Accounting and bookkeeping continue to be one of the most profitable industries for small businesses in the US. If you already have an in-depth knowledge of bookkeeping and/or years of experience in the industry, the idea of starting your own business can be very attractive.
But, once you set out on your own, you’re no longer just an accountant or bookkeeper. You’re an entrepreneur and a business owner.
Which means, in order to be successful, you need to handle more than just client’s books. You also need to manage every aspect of a business from marketing to invoicing and filing your own business taxes.
Here’s how to set up your own accounting or bookkeeping business for success in six simple steps.
Table of Contents
1. Create a Business Plan
Even if you’re considering starting a bookkeeping business as a side gig, it’s important to start with a business plan. Not only is a business plan critical for requesting outside funding, such as a bank loan, but going through the creation process ensures that you’ve thought everything out.
A formal business plan typically includes the following sections:
- An overview of the industry. This includes the size of your industry and market pool. For instance, are you planning on offering your services locally, throughout your State, the entire US, or even globally?
- A market analysis. In this section, you should detail your target market. Are you aiming to serve individuals, small companies, or large businesses? Are you targeting students or seniors? Try to include as much geographic and demographic information as you can. This will help when it comes time to market your business.
- Competitive analysis. Who are your competitors? What advantages, strengths, and weaknesses do they each have? Where do you see opportunities? What or who are going to be the largest threats to your own business?
- Sales and marketing plan. This is where you need to detail your service offerings and your price points. You should also outline how you plan to advertise your business and any plans you have for drawing in new clients.
- Management plan. Your management plan will outline how you’re going to manage your business. If you plan to have other people working for you, will they be employees or subcontractors? What is your planned organizational structure? If you’re starting a business with a partner, this section would also outline who is responsible for what.
- Operating plan. This section details how and where you will operate your business from. Will your business be in-person, online, or both? Will you have a home office, or rent out space? What are your planned days and hours of operation?
- Financial plan. This section will outline your expected business costs, projected revenue, and any funding you believe you need in order to start up. If you’re presenting this to potential lenders, you should draft a projected balance sheet, a projected income statement, and a projected cash flow statement.
If you’re not planning on requesting funding, don’t get too hung up on the business plan. It’s more important to focus on just completing what you can, rather than getting overwhelmed and deciding to skip the whole process.
Remember, everything you write down will help create a stronger foundation for your new business. And you can always go back and add or change things later, as needed.
2. Select Your Structure
When you start up a new business, there are four common structures that you can choose to adopt:
- Sole proprietorship
- Partnership
- Limited liability company (LLC)
- Corporation
Each structure has its own advantages, disadvantages, and costs associated. The structure you choose will also determine your potential personal liability if the company ends up being sued. It can also impact the amount of taxes you have to pay and your ability to raise funds for the business.
Every business and every business owner is different, so while one bookkeeping company may be a sole proprietorship, another may be a corporation.
To determine the right structure for your business, it’s important to take some time to understand your options and consider how you want to structure your business. You may also wish to consult a lawyer to help determine which type is best for you and how you can go about setting it up.
3. Get Certified
As a new business owner, you will need to work harder to establish trust and credibility. People who don’t know you may be reluctant to put their finances in the hands of a brand new company.
One of the best ways to overcome this hesitancy is to ensure you have the appropriate business credentials. For instance, if you’re a CPA, then your potential clients are more likely to trust that you have the knowledge and experience necessary to take care of their books.
If you have experience or self-taught knowledge, but no credentials, you may want to get certified before you start seeking out new clients.
Here are two options for bookkeeping accreditation:
- American Institute of Professional Bookkeepers (AIPB) – To earn certification through AIPB, you must have at least 3,000 hours of relevant work experience and successfully pass a certification exam.
- National Association of Certified Public Bookkeepers (NACPB) – To become NACPB-certified, you must already have an Associate or Bachelor’s degree in Accounting, and you need to pass an exam.
4. Invest in Accounting Software
As a professional bookkeeper or accountant, you’re going to need accounting software. Not only to help you manage your clients’ accounts but also to help you track and manage your own business’ accounting.
Determining which software to select can seem overwhelming, as there are so many options to choose from. However, one of the most important things to keep in mind is that you need a flexible solution that can grow with your business.
You don’t want to fork out a lot of cash for something much larger and more complex than you currently need. But, you also don’t want to have to switch solutions every year or two as your business grows.
By choosing a solution such as a Manager, you can start out with a completely free option and upgrade as your business grows. All without the hassle of switching platforms, migrating data, or having to learn a new tool.
5. Set Up Operations
Any business comes with a host of paperwork and administrative tasks. Before you’re ready to open your doors to new clients, you’ll need to take care of the following:
- Select a business name. You’ll need to name your company before you can start advertising. If you incorporate, you’ll also need to register the company and ensure someone else hasn’t already taken that name.
- Set up an office. Before serving clients, you’ll need a location to work from. If your business is going to be online only, this may be a home office. Otherwise, you may need to rent or lease space somewhere that you can meet clients.
- Set up a separate bank account. It’s important to keep your business income and expenses separate from your personal finances. Even if you set up a sole proprietorship, having a separate account for your business makes tax time a lot easier.
- Set up your contact channels. Even with a home office, you may want a separate phone number for your business. You may also want to set up a PO Box to allow for business mail while keeping your home address private.
- Check out bookkeepers insurance. As a bookkeeper, you will need liability protection in case you ever make a mistake in one of your client’s books. Do a Google search for “bookkeeper liability insurance” and get quotes from a few companies in order to find the best rate.
- Get your supplies. You will likely need everything from printer ink and paper to business cards for your new business. Make sure you have all of your basic supplies stocked in advance. You don’t want to meet with a client only to realize you have no pens.
6. Setup A Website
Even if you’re only planning on bringing in local clients, you still need a website.
Fortunately, you can set up a free WordPress, Wix, or Weebly website. All three sites are relatively intuitive and easy to set up, even if you have no website building experience.
At a minimum, you should have a home page, an overview of your services, some information about yourself, and a contact page. Check out your competition and other well-known accounting and bookkeeping websites to get a good idea on what else to include on your site.
Although a website is critical, you need more than one way to draw in business, especially as you’re building up your reputation.
7. Market Your Business
Now that everything is set up and ready to go, all that’s left is to start bringing in clients.
Here are some marketing suggestions to help you find new clients:
- Ask friends and family members for their business and/or a referral.
- Put out a local ad in the papers, on Craigslist, or posted up around town.
- Advertise on LinkedIn and other social channels.
- Attend networking events where your ideal client might be.
- Get referrals and testimonials from clients, or past bosses and coworkers –- anyone who can testify that you’re knowledgeable, reliable, and capable.
- Do a Google search for bookkeeper freelance jobs and agencies.
- Join a local group of bookkeepers and accountants.
- Cold call or email businesses in your target market.
If you’ve started your own accounting or bookkeeping business and have any tips for aspiring business owners reading this article please let them know in the comments.
About Carson Derrow
