How To Start a Bookkeeping Business in 2022

Bookkeeping is a necessary task for businesses of all sizes. But it can be time-consuming and confusing for business owners who are not accounting experts. So if you're thinking about starting a bookkeeping business in 2022, here are the steps you need to take.

First, make sure you have the right qualifications and experience. Next, create a business plan and find financing. Finally, market your services and grow your business. You can create a successful bookkeeping business that helps businesses manage their finances effectively by following these steps.

If you're looking for a way to start your own business, bookkeeping might be the perfect option. It's a growing industry, and there's a lot of potential for success.

Do you have a passion for bookkeeping? Are you looking for a way to start your own business? If so, you're in luck! Starting a bookkeeping business in 2022 can be a great way to achieve your financial and personal goals.

This article will discuss some of you need to know about starting a successful bookkeeping business. We'll also provide several tips that will help you get started. So, what are you waiting for? Read on to learn more!

Have you always been interested in bookkeeping? If so, starting a bookkeeping business in 2022 may be the right choice for you! This blog post will provide you with all the information you need to get started. In addition, we will discuss the business basics and some of the pros and cons of owning your own bookkeeping business. So, if you are ready to take the plunge into self-employment, keep reading!

Let's get started!

The Role of the Bookkeeper

A bookkeeper is an essential component of the back-end operations of any company. For instance, a firm will hire a bookkeeper to handle and organise its money. This individual will be responsible for documenting and classifying each transaction that takes place.

They make it easier for owners of small businesses to manage their cash flow, which is one of the most crucial indicators of the health of a business. With addition to this, they will frequently assist businesses in the production of important financial documents such as statements of profit and loss and balance sheets.

Bookkeepers are distinct from accountants in that they are not authorised to file tax returns or conduct audits in the same capacity as certified public accountants. Bookkeepers are not needed to have the same level of education as accountants.

In order to launch their own bookkeeping firm, people can earn credentials by participating in training programmes, but they can also gain expertise by working in the field.

The following are examples of typical bookkeeping services:

• Keeping track of the financial aspects of a company using specialised software for businesses.

• Take care of both the accounts payable and the accounts receivable.

• Give companies an overarching perspective of their financial situation so that they can better comprehend their patterns.

• Generate financial statements.

The Eleven-Step Guide to Getting Your Own Bookkeeping Business Started

The encouraging news is that acquiring the knowledge necessary to launch an accounting firm is not difficult. If you follow these instructions, you will have your bookkeeping business up and running in no time.

1. Construct a strategy

In this chapter, I will lead you through the process of building a basic strategic plan to get your full-time or part-time accounting firm business up and operating swiftly in its first year. Whether you want to work full-time or part-time, this chapter is for you.

You will begin by creating a long-term vision of what you want your own company to achieve, and then you will work backwards to determine the immediate objectives on which you should centre your attention.

When you've finished with this stage, you'll have a plan laid out for how your company should operate over its first year.

First Step: Determine Your Goals and Objectives

If you are considering opening a public accounting firm, one of the first things you should do is determine the motivation behind your decision.

This "why" is the goal of your accounting firm, and the reason for your accounting firm needs to be crystal apparent not only to you, but also to your team, and especially to your clients.

2. Choose a market and a speciality

The tasks performed by a bookkeeper can be utilised in a wide variety of fields; after all, it is necessary for any company to monitor and improve its financial standing. On the other hand, you can choose to specialise on a certain industry in order to better market your company and set it apart from the other companies in your field.

This has the potential to assist you in establishing credibility within that sector while also assisting you in honing your talents. In addition, if you have an expertise, it will be easy to zero in on the demographics of your ideal customers. Researching the market to find out what bookkeeping businesses are already established and which sectors they cover can be a useful step in narrowing down your field of expertise and helping you find your niche.

3. Create a plan for your business

Writing a business plan is something that every owner of a company, no matter what kind of company they run, should do. That obviously includes those who keep the books.

Creating a business plan requires providing a comprehensive summary of your goals and objectives for the organisation. It is a detailed document that outlines your products and services, as well as the market, as well as your edge over other companies in your industry. You are going to develop forecasts and strategies for your future expansion. However, finishing this document, which has a reputation for being somewhat lengthy, is essential. It will assist you in concentrating your efforts and getting your firm up and running more effectively right away.

There are a couple key aspects of the business plan that warrant some additional consideration.

