Bookkeeping Business Plan — Free Template
Create a business plan for your bookkeeping business quickly and easily using our free template in Word format.
Download NowHow to Start a Bookkeeping Business:
A step-by-step guide to starting your own bookkeeping business.
Consider getting certified as a bookkeeper.
Look into bookkeeping training or a CPA license.
While there is actually no specific training or education requirements for becoming a bookkeeper, having bookkeeping training, a CPA license, or an accounting degree can be instrumental in attracting clients.
It is useful to gain experience by working in a bookkeeping or accounting firm as this will help you to build your skills and knowledge and gain confidence in working on your own.
Get certified as a professional bookkeeper.
If you choose not to go the route of a formal CPA license or accounting degree, getting certified as a professional bookkeeper is a quick and sure way to prove your credentials, knowledge, and skills to potential clients.
Also consider getting certified in some of the leading accounting software providers, such as QuickBooks and FreshBooks.
Individuals with no formal education in bookkeeping can try the American Institute of Professional Bookkeepers Certification. It requires passing a national certification exam (a $200.00 test fee is required), 2-3 years bookkeeping experience, and a $25.00 (for AIPB members) or $60.00 (for nonmembers) registration fee.
Individuals with a bachelor's or associate's degree in accounting should try the National Association of Certified Public Bookkeepers. Certification requires the completion of an Accounting Fundamentals course and a Uniform Bookkeeper Certification Exam, as well as a $100.00 (for NACPB members) or $150.00 (for nonmembers) exam fee.
Individuals who prefer access to instructors while they learn can join online or traditional college courses. Examples include UCLA Extension's Bookkeeping Specialization and U.S. Career Institute's Bookkeeping Specialist certificate.
Individuals who want to become experts in specific accounting software should get an Accounting Software Certification. Examples include QuickBooks ProAdvisor and Xero Advisor.
Decide what type of bookkeeping business you want to open.
Consider a small bookkeeping business.
Small business bookkeepers generally work from a home office as it helps to keep startup costs down. Working from a home office can also provide you with some useful tax deductions but you will need to meet your clients in a more professional setting, such as online or at their office.
Having a dedicated office space also provides many benefits. It is a more professional environment for clients to visit and affords privacy. To keep costs down, you can look for a company that offers office space for rent or single office space rentals.
Consider a virtual bookkeeping business.
Virtual bookkeepers have the benefit of working from a home office. All you will really need to get started is a good computer and high-speed internet. Virtual bookkeepers provide their services remotely, usually through bookkeeping or accounting software.
There are many bookkeeping and accounting packages, such as QuickBooks, Xero, and FreshBooks, so you will need to research the best option for you, personally.
Software knowledge is very different from bookkeeping knowledge, so make sure you know and understand all the ins and outs of your chosen software.
Once you have your chosen accounting or bookkeeping software, start training. Research your chosen software, find training manuals, and watch tutorials. You can usually find all the training material you need in the software package's knowledge base.
Once you are comfortable with the software, get certified so that you can show your clients you have the necessary skills and credentials to effectively help them.
Join online communities and professional associations. Not only will you connect to like-minded individuals so that you won't be isolated, but you will also be able to talk to other professionals if you run into any problems or difficulties.
Write a business plan.
Consider the types of services you will offer.
You could focus on serving a niche such as real estate or you can generalize and offer a bit of everything, but be careful not to over-sell yourself. When you've identified your ideal market, you can put together a services package that can be customized to specific needs.
Examples of bookkeeping services include financial statement preparation, accounts payable management, accounts receivable management, invoice preparation, payroll services, and tracking long-term assets.
Research the market and your competition.
Think about why you want to be a bookkeeper, who you want your clients to be, how you want to provide your services, and what your end goal is. Knowing where you want to take your business will guide you in how to do your business, when to hire staff, the kind of clients you should be approaching, and how difficult it will be to get those clients.
Key features that should be present in every bookkeeper's business plan include an executive summary, a company overview, a competitor analysis, a marketing plan, start-up costs, and financial projections.
Plan your pricing strategy.
Most bookkeepers charge by the hour, others use a flat fee, and some use value pricing. As yet, there is no set or perfect way to charge for your bookkeeping services.
By the hour is the most common fee structure for bookkeepers. It is simple to quote and most clients expect it. However, it may give the impression that your time is no more valuable than any other bookkeeper's which leads clients to shop around. Also, the more efficient you get, the less you earn.
Prepaid time blocks are a combination of hourly and flat rate pricing. This fee structure is simple to quote and gives you the benefit of working off of a retainer. However, it can be hard to estimate the number of hours needed so you may end up needing to refund some of the client's money.
