How to Start a Small Bookkeeping Business
If you have a knack for turning a jumbled mess of invoices and receipts into financial reports that make sense and are longing to strike out on your own, then starting a small bookkeeping business may be the perfect career path for you.
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Things You'll Need
- Business plan
- Accounting software
- Office equipment
- Data backup system
- Business insurance (optional)
Instructions
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Educate yourself on the ins and outs of running a business. Spend time at your library or on the Internet researching what it takes to run a successful small business. Talk to other small-business owners and consider taking a business management or entrepreneurial class at your community college.
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Check your municipality and state regulations. Your state and local business licensing guidelines will determine if you can run your business from your home. Usually, with occupations such as bookkeeping, you will not have any problems getting permission to run your business from your home, but there may be regulations regarding client traffic in a residential area.
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Locate inexpensive office space, if you cannot legally run your business from your home. Many communities have shared office space, also known as business centers, or executive suites. Shared office centers usually provide a furnished private office with other business essentials such as receptionist or phone service, conference rooms and general office equipment shared by other companies or professionals.
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Write your business plan. You may think it unnecessary if you are planning a one-person operation and aren't seeking any type of financing, but you cannot create a successful business without a written plan. Your business plan should cover the basics: detailed description of the business; branding--name, mission statement, logo; marketing and advertising strategy; financial estimations and budgets and business goals.
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Choose the accounting software you will use. If you are already working as a bookkeeper, you may know which software program you would like to use. If not, most of the major accounting software programs have 30-day free trials that you can use to test the program's functionality before you decide which one to purchase.
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Set up your office. In addition to a computer and accounting software, you will need: filing and storage cabinets; a dedicated phone line and voice mail or answering machine; fax machine; postage supplies; quality printer; adding machine or calculator and, most importantly, the means to back up all of your data.
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Purchase business insurance. While you can put this off until you have several paying clients under your belt, it is not advisable to do so.
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Set up a separate business checking account. This is a must-have for your professional image and for your personal accounting.
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Check out the competition, then set your rates. A word of caution: If you attempt to undercut other bookkeepers and financial professionals by too steep of a margin, not only do you run the risk of being perceived as a low-budget or fly-by-night operation, but any clients you gain may balk when the inevitable happens and you need to raise your rates.
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Put together your marketing materials. Start with a simple trifold brochure that lists your services, your pricing, the benefits of doing business with you. Include your company mission statement, business cards, a sales letter that you can customize and a your website location.
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Advertise and network. When you are just starting out, the majority of your time will be spent trying to gain customers. Attend community meetings; tell your friends, family, former colleagues and neighbors; make phone calls; visit small area businesses in person; use social networking sites, newsgroups, forums and message boards; send out press releases and always keep copies of your marketing materials with you.
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Tips & Warnings
Your business plan is a document that should grow and be updated frequently.
Check the classified ads in your local paper every day and send your marketing materials to any company advertising for a part-time bookkeeper. There is a good chance they would be willing to outsource the work instead of hiring an employee.
Consider offering a free initial consultation--limited to no more than an hour--to potential clients.
Reward your clients who bring in more business. If a client sends you a prospect who purchases your services, reward your client by giving him a percentage off his next bill.
Sponsoring a local children's sports team is a great way to get your new business known within the community and build word-of-mouth advertising.
Consider joining a local business networking referral group. There is a membership fee, but it is a marketing expenditure that usually pays for itself within a few months.
Your clients will be giving you a great deal of paperwork--receipts, bank statements, invoices, bills--and you must be able to transport and store these papers securely.
If you are not well-versed in IRS regulations and filings, it would be a mistake to offer to do taxes as a part of your services--a mistake that could get both you and your clients into financial hot water.
Don't bite off more than you can chew. When you are just starting, target businesses that have five to 15 employees so that you are not overwhelmed by the enormity of the tasks required by a larger company.
