When you decide to start a home-based bookkeeping business, it is a good way to achieve your goals without spending a lot of money on an office.
Settling on a bookkeeping business can be both lucrative and fulfilling.
Bookkeeping is a service that can be done remotely, and there is always a need for people to help small businesses and individuals stay organized and on top of their finances.
In this blog post, we will cover all details related to how to start a home-based bookkeeping business.
Let’s dive into it.
Role of a Bookkeeper
Bookkeepers keep track of a business’s financial records, preparing accurate and up-to-date financial statements.
- tracking expenses and income (including invoices, payments received, and bills),
- bank reconciliations,
- producing Profit & Loss statements, and
- preparing BAS (Business Activity Statements).
All You Need to Know Before You Start a Home-based Bookkeeping Business
Bookkeeping is an essential form of financial management for any business.
A home-based bookkeeping business is daunting to start if you are not educated about the profession.
Here is a glimpse of the things that you need to know.
Getting Relevant Certifications
Although it is not required, becoming certified in bookkeeping will improve your professional proficiency as well as adds credibility to your name as a bookkeeper.
Various certifications are offered on the market, with different difficulty and complexity levels.
Certifications for Professionals
The National Association of Certified Public Bookkeepers (NACPB) offers certification for bookkeeping professionals.
To obtain the NACPB certification, you must pass a competency exam and complete bookkeeping, payroll, and QuickBooks Online courses.
Additionally, AIPB certification is the most widely accepted credential in the profession and gives you credibility when working with clients.
To become AIPB-certified, you must complete 3,000 hours of work experience and pass a certification exam.
Understanding the Tax Laws
You must understand your state’s tax laws and regulations if you’re offering bookkeeping services.
Many states require a specific certification or continuing education to practice this profession.
Necessary Equipment For Business
You will need a computer, office software such as Microsoft Office or QuickBooks, and equipment to perform the bookkeeping tasks.
You may also need additional items such as a printer, copier, scanner, and fax machine to help you manage your business.
Access To An Accounting Software
Bookkeepers need access to the right software to help them manage their client’s financial records.
Various software programs are available, including popular ones like Xero and Quickbooks Online.
Insurance for Unfavorable Circumstances
Errors and omissions insurance is a must for any bookkeeping business.
This kind of insurance protects you from any financial losses or damages caused by your mistakes or oversights.
Setting Up A Business Website
Having a website setup will help your bookkeeping business.
It will act as a business card.
Hence, you must create a professional-looking website to attract potential customers and showcase your services.
Make sure the website is easy to navigate, with clear tabs.
Some website builders offer domains and hosting as well.
Access To Phone and Internet Services
Having phone and internet services is necessary for running a bookkeeping business.
You will need a reliable landline, a mobile phone, and access to the internet.
Register Your Business
When starting a bookkeeping business, it is important to register with the appropriate state and federal agencies.
It includes registering for necessary tax identification numbers, such as an Employer Identification Number (EIN) or a Sales Tax Permit.
Setting Up An Emergency Fund
Creating an emergency fund should be a priority.
You should set aside money so you can access it quickly and easily in case of an unanticipated expense.
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Steps for Starting a Home-Based Home Based Bookkeeping Business
You can operate and start your own home-based bookkeeping business by taking the following steps:
Step 1: Identify your Target Market
Most bookkeepers work with small to medium-sized businesses, so you’ll need to figure out what kind of market and niche best fits your skills.
Step 2: Business Plan
A well-written and comprehensive business plan is a must for any home-based bookkeeping business.
It should have a detailed explanation of your services, your target market, how your prices work, and how you plan to grow.
Step 3: Selecting A Business Name.
You must choose a business name that both reflects the services you offer and is easy to remember.
Make sure you check that no other business has already registered the same name.
Step 4: Registering Your Bookkeeping Business.
Before starting a bookkeeping business from home, it’s important to make sure that all of the paperwork is done.
Depending on where you live, you might need to register a business name and get any licenses or permits you need.
Step 5: Insurance
Depending on where you live, there may be specific requirements for what type and how much insurance coverage your business needs.
Generally speaking, it’s important to consider liability insurance and property damage protection in case anything goes wrong with your business.
Step 6: Set Up All The Required Software
Bookkeeping requires the use of software to make your job easier.
Various options are available, from simple spreadsheets and invoicing programs to comprehensive accounting packages.
- Payroll Software
Payroll software is an essential tool for any home-based bookkeeping business.
It can help you easily manage payroll processing, tax filing, and wage calculation needs.
With the right software, you can quickly and accurately pay your employees on time.