Value pricing is used to offer rates based on how the client values the result. It can be more profitable and may help you screen for high quality clients but it also slows down the sales cycle as you need to quantify the value of your services.
Customized flat fees are offered to fit a client's specific needs. As a pricing strategy, it is simpler than value pricing and can be more profitable than by-the-hour rates. However, it can be easy to underestimate the work involved, which leads to undercharging due to misquoting.
Packaged pricing involves selling your services in bundled packages at a fixed fee. It is usually more profitable than by-the-hour pricing, easier to adjust, and easier for the client to budget. As it focuses on results and not hours, it is easier to forecast revenue. However, clients may ask for additional services after engagement, which leads to providing additional services at no extra cost.
Most people have experience with what they earned working for a bookkeeping firm. However, it is not a good comparison for the value you will provide as an independent contractor.
See what professionals who have been in the business for years are charging to give you an idea of what professional fees generally look like.
Take your own knowledge, experience, and qualifications, as well as your target clients' budgets, into account when setting your fees.
Bookkeepers have been moving away from traditional by-the-hour rates and moving towards flat fees. To get you started in pricing, take a look at surveys, such as Mark Wickersham's benchmarking pricing study. Another good resource for billing advice is the American Institute of Professional Bookkeepers.
Incorporate your business.
Select a business name.
The name of your business will convey your brand, so you want it to say exactly what it is you do. Aim for clarity when naming your business and use a term with an established brand, such as the name of the city you are located in.
Compare your name to competitors' names to see if it stands out.
Ask family and friends for input and try out your name on some potential clients to see what they think.
Once you have selected your name, do a quick Google search to make sure no one else has that name.
Consider trademarking your name in case you want to expand your business in the future.
Select a business structure.
You will need to select a business structure for tax purposes and to limit your personal liability if your company is sued for any reason.
The four main types of business structures are sole proprietorships, partnerships, limited liability companies (LLCs), and corporations. LLCs are the most common choice for small businesses as it offers more protection to the business owner than a sole proprietorship.
Register with your state.
You will need to register your business structure with your state, which requires registration forms and fees applicable to each state.
If you decide to register as an LLC, you will then need to appoint a registered agent to work with the government on your behalf.
Get an employee identification number (EIN).
An employee identification number (EIN) is a 9-digit number obtained from the IRS and used for identifying a business on tax forms, for employee payroll, and at some banks when opening a business account.
Familiarize yourself with federal income tax, your state's tax, and any local tax requirements. Any taxes and fees your business will need to pay will depend on the business structure you registered and your location.
Get your business licenses and permits.
Any business licenses and permits needed to operate your business will depend on your location. It is very important that you check all state, county, and local requirements to legally run your business. This includes business licenses and home occupation permits.
Research any business compliance requirements, such as paying taxes on time, submitting annual reports, and renewing your business licenses. Consider investing in a business calendar to keep track of all your due dates.
Consider drafting a bookkeeping services agreement.
A bookkeeping services agreement is a document detailing your and your client's names and addresses, the start date and duration of your agreement, the services you will and will not provide, payment for your services, billing terms, dispute resolution, and (if necessary) a confidentiality agreement.
When signed by both you and your client, this agreement will protect you against any liabilities.
Set up your bookkeeping business operations.
Invest in business insurance.
There are certain liability insurances that are important for bookkeepers to get, in case you make a mistake on your client's books. Bookkeeper insurance typically starts with professional liability insurance and can cost between $500 to $1,000 a year. Be sure to check for any state, county, and federal business insurance requirements.
Professional liability insurance protects against allegations of negligence and is important because the main exposure bookkeepers face is an accusation of causing a client financial loss.
Some excellent insurance providers for bookkeepers, accountants, and CPAs include The Hartford, Hiscox, and Travelers.
Professional Liability Insurance covers you for third-party claims of financial damages caused by negligence. It typically costs $600 - $2,500 per year.
Commercial General Liability Insurance covers third-party claims for bodily injury, property damage, or personal and advertising injury. It typically costs $450 - $1,500 per year.
Workers' Compensation covers employees' claims for work-related injuries. It typically costs $350 - $1,500 per year.
Commercial Property Insurance covers damages to business properties, such as buildings and equipment. It typically costs $550 - $1,500 per year.
Cyber Liability Insurance covers you for losses resulting from cyber attacks or data breaches. It typically costs $1,000 - $7,500 per year.
Employment Practices Liability Insurance covers employment-related claims such as wrongful termination, sexual harassment, and discrimination. It typically costs $800 - $4,500 per year.
