How To Start a Bookkeeping Business From Home

bookkeeper working at home

In this day and age, there are more options than ever when it comes to starting a business. And one of the most popular choices is working from home. If that’s something that appeals to you, and you have a knack for numbers and organization. starting your own bookkeeping business may be the perfect option. 

Starting a bookkeeping business is popular because you can work from home, and it is very flexible. You can choose to work full-time or part-time. The startup costs are also low, as you can get started with just a laptop, an internet connection, and some accounting software.

In this guide, we’ll walk you through everything you need to know about starting and running a successful bookkeeping business from home, and I’ll cover topics like setting up your business structure, choosing the right software, marketing your services, and more! 

Let’s get started!

1. Decide on a Market

I know it’s tempting to jump right in and get started, but the first thing you should do when starting a bookkeeping business from home is to take some time and decide who you want your customer to be. 

Once you have a good idea of who your target market is, you can start to narrow down the type of clients you want to work with and what services you will provide.

 – What type of businesses would you like to work with? Is your ideal client a local business or one that you will work with remotely? 

 – What size businesses do you want to work with?  Smaller companies typically need more guidance than a larger company and just getting the paperwork organized can be quite a challenge, though you are able to make a larger impact than when working for a larger company. 

 – What industry or niche do you want to specialize in? Starting out, you may want to market to all types of businesses to generate income, but if you have specific experience with a particular industry, it may be easier (and more profitable) to market your expertise. 

– What services can you provide?  Being a bookkeeper can mean offering a lot of other services in addition to entering sales and expenses. Bookkeepers can offer payroll processing, bank reconciliation, mailing invoices and processing accounts receivable, overseeing accounts payable, preparing financial statements such as income statements, cash flow statements, and balance sheets, preparing tax returns, and more. Recording financial transactions for small businesses tend to be the lowest paid service that a bookkeeper can do, so by offering some higher profit services, your income can be much higher. 

Not only will narrowing in on your target market will help focus your marketing efforts, but it will also prevent you from wasting time going after clients that you aren’t equipped to help or who aren’t a good fit for your business.

2. Write a Busines Plan

No matter what type of business you decide to start, it’s always a good idea to have a business plan in place. This document will serve as your roadmap as you get started and will help keep you on track as your business grows. A bookkeeping business plan doesn’t have to be complicated or over-the-top, but it should answer some of the following questions:

  • What are your business goals? 
  • Who is your target market? 
  • How will you reach your target market? 
  • Why will companies choose your service over the competition?
  • What services will you offer, and how much will you charge?
  • How will you keep your client’s financial information secure?
  • What are some potential challenges you may face, and how will you overcome them? 
  • How many customers do you need to create the cash flow you need?

If you’re not sure where to start, there are plenty of resources and templates available online to help you get started. 

3. Get Certifications

While a bookkeeping business isn’t required to be certified, customers often look for their bookkeepers to be certified. Not only does certification build credibility and proves competence in bookkeeping, but clients are trusting their bookkeeper to keep the business’s money safe, and they want some assurance you know what you are doing. 

Organizations such as the American Institute of Professional Bookkeepers and the National Association of Certified Public Bookkeepers offer certification programs in additional to professional development. Another popular certification is as a Quickbooks Certified ProAdvisor

Certification typically requires passing an exam that tests your knowledge of bookkeeping principles and practices. The exam covers topics like accounting, tax preparation, and financial statements. Don’t worry if this is all new to you. There are plenty of training opportunities to help get you up to speed quickly. 

4. Set Up A Business Structure 

The next step is to set up your business structure. This is an important step, as it will help determine how you file your taxes and protect your personal assets if your business is sued. 

There are four main types of business structures: sole proprietorship, partnership, limited liability company (LLC), and corporation. 

The most common structure for a home-based business is either the sole proprietorship or Limited Liability Company (LLC). 

The sole proprietorship is popular because it’s the simplest option, and there’s not much paperwork to file. However, it does have some disadvantages. 