Select a company name

Because the name of your company is going to be the first impression that potential customers get, you will want to give this a lot of serious thought. What do you want others to understand about you based on your name? Is it your area of expertise, a particular facet of your personality, or all three?

Before deciding on a name for your company, check to see whether it is being used by another company; this will prevent potential customers from becoming confused. In addition to this, you should ask a few individuals what they think of the name and consider their feedback. The next step, once you have narrowed down your options, is to check the availability of each name in the business name database maintained by your state's secretary of state.

Think about certification

As was just discussed, a certification for bookkeeping is not strictly necessary in order to operate a bookkeeping business. You should, on the other hand, give some thought to becoming a certified public bookkeeper, also known as a CPB. This demonstrates to customers that you have skills on par with those of a professional and could be an essential component of your strategy for setting yourself apart in a crowded market.

In addition, certification is offered for certain software packages; for instance, you can become certified in QuickBooks if you choose to do so.

4. Register your company and obtain insurance

After you have decided on a name for your company, the following step is to register it with the appropriate authorities and make the decision official. The specific steps you need to do will change according on the organisational structure of your company as well as the geographic location of your commercial operations. To begin, you will need to visit the website of the office of the secretary of state in your state to obtain the specific guidelines that must be followed in order to register your business.

Select a company structure

Choosing a business entity is a significant step in getting your company registered and opening a storefront for business. This will determine how you will organise your firm, how you will pay taxes as the owner of a small business, and what sort of liability protection you have available to you in the event that something goes wrong.

If you are going into business for yourself as a bookkeeper, it is highly likely that you will be doing all of the job by yourself, at least in the beginning. Therefore, you should think about beginning your search for bookkeepers by looking into sole proprietorships and limited liability companies (LLCs). If you bring in some assistance later on, the second choice can turn out to be an excellent one.

Purchase insurance

Although getting insurance for your bookkeeping firm is not required, you should nonetheless give serious consideration to doing so. If you make a mistake in the books of your clients, this can assist shield you from the financial responsibility that can result. This can be a significant blow to your company and, in certain situations, your personal finances if you are not protected. Professional liability insurance and general liability insurance are two types of business insurance policies that are common for bookkeepers.

5. Selecting a bookkeeping programme

It should come as no surprise that the bookkeeping software you choose to use will serve as the backbone of your company. You have numerous choices available to you for the best bookkeeping software; therefore, you should investigate each of them thoroughly.

Nonetheless, let's say that you are overwhelmed; however, let's say that you are overwhelmed and wish to use the most popular option. If this is the case, you might think about utilising QuickBooks Online, since it is one of the most well-known providers of accounting software on the market and is utilised by a huge number of companies of all sizes.

Xero is yet another well-liked alternative, although there are many bookkeeping programmes available for you to select from. You can also get certified in each of these applications, which can help you become a power user and help you advertise yourself as an expert. Getting certified in any of these programmes costs money.

6. Create your company's infrastructure

When you’re studying how to start a bookkeeping firm, you’ll find that there are a few important pieces of infrastructure you’ll need to kick off. Please consider the following in great detail before proceeding:

Website

Many of your customers will check out your website in order to discover more about you and your background. If you are primarily operating an online or virtual business, having a website that showcases your capabilities to customers is of utmost significance. And to make matters even better, there are a plethora of website builders available to make the process of constructing your website a snap.

Administration of a client database

You will want to be sure that you are tracking your customers in an efficient and comprehensive manner as your client list grows. You can utilise a CRM and project management application that allows you to set up your workflow if you wish to do so. You might also investigate dedicated accounting practise management software, some versions of which interface directly into accounting software like QuickBooks Online.

File-sharing

If your customers regularly send you receipts or statements, you ought to give some thought to the application that you will use to transfer and share files. Dropbox is a popular choice because it enables you to set up a shared folder that can be accessed by both you and your customers.

Business bank account

You should also make sure that you open a bank account for your business so that you can keep the financial aspects of your company distinct from your personal affairs. This is essential in order to shield oneself from personal liability and for tax purposes.

You should begin by opening a business checking account, and if your company expands, you may also decide to open a business savings account so that any monies that are left over will earn interest. It is in your best interest to do some comparison shopping before determining where you will keep your hard-earned money because both online institutions and traditional, brick-and-mortar banks provide appealing banking options.

7. Determine your market segment

After determining the raison d'être of your accounting firm, the next step is to determine, as early on as possible during your first year in business, the specific characteristics of your ideal client.

