New and inexperienced entrepreneurs are often interested in buying businesses that are relatively easy to start and manage. While it’s never truly easy to start and nurture a successful business, there are some businesses that are somewhat less complex to start than others. Starting a bookkeeping business can be relatively easy – but what exactly is this business, why is it somewhat easier to start than others, and how can you make yours successful?
Bookkeeping vs. Accounting
First, let’s talk about some of the differences between bookkeeping and accounting, as these terms are sometimes used interchangeably.
Bookkeepers and accountants both play a role in managing the finances of an organization. But bookkeeping is more focused on transactions and administrative elements, while accounting focuses more on higher-level strategic analysis of an organization’s finances.
For example, a bookkeeper will typically record and appropriately categorize daily payments and expenses associated with the business. They’ll send invoices and receive payments from clients, practice bank reconciliations, produce monthly reports and financial statements, process payroll, and provide end-of-year tax documents for review.
An accountant, by contrast, will typically adjust entries, analyze costs, make financial decisions on behalf of the business, provide advice to decision-makers, review and audit the financial department, and formally file tax returns.
One of the reasons why starting a bookkeeping business is easier than starting an accounting business is that it requires less knowledge and experience.
How to Start a Bookkeeping Business
So what are the steps to starting a bookkeeping business?
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Get your education
You don’t need to be a formally certified public bookkeeper (CPB) to start a bookkeeping business, but you’re going to need at least some education or experience in this field. You don’t need to be a mathematical genius, nor do you need decades of experience to start your own bookkeeping firm, but you should be intimately familiar with whatever software platform you plan on using, you should understand the fundamentals of financial recordkeeping, and you should have at least some experience working with accountants. If you do decide to be formally certified as a CPB, you’ll likely earn more recognition and will have an easier time finding new clients.
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Choose a niche
There are many professional bookkeeping service businesses out there already, so if you want to be successful, you’re going to need to choose a niche. What types of clients are you searching for? How is your business different than others that are already on the market? How are you going to appeal to your most important target demographics?
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Write a business plan
You’ll answer these questions and many more when writing your formal business plan. Your business plan is going to be the guiding document for your entire business. So, it’s important to spend time thinking about elements like your organization’s strengths, weaknesses, threats, and opportunities.
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Get funding
Even though it’s relatively inexpensive to start a bookkeeping business, you’re still going to have some initial expenses. How are you going to pay for them? Saving up money, taking out a loan, or procuring funding from an investor are a few of your options.
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Purchase the essentials
At this point, you’ll be ready to purchase the essentials. You’ll need a computer and an internet connection, as well as bookkeeping software. You may also want to invest in a website, initial marketing and advertising, and accessories like business cards.
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Register your business
You’ll need to officially start and register your business. Depending on what type of business structure you want to pursue, this process could be very simple or somewhat complicated and time-consuming. Many bookkeepers choose to start a limited liability company (LLC) because of its simplicity and liability protection.
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Set pricing
What services are you offering and what are you charging for those services? This is one of the most important strategic decisions you’re going to make for your business since it will dictate your profitability and marketability. Try to find a balance, incentivizing customers with inexpensive pricing while still making a profit for yourself.
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Find your first client
At this point, you’ll be ready to start looking for your first client. There are many marketing and advertising strategies you can use to promote your business. You can see faster initial results through active networking.
The Bottom Line
Getting training and education as a bookkeeper doesn’t take much time. But it could equip you with all the skills you need to start a successful bookkeeping business. Starting the business is also relatively straightforward, especially when compared to other businesses. Because it doesn’t take much time, money, or effort to start building momentum. As long as you build a solid foundation and are willing to put in the work, you have a good chance to see excellent long-term results.