For one, you are personally liable for all debts and obligations of the business. This means that if your business is sued, your personal assets (like your home or savings account) could be at risk. 

Another downside is that it can be harder to get funding from investors or lenders because they will see you as a higher risk. 

The LLC, on the other hand, is a separate legal entity, so your personal assets are protected if the business is sued. Another advantage of the LLC is the potential to save on taxes.  

The partnership is like a sole proprietorship, except with two or more owners. Just like the sole proprietorship, if the business is sued, the owner’s personal assets are at risk. 

The corporation is another option but is often used for businesses with a larger number of owners or investors. LLCs have the liability protection as the corporation, but they are much easier to set up and manage. 

If you’re not sure which structure is right for you, it’s a good idea to speak with an attorney or accountant who can help you determine what will work best for your business. 

5. Register your business 

After getting the business structure set up, the next step is to register your business. 

Each state has different requirements, but a business license is often required, even for a home-based business. In some states, a sales tax permit may be needed, in addition to an Employer Identification Number, if you plan to have employees. 

Working from home generally has fewer requirements than one that has a storefront, but licenses need to be obtained before offering services. 

6. Get a bank account

One of the first things you need to do when you start any business is to open a business bank account and business credit card. This will help you keep your personal and business finances separate, which, as you probably already know, is important for both legal and tax purposes. 

7. Choose bookkeeping software

Now that your business is up and running, it’s time to choose the bookkeeping software you’ll use to manage your client’s books. 

Accounting is the primary tool of a bookkeeper, and this isn’t an area to skimp on. There are many options available, with popular options such as Quickbooks, Xero, FreshBooks, and others. Since you will likely have clients who prefer different accounting software programs, you will probably want to get certified and become proficient with the more popular ones.   

8. Get business insurance

The only type of insurance that is usually required is worker’s compensation insurance if you have employees, there is insurance that is recommended as a bookkeeper. Professional Liability Insurance,  also called errors and omission insurance, protects a bookkeeper in the case of a bookkeeping error that financially harms a client, and as you may guess, the cost of a financial mistake could be quite costly.

9. Price your services

Now it’s time to price your services. This is often one of the most challenging aspects of starting a bookkeeping business, as you need to find the right balance between charging too much and too little. 

There are several factors that go into pricing a bookkeeping service, such as experience, industry specialization, and the range of services you provide. While it may be tempting to price your services low to get customers, you may consider pricing what your service is worth and providing a discount to start things off. Otherwise, if you are good at bookkeeping, you will be raising prices soon, and those initial clients can get anchored to your initial price and then be upset when you charge what you were worth, to begin with. 

10. Set up your office

If you haven’t already done so, it’s time to set up your office space. If you’re working from home, this can be as simple as setting up a desk and chair in a spare bedroom or corner of the living room. 

Optimally, having a dedicated space is best so you can have privacy and a quiet space to talk to clients.  Especially if working with local businesses, it is important to have a space where you can secure your client’s financial records, as it can be a real mess if poor document storage causes a client’s information to be seen by others. That’s a sure way to ruin your name in the community. 

If you have the budget for it, or your home isn’t a good setup, you may want to consider renting office space. In many areas, there is office space that you can rent for a few hours a month if you need to go to a place where you can concentrate. 

Begin marketing and find clients

The final step is to market your bookkeeping business and find potential clients. Going back to our first step, and figuring out the market you want to focus on, will shape your marketing efforts. Clients can be found locally, work from home opportunities, or in freelance marketplaces like Upwork. 

With a target market firmly in place, your marketing can be done in many ways, such as creating a website, getting the word out on social media platforms like LinkedIn, Twitter, and Facebook, direct mail, or radio, handing out business cards at networking events, working with local Certified Public Accountants(CPA), or even just telling friends and family that you’re starting a bookkeeping business. 

There are several ways to market a bookkeeping business, and it may take some trial and error to get that first client. Once you’ve found a few clients, be sure to provide excellent customer service so they will continue to use your services and recommend you to others. 

With these steps, you’ll be well on your way to starting a successful bookkeeping business from home.