For example, if the bookkeeper makes an error while working on the client’s books, the contract can help to limit their liability. Networking has always been a cornerstone in this industry, and joining local business organizations like the Chamber of Commerce can open many doors for you. If you plan to specialize, joining related industry organizations can be a great way to find clients as well. While this isn’t a required step, it is one to strongly consider. A business plan serves as a blueprint that helps organize your thoughts, outlines your business’s goals and how you plan to achieve them, and lay out strategies for growth.
You might also consider general liability insurance coverage to protect against a broad range of risks. And if you hire employees, you’ll also need to invest in worker’s compensation insurance. At this point, you may be thinking, “That all sounds nice, but how hard is it to actually start a bookkeeping business?
Rinse and Repeat – How to Start a Bookkeeping Business
Each client can pay you upwards of $500 depending on the service and up to $3K-$4K a month for bigger clients. Stacking clients this way is a great way to scale your bookkeeping business revenue. Never leave the practice of bookkeeping (or your business assets) to chance. No matter what system you implement, incorporate a practice of reconciliations, by comparing the numbers in your system to the source records, like bank statements, receipts, and invoices. This habit improves communication, boosts transparency with your bookkeeping team, and promotes longevity and compliance.
Bookkeepers use a chart of accounts to see all of the accounts in a company’s general ledger. In many instances, an accountant prepares the initial chart, and the bookkeeper references it while recording transactions. The information you get from your receipts should go into some kind of ledger (usually a digital option). Bookkeeping is different from accounting in that it is the critical first step in tracking all business activities. While bookkeeping provides oversight into each individual transaction (in order to catch discrepancies and correct mistakes), accounting provides a thorough analysis of these numbers.
How to start a bookkeeping business: Top tips to help you succeed
This may seem like a given because, after all, you are a virtual bookkeeper. However, it’s important when starting out to choose how to build a bookkeeping business the best software for your own accounting. One thing you should not skip is finding a great business banking account.
You’ll also need to learn some basic Search Engine Optimization (SEO) practices or hire someone to help you. Bookkeeping services also tend to be ongoing, so consider offering discounts for clients who pay by the year. For example, you can charge a monthly rate for ongoing bookkeeping help and then offer a 10% discount for bookkeeping clients who pay a year in advance. This may help you attract prospective clients, as well as provide some much-needed cash flow as you’re starting.
Preparing Basic Financial Statements
When manually doing the bookkeeping, debits are found on the left side of the ledger, and credits are found on the right side. Debits and credits should always equal each other so that the books are in balance. If you like a certain industry, you’ll probably develop the skills they value most, and you’ll learn the technologies that work best for them.
- Talk to people in your network who are also bookkeepers and ask what they are charging.
- Good preparation and documentation are critical for paying taxes (including payroll taxes) on time.
- A popular option is Dropbox, in which you can create a shared folder that both you and your clients have access to.
- These rules are called Generally Accepted Accounting Principles (GAAP).
- QuickBooks offers bookkeeping, payroll, and management software all in one, so it could be a good option if you don’t want to juggle multiple platforms.
- Despite the importance of accurate bookkeeping practices, most people don’t feel entirely confident with maintaining detailed business finances.
Ideally, you would want to get the business off the ground without spending too much money. To offset some of the costs and cash flow, you’ll need a plan for handling your business transactions and expenses. It is an essential task for business owners to keep track of expenses, payroll and profits, all this while also categorizing expenses.
Here are some of the most frequently asked questions on bookkeeping for small businesses. When you first begin the bookkeeping journey, collect everything you have that could be relevant to establishing financial history. When you keep detailed, organized records of your business transactions, tax season suddenly won’t feel like such a daunting chore. By being proactive with your bookkeeping, you’ll save your small business time when it comes to taxes.
You can also look into specific accounting practice management software, some of which integrate directly into software such as QuickBooks Online. Many clients will look for your website to find out about you and your experience. If you’re specifically running a totally virtual business, a website is extra important since it can demonstrate to clients your skills. And luckily, there are plenty of website builders to make creating your website a breeze. A bookkeeper’s work is applicable across many different types of industries — after all, every business needs to track and optimize its finances.