bookkeeping businesses start as sole proprietorships, but you may want to consider forming a corporation or limited liability company (LLC). The appropriate structure will depend on your long-term goals and revenue expectations.

If you are starting the company with a partner, you need to make sure a partnership agreement is part of your business plan to ensure you are all on the same page.

Make sure you take the time to consider your name carefully - you’ll be stuck with it for a long time. You’ll want to make sure that it reflects your business and personality. 

2. Get the Necessary Licenses and Permits

The requirements for permits and licenses will vary by state and locality. A corporation or LLC will require registration with your state. Sole proprietorships do not require any form of formation filings.

Once you’ve formed your entity, you must file for an EIN (Employee Identification Number) with the IRS. The EIN identifies your business and is separate from your Social Security Number (SSN), even for sole proprietors. Having an EIN is optional for sole proprietors, but it allows you to receive 1099s at the end of the year from your clients without giving them your SSN.

You are required to register for a business permit in most locations. Fees vary from a few dollars to a percentage of revenue, depending on your location. You should research your local regulations before deciding where to locate your business. 

You may need to file a Doing Business As (DBA) filing if you plan on operating under a different name or several different names. DBAs are usually filed with your county or parish.

3. Get Insurance

One of the most important things you should do as a business owner is to invest in professional liability insurance (also known as errors and omissions insurance). These types of insurance will kick in if you are sued by a client and can limit your financial liability for mistakes. 

Professional liability insurance will protect you against errors, negligence, and omissions that happen during your bookkeeping engagements. Your premiums will vary depending on what type of services you offer and your projected revenue. For a bookkeeping business just starting out, an insurance policy can be purchased for less than a dinner out once a month.

You should also consider health insurance as an added expense, especially if you’ve previously had health insurance through your employer. Many states require citizens to have some level of health insurance coverage. If you plan on having employees, health insurance is a much sought-after benefit.

4. Get Equipment

Modern-day accounting doesn’t require specialized office supplies like ledger paper (or much paper at all). However, it does require you to have a complete office set up, including a scanner and printer. You’ll need to ensure your computer is fast enough to handle any accounting software you’ll be using and that it has an internet connection fast enough to meet your needs. 

With more work being done virtually, you will benefit from having multiple monitors. You’ll also want to consider investing in a headset, if you’ll be spending significant time on the phone. If you’ll be driving to client locations, do you have a reliable vehicle to get you there? 

If you plan to visit client sites, ensure you have a laptop with the speed and power necessary to get you through long meetings.

5. Track Your Expenses

As a bookkeeper, sometimes your clients' needs outweigh your own. Make sure you have set up your own expense tracking system to monitor your startup costs. Remember that it’s easy to overlook expenses paid for on different credit cards or out of your personal accounts rather than your business bank account so keep track of receipts. Ideally, you’ll separate your personal finances from your business finances. 

By tracking your expenses from the beginning, you’ll ensure you’re not missing anything and have one less item on your to-do list during tax time (when your clients are all wanting their work done).

6. Pick a Focus

Picking a focus is optional, but you should consider picking a specific niche for your business.  Having a focus allows you to market yourself more effectively. You can cater your services to a specific location or a specific profession. By becoming an expert in a particular niche, you will be able to complete your work more efficiently (which will free up time for you to work on getting more clients).

Additionally, once you’ve established yourself, a lot of your business will likely start coming from referrals. Sometimes niches are determined by happenstance simply based on referrals from existing clients in certain professions.

7. Set Pricing

You need to determine how you are going to price your services. Each meeting with a potential client will (or should) involve a discussion of your fees. You can either work off of retainers or bill hourly. In addition, there are several things you should consider before picking a billing method.

Do You Want to Track Your Time?

Billing clients hourly can be very profitable. However, it requires maintaining records of how you and your team are spending your time. It also doesn’t reward efficiency since finishing fast simply means you’re billing less. If you decide to bill hourly, research the average hourly rate in your area and consider adding a minimum number of hours each month you will bill.

How Will You Handle Scope Creep for Fixed Payment Clients?

You are no longer tied to the clock with a fixed payment schedule or retainer billing. As long as the work is getting done, you do not need to worry about how long it’s taking you. When you finish the work, you can focus on expanding your client list or take a well-deserved break.