- Practice Management Software
As a bookkeeper, it is important to ensure that you are using the right practice management software.
It will also provide features like creating reports, tracking payments, automating invoicing tasks, and providing secure backups.
It is available from both QuickBooks and Xero and is interconnected with their accounting software.
Step 7: Financial Management
If you want to start a full-time bookkeeping business, you may need some seed money.
You can do this by taking out a loan from a bank or other financial institution or raising funds from private investors.
When applying for a loan, carefully consider the terms and conditions of the loan and ensure that it is something you can afford.
Setting the Financial Credentials of the Company
One of the steps to starting a home-based bookkeeping business is getting a company credit card and business bank account.
It will allow you to track expenses, accept clients’ payments, and ensure that your finances are kept separate from your personal life.
Step 8: Focusing on the infrastructure
Once you have decided on the scope of your home-based bookkeeping business, it’s time to build your infrastructure.
Please take your time and be meticulous when setting up the following:
- Website Creation
Creating a website for your bookkeeping business is essential.
By making it easy to find you online, potential customers can learn more about what you offer and contact you directly.
- Creating and Managing Database
Creating and managing a database of clients is essential to any bookkeeping business.
It should include basic information such as name, address, contact details, account balance, billing rates, and payment terms.
- Efficient Answering Service
Invest in a professional answering service. You want to avoid a client reaching out to you and being able to get through, as this reflects poorly on your business.
You can always use an answering service like Go Answer.
- Postal Service
Register your business with the United States Postal Service.
You can use a P. O Box, or you can use an address that is linked to your home.
- File Sharing Mechanism
When it comes to home-based bookkeeping, an online file-sharing system is essential.
It will allow you and your clients to easily share files without relying on physical media or emailing large attachments.
Dropbox, Google Drive, and Microsoft OneDrive offer secure cloud storage that you can use for storing documents securely and easily.
- Daily Analysis
Once you’ve decided to start your bookkeeping business, it’s time to build the infrastructure that will be necessary for success.
You’ll need to consider what services you are offering and determine their cost and how much you will charge.
Step 9: Setting the Price of Your Services
Once you’ve established the services your home-based bookkeeping business will provide, it’s important to determine the price for each service.
It’s best to research competitors and industry standards to set a competitive rate.
Step 10: Finding Your Audience
Once you have the paperwork sorted, it’s time to start looking for customers.
One of the best places to start is by networking with other business owners.
You can do this by joining groups or associations in your line of work or attending bookkeeping and accounting events.
Step 11: Prepare Your Work Station
Bookkeeping requires a substantial amount of paperwork and organization.
Before you begin, prepare your workspace by setting up a filing system with labeled folders and easy access to supplies like printer paper, pens, pencils, calculators, and other office materials.
Step 12: Streamlining the Bookkeeping Business
One key to a successful home-based bookkeeping business is to streamline your processes.
You should be able to complete clients’ work quickly and accurately.
To do this, you must have effective systems in place for every aspect of the business.
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Some Bonus Tips:
Offer Specialized Services
Once you’ve found your niche and learned about the different bookkeeping systems, you might want to offer productized services.
Productizing your services can help you streamline processes, increase efficiency, and focus more on customer engagement instead of time-consuming administrative tasks.
Attending Conferences and Seminars
Attending bookkeeping conferences and seminars is a great way to learn new skills and stay updated with the latest technology, trends, and best practices.
Not only will you be able to network with other bookkeepers in your field, but you may also be exposed to new ideas that can help your business grow.
Following Different Digital Platforms
Following blogs and signing up for newsletters are great ways to stay on top of the latest trends in bookkeeping.
It’s important to know about new technologies, best practices, and any changes in laws or regulations that could affect your business.
Using LinkedIn Groups
A great way for home-based bookkeeping business owners to connect with potential clients, market their services, and stay up-to-date on the latest industry trends is by joining LinkedIn groups related to bookkeeping.
Working on Your Blog
Starting your blog is a great way to create a professional presence for yourself and your business as a bookkeeper.
You can use them to show off what you know about bookkeeping and accounting, share tips and tricks, or just advertise your services.
Running ads in local newspapers, an online job listing websites, and even on social media can help you get your business noticed by potential clients.
Ads don’t come cheap, but if you can afford to invest in them, they can be a great way to get your name out there quickly and efficiently.
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Starting a home-based bookkeeping business can be a great way to earn extra income while still enjoying the flexibility of working from home.
By learning the most important parts of bookkeeping, like basic accounting principles and software systems, you can help small businesses in your area in a big way.