If you’re naturally organized, enjoy working with numbers, and want to help other businesses succeed by making informed financial decisions, it might just be time to look into opening your own bookkeeping business.
The Benefits of Starting a Bookkeeping Business
Deciding to become your own boss is an exciting decision, but also a tough one.
Fortunately, those who are looking to start a bookkeeping business can be reassured by the fact that this is a high demand industry in any economy. Every business needs some level of bookkeeping. Many business owners often come to realize that bookkeeping is a time-consuming and important process they don’t want to be managing on their own. That’s where you come in.
Beyond a high demand, another great benefit of starting a bookkeeping business is a high margin of profitability. Entrepreneur reports that the accounting, tax preparation, bookkeeping, and payroll services industry is one of the top 15 most profitable small business industries.
Part of what makes bookkeeping so profitable is there’s no need for expensive equipment, and depending on the size of your operation, you could easily work from your own home or a co-working space. Overall, there’s very low overhead and few barriers to entry.
Requirements for Becoming a Bookkeeper
Contrary to popular belief, there’s no specific training or education required before you can become a bookkeeper. However, if you already have a few years of experience, are a CPA, or have an accounting degree, these qualifications can certainly help you attract clients.
If you don’t have applicable experience or education and you’re looking for certifications or training to build credibility with potential clients, there are a few options available:
- Certified Public Bookkeeper (CPB). The CPB accreditation is offered through the National Association of Certified Public Bookkeepers (NACPB) and is recognized nationally. The license validates your skills in bookkeeping, accounting principles, Payroll, and QuickBooks. Obtaining the license involves a 4-part exam, verification of experience, continuing education hours, and agreeing to a professional code of conduct.
- Certified Bookkeeper (CB). The CB program is offered through the American Institute of Professional Bookkeepers. Much like the (CPB) program the certification process for the CB involves a 4-part exam, and both are nationally recognized programs
- QuickBooks Certification. Another way to show potential clients that you’re well qualified is by earning a QuickBooks Certification. Many businesses are already learning QuickBooks or need someone to help them get started. By earning a certification, you can help them make the most of the program and keep all of your client’s financial statements easily in order. To earn your certification, you can attend in-person training, practice, and then take an exam at a location near you.
Equipment and Paperwork Needed for Staring a Bookkeeping Business
As mentioned, the overhead costs of starting a booking business are relatively low because there isn’t much necessary equipment to purchase. However, there are some initial investments to make and paperwork to get in order before you start taking on clients.
6 Must-Have Tools for Starting a Bookkeeping Business
- Business Licenses As with any business, it’s important to obtain the correct state and local business license(s) before working with clients. Keep in mind; if you are a CPA, you may need to apply for a professional services license
- Business InsuranceAs a bookkeeper, it’s wise to consider purchasing professional liability insurance. This kind of insurance can cover mistakes you or an employee make or a perceived mistake when handling a client’s financial records. Many insurance providers offer professional liability policies with $1 million in coverage for less than $50 per month.
- Accounting Software One of the most valuable investments you’ll make as a bookkeeper is in your accounting software. QuickBooks Accountant software is specifically built for bookkeepers and accountants to keep track of work for multiple clients. It also allows you and your clients to send and view documents and real-time financial data safely.
- Document Collection SoftwareIf you don’t opt for an all-inclusive program like QuickBooks, it’s essential to purchase a reliable document collection software that allows your clients to send you information securely and vice versa.
- Antivirus SoftwareBecause you’ll have sensitive, private data housed on your computer, it’s a prudent decision to also invest in firewall and data protection software, as well as other cyber-security options.
- Computer and Data StorageOf course, today it’s nearly impossible to run a bookkeeping business without a computer and lots of space to store client information. There are several options, whether you store info in the cloud or on an external hard drive, but always be sure to back up your client’s data.
Funding a Bookkeeping Business
The cost of starting a bookkeeping business will all depend on how you structure your company and your services. If you want to start small, you can keep expenses extremely low by acting as your only employee and working from home. Or you may choose to hire multiple bookkeepers and rent or buy a physical office that clients can visit. Fortunately, there are funding options for whoever route you choose:
- Rollover for Business Start-ups (ROBS). Also known as 401(k) business financing, ROBS is the perfect way for future business owners to start a bookkeeping company without taking on unnecessary debt. ROBS allows you to access the money in your retirement account without paying taxes or penalties and without taking a loan, which means there are no monthly interest payments to make.
- SBA Loans. Loans from the Small Business Association (SBA) are a great option if you’re looking to start a business with more money than what’s available in your retirement account. The SBA works with banks and financial institutions, guaranteeing up to 80% of the total loan amount — encouraging banks to offer better terms to small business owners for loans up to $5 million. If you’re looking to launch a robust operation with a physical location and multiple employees, you might consider an SBA loan.
- Unsecured Loans. Also known as credit card financing, unsecured loans are a good option for those who either don’t have money in their retirement account or don’t meet the qualifications for an SBA loan. Fortunately, because the costs of starting a bookkeeping business are relatively low, unsecured loans can be a good option because for the first year there is 0% interest, though this does jump greatly in year two.
Whatever your vision is for starting a bookkeeping business, there are ways to make it happen and fast. With low barriers to entry and minimal overhead costs, there’s no reason to delay your dream of becoming your own boss.