Do you enjoy working with numbers, have a sharp eye for detail and find satisfaction in helping businesses thrive financially? If so, starting a bookkeeping business might just be the perfect path for you.
Consistently high demand for bookkeeping services means it has a strong earning potential. After all, many business owners are confused by IRS regulations and want help tracking their business finances. In fact, Glassdoor reports that experienced freelance bookkeepers can make up to $65,000 a year.
Whether you're looking for a part-time hustle to boost your current income or a full-time career change, this comprehensive guide shows you how to start a business from scratch.
Let’s dive in.
What are the roles of a bookkeeper?
Accurate and organized record-keeping of an organization's finances is essential to its health and stability. Bookkeepers are the unsung heroes who balance the books and keep the IRS at bay. They handle the day-to-day financial tasks that keep all types of businesses running smoothly.
Bookkeeper core responsibilities include:
Recording financial transactions: Bookkeepers are in charge of maintaining records of all financial transactions for the business, including sales, purchases and payments.
Managing accounts receivable and accounts payable: Bookkeepers also track who owes the business money (accounts receivable) and who the business owes money to (accounts payable). They make sure that appropriate invoices are issued or paid in a timely manner.
Preparing bank reconciliations: Bookkeepers regularly compare business bank account statements as well as business credit card statements with internal financial records to make sure everything matches up and resolve any discrepancies.
Preparing monthly, quarterly and yearly financial statements: Bookkeepers help prepare important financial statements that summarize a company’s financial status, including profit and loss, balance sheets and cash flow. A certified public accountant (CPA) may finalize these statements based on the information the bookkeeper provides.
Ensuring compliance with current legislation: Bookkeepers monitor changes in tax laws and legislation to ensure the business remains compliant.
Payroll processing: Bookkeepers often handle payroll tasks, such as calculating employee salaries and deductions, generating paychecks and filing payroll taxes.
Preparing tax returns: In some organizations, bookkeepers are in charge of preparing business tax returns.
How to start a bookkeeping business in 8 steps
To set yourself up for success, follow these steps to start your bookkeeping business:
01. Develop a business plan
Start by turning your initial concept or idea into a written plan of action called a business plan. Think of it as a roadmap or blueprint for your business, detailing your vision and goals and the strategies you’ll use to achieve them. It can also detail how you plan to raise money for your business.
If you’re not seeking external funding like a business loan, the business plan doesn’t need to be overly detailed. In fact, you can start with a lean plan that covers just a few key elements, such as:
Your business name
Business mission and goals
Target market and customers
Services offered
Primary competitors (including their strengths and weaknesses)
Marketing strategy or plan
Business financial reporting system
Creating a business plan will give your bookkeeping business a clear direction and increase your chances of success in a competitive marketplace.
Never created a business plan before? Don’t fret—numerous websites, including Wix, offer free business plan templates or samples that you can use to get started.
If there’s room in your budget, you could also hire a professional to create a business plan for you from scratch.
Learn more: How to create a bookkeeping business plan
02. Choose a business entity
The next step is to choose your business entity, that is, the legal structure for your business.
There are four main options in the US:
Sole proprietorships and partnerships are usually the easiest and most affordable entities to set up and run, making them a good starting point for many new businesses. As your bookkeeping firm grows and you add employees, you can think about transitioning to a different type of business entity, like an LLC or corporation.
Keep in mind that your business structure will have a big impact on your day-to-day operations, taxes and personal liability if something goes wrong, so choose wisely.
03. Obtain necessary skills and certifications
Even if you have formal education or experience in accounting or another related discipline, consider investing in additional bookkeeping courses and certifications such as QuickBooks ProAdvisor and Certified Bookkeeper from the American Institute of Professional Bookkeepers (AIPB).
In addition to enhancing your skills and know-how, certifications help you stand out from the competition and attract more customers. Bookkeeping certifications can also make it easier to get licensed and insured.
Protecting yourself and your business for the day things don’t go well is where business insurance comes in.
First, you’ll want to invest in professional liability insurance. This safeguards your business financially in case someone claims negligence, errors or omissions in your bookkeeping services.
Other types of insurance many businesses find helpful include:
General liability insurance
Workers compensation insurance (if you’re hiring employees)
Business property insurance
Cyber insurance
04. Set up your office and accounting systems
Bookkeeping has come a long way. Gone are the days when almost everything was done manually on paper.
Today, powerful, user-friendly bookkeeping and accounting software like QuickBooks Online, FreshBooks and Xero simplify and streamline recording and organizing financial data.
These tools simplify tasks like recording transactions, invoicing, tracking business expenses, bank reconciliation and generating reports. Research their features and pricing to find the best option for your needs.
While bookkeeping is the service you’ll provide, you’ll also need tools beyond bookkeeping and accounting apps and software to manage other parts of your business. Research other tools to streamline your workflow.
Popular business tools include:
Project management tools like Trello, Asana and Monday.com can help you manage tasks, set deadlines and track progress on clients’ projects.
Time management tools like Toggl and Timely help track the time spent on each project, which is especially important when billing clients by the hour.
05. Define your target market
The next step in starting a bookkeeping business is to define your customers. Honing in on a specific target audience enables you to tailor your services and messaging to their needs, making your business more attractive so you can find that first client and beyond.
Here are some ways to find your target market:
Industry focus: Consider catering to a specific industry, such as small businesses, startups or freelancers. These groups often lack the time and resources to hire and manage in-house bookkeeping, making them ideal clients.
Niche markets: Another option is targeting niche sectors with specialized bookkeeping needs. Doctor’s offices, eCommerce businesses and hospitality businesses like hotels and restaurants are great examples of niche sectors.