When it comes to the topic of how to establish an accounting business, one of the things that I suggest is creating a "persona" for your ideal client:

• Which industries do they operate within?
• What kinds of difficulties do they face?
• How many people do they have working for them?
• What are their total annual sales?
• What are their thoughts exactly?
• What are some things that they value?
• Etc.

You'll be able to concentrate more effectively on your marketing initiatives, which we'll cover later, if you establish a defined target client market.

8. Set a long-term objective

If you are unsure of what you want your accounting firm to become in the long run, it will be tough for you to properly prioritise choices, projects, and other activities as you get the business off the ground.

To establish a goal for the long term:

• Choose a target date. It could be five years, ten years, twenty years, or any other number of years. You get to choose the day that works best for both you and the accounting firm that you work for.

• Consider the goals that you have set for the bookkeeping business or accounting firm you own by the time the target date arrives. This need to be a challenging objective that can be measured.

It could be a metric-based goal, such as reaching $1,000,000 in revenue or providing service to 1,000 different small businesses.

Or it could be something that is less focused on numbers, such as the goal of "a world without breast cancer" set by the Susan G. Komen for the Cure organisation.

Create one of your own and include it in the strategic plan you've created.

9. Set a price for your work

The most difficult task that faces the owner of a small business is pricing their goods and services appropriately. If you charge too little, you won't be adequately reimbursed for your labour, and if you charge too much, you won't be able to compete effectively with other bookkeeping businesses.

According to PayScale, a website that monitors salaries and rates, the hourly rate for a bookkeeper is somewhere about $17, with a range anywhere from $10 to $24 per hour. You should also consider looking into freelancer and for-hire contractor sites like UpWork and Fiverr, which allow users to publish their pricing for their services. Find other bookkeepers who have expertise and talents that are comparable to your own so that you can have a better idea of how much you should charge for your services.

Keep in mind that the price that you set should be determined by the number of years of experience that you have, the industries that you specialise in, the certificates that you have, as well as the location that you operate in. In addition, your pricing is not set in stone; if you believe that it does not accurately reflect your value to customers, you are free to adjust it at any time.

10. Find your audience

The marketing of your company, no matter what kind it is, is of the utmost importance. The most astute marketers for small businesses are the ones who determine precisely who their consumers are and then advertise specifically to those individuals.

You need to come up with a distinctive selling point for your company, such as the following: For example, are you bragging about your years of experience? Which sector of the industry do you specialise in? Your emphasis on the local business community? All of this will assist you in conceiving of novel approaches to sell yourself, such as advertisements by direct mail or radio, advertisements via social media or email campaigns, or any of a variety of other marketing approaches.

Check out our in-depth guide to marketing for small businesses, which explains how to connect with customers through search engine optimisation, paid search advertising, social media, and more.

Never underestimate the value of referrals from satisfied customers, and don't be afraid to directly approach them for business.

11. Know your available funding alternatives

If you are just getting your firm off the ground, it is unlikely that you will require a significant amount of business capital. However, you can always investigate your alternatives in the future if, for example, you decide to establish a traditional office and recruit a number of workers.

For the time being, however, it is recommended that you apply for a business credit card so that you can finance your accounting firm. This will provide you with the financial ability to establish your firm and consolidate all of your business-related expenses into a single location. This is not only useful for keeping your personal and business finances separate, but it can also be of use to you when it comes time to do your bookkeeping for taxes.

If you have a few initial fees that you can't pay with savings, you can treat this card as an interest-free one-time loan by using one of the many different types of business credit cards that are available to look into, including alternatives with introductory periods of 0% introductory APR. Be certain that you have a plan in place to pay off the balance before the introductory deal expires and the variable APR kicks in.

How Poor Bookkeeping Advice Can Ruin Your Company (And What To Do Instead)

Are you the recipient of poor advise on bookkeeping?

If that's the case, don't beat yourself up over it. Everyone has at least once heard something similar to this from a loved one or even a bookkeeper who purports to be professional:

"Don't worry about it; the information that you need for your company may be found on your bank statement and credit card statement."

In case it wasn't already obvious:

This kind of guidance is absolutely horrible. Bad.

The majority of the time, it is well-meaning family members or friends. People have been known to go to the local watering hole to hear what their friends and coworkers have to say.

If you've been paying attention to this piece of advice, it's imperative that you start by forgiving yourself first. Then have mercy on those who are ignorant of other options.

After all, even if they have the best intentions, many people do not realise that the recommendations and tactics they offer regarding poor bookkeeping put your wealth at risk.