But the flip side of this arrangement is that scope creep tends to become a real problem. Occasional questions turn into regular calls and meetings. Additional reporting becomes expected regularly. If you’re not careful, since your clients aren’t being billed for your time, they may start to monopolize it.

Do You Have the Time to Bill Your Clients by Hourly Invoices Each Month?

In the beginning, you’ll have the time to bill each client individually. But as your business expands, billing can start to take a substantial amount of time. Consider your long-term plans when determining the best option for billing your clients.

8. Set Up Your Software

You need to have your software subscriptions in place before taking on a client to ensure you can hit the ground running as your business ramps up. If you are limiting yourself to online accounting platforms, there is little you need to do. However, if you’re going to also work with desktop bookkeeping software such as QuickBooks Desktop, you may need to invest significant amounts in software subscriptions.

Along with the accounting software you’ll need, you should consider PDF editing, presentation, and time management or workflow software. Microsoft Office Suite used to be a requirement, but many bookkeeping firms manage just fine with the free G-Suite products offered by Google. 

For firms planning on holding virtual meetings with clients, you will probably want to invest in a Zoom Pro subscription which allows longer meeting times and a larger number of attendees. 

9. Create a Web Presence

If you have experience creating websites, you can put together a simple website for less than $50, including the purchase of a domain name. If you don’t have experience, you can find many predesigned websites on the Internet or have one put together for less than $500. 

No matter how you put together your online presence, you need to ensure that clients can find you. A professional website can add an air of legitimacy to your bookkeeping business.

10. Build Your Team

Many bookkeeping businesses start as a team of one. But with the large demand for bookkeeping services, the businesses often grow quickly and require more support. As you launch your business, you should be mindful of people you meet who could add value as employees in your business. These other team members might be bookkeepers, but they could also be marketing specialists or office assistants.

Always be on the lookout for tasks you can outsource to other people and then consider, if it is worth it to outsource the task. Though you might take an initial financial hit, you may find that hiring assistants frees up time that allows you to grow your business.

Consider adding new team members before they’re absolutely necessary. Trying to find a last-minute hire, especially in today’s competitive hiring environment, may mean you don’t have time to find the ideal candidate. 

11. Determine How to Manage Your Workflow

From the beginning, you should have a plan in place or how you will manage your workflow. You might be used to keeping to-do lists to plan your days, but as your client list grows and you are juggling more responsibilities, a to-do list may not be adequate. 

Using Google Sheets or other similar programs will allow your entire team to check the outstanding lists. Again, this method may become unwieldy for large (or even medium) teams. You should consider a workflow management system such as Jetpack Workflow. The right workflow management system can save you hours of time and allow you to monitor your team without micromanaging it.

Progress Report Tab Jetpack Workflow

12. Market Yourself

Everyone who starts a business puts themselves out there. But how will people find your business and become your clients, if you don’t invest time in marketing? There are many opportunities to market yourself and your business. 

Though it might seem old-fashioned, you should have business cards you can hand out to potential clients. You also can’t overlook the newer types of marketing, such as LinkedIn. Other types of social media, including TikTok, Instagram, and Pinterest, have also proven successful for some firms. You need to build your brand. Knowing your target market can make tailoring your message (and your medium) easier.

For more ideas, check out Jetpack Workflow’s ideas on how to market your bookkeeping business.

13. Network

Meeting other small business owners is vital to building a successful bookkeeping business. 

You should consider joining the American Institute of Professional Bookkeepers or the National Association of Certified Public Bookkeepers. These credentials can help you land cliens and having the resources these organizations offer is priceless.

14. Enjoy Your Success… But Keep Hustling

Once you’ve landed a few clients and started to fill up your workdays, enjoy! Take a moment to evaluate how far you’ve come. Also be sure to take a moment to determine where you’re headed next. Evaluate what things are working well for your business and where things are falling short. 

Revel in your success, but never stop looking for areas of improvement. 

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see why over 7,000 accountants and bookkeepers use jetpack workflow. start your free 14-day trial.

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Experience workflow software that helps make sure nothing falls through the cracks. See why over 7,000 accountants and bookkeepers use Jetpack Workflow. Start your free 14-day trial.