Software expertise: Do you have in-depth knowledge of a particular bookkeeping software? You can leverage that expertise to target businesses already using that software.
Once you've identified a potential target market, take time to create client personas. These detailed profiles outline your ideal clients’ interests, needs, pain points and how your services add value or help them reach their goals.
These client personas will help guide your marketing strategy so that your messages resonate better with prospective clients.
06. Set pricing and payment terms
Now it’s time to decide how you’ll charge for your bookkeeping services.
When setting your rates, consider your experience, prevailing rates in your industry or niche, the type of services you offer, your startup costs and projected operating expenses and your desired income level.
The most common pricing models are:
Hourly rate: This is a straightforward approach where you charge bookkeeping clients an hourly rate for your time. According to Salary.com, the average hourly charge for bookkeepers is $19–$24 per hour. This pricing model is ideal for clients with fluctuating bookkeeping needs.
Monthly retainer: This option charges a fixed monthly fee for a predetermined set of bookkeeping services. A monthly retainer provides a predictable income for your business and gives your clients a clear picture of their ongoing bookkeeping costs.
Per-transaction: Charging a set fee for each transaction you process (e.g., an invoice or bill payment) gives clients a clear picture of costs. A per-transaction model works well if you primarily serve clients with a high volume of simple transactions.
Next, outline your payment terms in a written agreement or contract. This includes your preferred payment method, invoice due dates and late payment penalties where applicable. It's a good idea to have a lawyer look over the contract to make sure it is airtight.
Contracts help ensure you and your clients are on the same page and reduce the likelihood of misunderstandings down the road.
07. Register your business and launch your brand
You’re almost ready to open the doors.
Start by selecting a unique and professional name that reflects your services and is easy to remember.
If you’re struggling to name your business, the Wix business name generator can help.
Before making a final decision, search for the name on the United States Patent and Trademark Office (USPTO) database to confirm another business hasn’t already trademarked it.
Name in hand, file the necessary paperwork with local, state and federal governments. The specific requirements vary by business entity and state.
For example, as a sole proprietor, you might not need to register officially with your state to start your business. However, other requirements, like obtaining business licenses and permits, might be required. Check the requirements for your specific location to confirm what paperwork and permits are needed.
Secure a matching domain name once you’ve settled on your perfect business name and then create a website.
A website is a valuable tool for showcasing your services and expertise, and Wix can help you build a functional and professional website quickly and easily with hundreds of templates to choose from. You can even add an appointment scheduler.
Check out these bookkeeping websites built with Wix for inspiration:
08. Market your bookkeeping business
Once you’re open for business, you’ll need to spread the word. Marketing your services helps build a steady stream of new clients.
Common marketing strategies include:
Listing on online directories: List your bookkeeping business in relevant online directories like Google My Business, Yelp and Bing Places. This increases your online visibility and helps prospective clients find you when searching for bookkeeping services in your area.
Targeted advertising: If your budget allows it, use online advertising platforms like Google Ads or social media ads to target your ideal clients. These platforms allow you to narrow down your target audience by location, industry and business size, maximizing your ads' effectiveness.
Content marketing: Establish yourself as an expert or authority figure in the bookkeeping industry by creating and sharing helpful content like blog posts and videos that offer useful tips and advice about bookkeeping.
Networking: Attend local business events, join professional bookkeeping associations (e.g., the National Association of Certified Public Bookkeepers (NACPB)), and participate in online industry forums. Building relationships with other bookkeeping professionals and businesses strengthens your credibility and opens doors to referrals. Don’t forget to take business cards with you.
Strategic partnerships: Seek out and try to connect with similar service providers like accountants, tax advisors or business consultants. Create referral partnerships with them so you can refer clients to each other.
Social media marketing: Maintain an active presence on social platforms like LinkedIn, Facebook and X. Share informative content, engage with your audience and join relevant groups to increase brand awareness.
Local advertising: Advertise in local business directories, newspapers and community boards to increase your visibility within your local community.
Customer referrals: Encourage satisfied clients to refer your services to others. Offer incentives, like discounts or free services, to motivate clients to spread the word.
Examples of successful bookkeeping businesses to inspire you
These bookkeeping websites built on Wix effectively showcase their expertise, catalog of services, years of experience and more:
Axsom Accounting has more than 20 years of experience in the field. Founder Jennifer Axsom has specialty experience in fraud accounting, reconciliation, auditing and internal controls in addition to general accounting. Her Wix website features a bio, examples of service packages and a simple contact form for customers.
Abacus Professional’s team has more than 40 years of collective experience in accounting, specifically serving business accounting needs. Led by Christine Wilson, Certified Public Accountant (CPA), the firm offers comprehensive packages for its business clients that range from general bookkeeping to more advanced tax filing, credit management and consulting services.
For more inspiration, you can check out these service business examples to help you get your creative juices flowing.
Looking to start a bookkeeping business in a specific state?
You can start a bookkeeping business in any state but licensing and registration requirements can vary from one place to another. As such, it’s important to check with your local or state government for any specific licensing or registration requirements applicable to bookkeeping business in your area.
Here are some useful resources for starting a business in different states:
Other service business ideas you might be interested in
How to start a bookkeeping business FAQ
How is a bookkeeper different from an accountant?
Bookkeepers focus on the day-to-day aspects of a business's finances like recording income and expenses, compiling basic financial statements and processing accounts payable and receivable. Conversely, an accountant analyzes the financial information recorded by bookkeepers to offer insights and strategies for improving business operations.