But wait—more there's poor advice on bookkeeping that you need to be aware of and steer clear of.

For instance, there is a common misconception that you can use your bank statements in place of legitimate receipts. This urban legend has also been promulgated by banks as a selling feature at their various branches. Thankfully, they were made to quit what they were doing.

And just so everything is clear, let me state it unequivocally:

It is never sufficient to substantiate your business spending with just your bank statement. If you always had proper tax invoices and tax receipts for all of the business-related expenses you incurred, it would be helpful.

You are breaking the rules if you do not have receipts and you are trying to get away with lying about it.

To reiterate, if you are guilty of adhering to this fallacy, you should begin with forgiveness. And after that, immediately alter your behaviour.

It's true that life is challenging for the majority of business owners, but the law is the law. You are ultimately the one who is responsible for your company, so even if the most difficult aspect is ignoring the unhelpful advice and incorrect ideas that are offered by loved ones, you are still the one who is in charge.

However, this does not only involve the family. Absolutely not...

Even there are tax professionals out there who are swaying honest business owners in the wrong direction.

You did read that sentence correctly.

1. The Rate At Which The Government Will Take Vengeance On Business Owners Who Break Tax Laws

You are not required to take my word for it in any way. This is what the assistant commissioner of the ATO had to say:

Even among the population of agents, there are those individuals who require additional instruction... When we come across a significant allegation that does not appear to be true, we do not hesitate to investigate it.

What about an audit? Will it be your turn next?

Here's an even more essential question:

Are your books in order? Do you put away all of your receipts and invoices somewhere safe so they won't become discoloured?

2. The Startling Reality of Improperly Storing Your Receipts

Within a few months to a year, thermal receipts lose their ability to be read by anyone. You also can't cite the fact that the receipts are fading as an excuse anymore because every new accounting software gives you the option to store them electronically (e.g. photos, scans, PDFs).

Keeping your financial records in shoeboxes is another poor option for safekeeping. Even a passable spreadsheet exposes much too much of your data to the risk of being stolen.

Each year, the Australian Taxation Office (ATO) implements a number of cutting-edge technologies and algorithms that allow for a major expansion of their investigation capabilities. If you managed to stay under the radar during the previous tax year, would you try to delay taking immediate action for the upcoming tax year?

Your response should be an emphatic "No!" in this situation.

This is why:

In 2017, the ATO was responsible for doing around 450,000 audits and reviews. These investigations led to the recovery of approximately one billion dollars and the prosecution of more than one thousand three hundred individuals. As a direct consequence of this, some individuals were required to pay fines of up to 365,000 dollars and even spent time in jail.

3. The Surefire Method to Avoid Harsh Tax Penalties and Get Some Rest

The law mandates that you maintain order in your accounting practises. But could you please explain that in more detail?

To begin, you are required to save all documents supporting your claim for a period of five years. When businesses use payroll services, they are subject to an additional legal obligation to maintain their records for a period of seven years.

There are still more specifics to go over, but hear me out:

Our customers will find that we are making this process as simple as it can possibly be. When you decide to have us take care of your bookkeeping, you will receive the following benefits:

• Receivables from customers that are handled entirely by computer. Because of this service, you will always be aware of how much money customers owe you as well as the amount of profit you have generated. Integrations that are only partially completed through unsupervised clearing accounts are contributing to the chaos.

• By rerouting emails, the bookkeeping system and the Data Engineering Crew are able to quickly identify bills that are due to be paid. This approach will normally sort out fifty percent of the bookkeeping problems you have. In addition to this, we will collaborate with your vendors to ensure that this process runs as smoothly as is humanly possible.

• For all the nitty-gritty details, we make the time-saving and intuitive app available to each and every one of our customers. You can take a picture of every receipt you get using this straightforward software, and then you can easily submit it to us with just a few touches on your mobile device. We are aware that many other businesses are coercing their customers into photographing or scanning each and every one of their invoices. However, in contrast to other firms, we provide methods that make photographing your receipts not only simple but also enjoyable.

The Bottom Line

One last thing to consider before launching a bookkeeping company is to ensure that your company expands at the same rate as the companies in your immediate area. That does not imply that you need to take on more customers; rather, you should focus on expanding your knowledge and network.

Keep your abilities current, grow the depth to which you know your chosen platforms, and make sure you're aware of any changes made to the functionality of those platforms. Attending professional events, such as conventions and gatherings for networking, is always an option for you. Don't lose sight of the fact that putting money into your company also implies putting money into yourself.