Commercial Umbrella Insurance offers coverage extensions on certain underlying liability insurance policies. It typically costs $500 - $1,500 per year.
Open a business bank account.
It is important to separate your personal finances from your business finances to support your limited liability status and protect your personal finances. Check with your bank to see what you will need to start a business checking account.
Building a relationship with your banker is also a good way to establish a referral source for new clients.
Set up an answering service.
When you own and operate your own business, it can be hard to get back to clients in a timely manner, especially during tax season. Simply sending your clients to voicemail when they need you may cost you new business in the long run. Consider investing in an answering service that will connect your customers to live customer service agents 24/7.
Get a business mailing address.
If you plan to work from home, you will need to establish a physical as well as a virtual business mailing address so you can control who has access to your personal address.
You can rent a PO Box from your local post office, but registered agents do not allow you to list a PO Box. It can also come across negatively to customers that you don't have your own office space, which may cause them to question the legitimacy of your business.
Consider renting a UPS mailbox instead, as the UPS Store will give you a real physical address to use.
Set up your own domain name so that you will have a professional email address. For example, you can use GoDaddy to get a personalized domain name for as little as $5.99 per month, then you can use G Suite to set up your own email address.
Invest in accounting tools.
Get the right accounting software for your needs.
Good accounting software will help you and your clients to send and view documents and real-time financial data at the same time, reducing the need for face-to-face meetings. It is one of the most valuable investments you will make as a bookkeeper, particularly if you are planning to start a virtual bookkeeping business.
The right software makes it easier to manage your business and provide the best service to your clients. Also, when you start building your customer base, you will need a lot of space to store client data. You can store data on the cloud or on an external hard drive, but always be sure to back up your clients' data.
Common software tools for bookkeepers include bookkeeping or accounting software, payroll software, tax software, practice management software, e-file sharing or management software, and antivirus software.
Shop around for the best options and also look at the software provider's partners. They may help you to grow your business in the future.
Get funding, if necessary.
Work out your start-up costs and see if you need funding.
Start-up costs for your bookkeeping business will depend on whether you are thinking of starting a traditional brick-and-mortar business or a virtual business. However, both types of businesses require some administrative and legal costs, such as licenses, permits, marketing, and utilities.
If you are starting a virtual bookkeeping business, you can keep your costs pretty low by working out of your office and by working as your only employee.
Working as your own employee will also keep costs down for a brick-and-mortar business, although you will then have the costs of office rent to consider.
Get funding from a business credit card.
Credit card financing is a type of unsecured loan that is a good starting point for those who may not qualify for a small business loan. A business credit card is a great financial tool for managing cash flow and expenses, floating working capital expenses, and earning rewards.
Keep an eye on the interest as, while it is mostly set at 0% for the first year, it can jump in the second.
Apply for a small business startup loan.
Small business startup loans help new businesses to gain access to capital for any startup needs, such as equipment, property, or other assets.
Set up your bookkeeping office space.
Set up a separate, private home office if working from home.
Your office space should be private and free from distractions so, if you are setting up a home office, you should have a separate, private entrance and space for meeting clients.
Setting up a home office will mean that you can keep your initial costs low and you can claim home office expenses as a tax deduction.
You will want a large enough space to comfortably meet with clients, unless you plan on meeting your clients virtually, at a coffee shop, or at their office.
Basic office supplies include a desk and chairs, bookkeeping software, filing cabinets or shelves as well as virtual storage space, a good computer and printer, a business telephone line with professional voicemail, a set up for coffee and tea, folders and stationary, and bookkeeping resources, such as guides.
Rent a virtual office space.
If your home cannot work as an office space and you don't yet have the means to rent physical office space, you can consider renting virtual office space. It is a remote working solution that provides the benefits of a physical office space but at a lower monthly rate.
With a virtual office space, you will have access to a physical address and/or phone number for your business, envelope opening and scanning, call answering and forwarding by a live receptionist, access to a physical office space as well as rented conference rooms, business services such as high-speed WiFi, printing, fax, and basic catering at the physical office, and occasional networking and social events.
Market your bookkeeping business.
Invest in a customized website.
Contact a company like CPA Site Solutions that will customize a website with your business logo, images, and content and offer you specialized marketing services.
A dedicated website for your business can help you to increase revenue, improve client loyalty, and drive awareness of your brand.
Make sure your site is clean, simple, and easy to navigate. You should include a professional photograph, your business statement, your areas of expertise, and positive reviews from existing clients.
Use search engine optimization (SEO) to make sure your website places high in a Google search.
Establish professional social media accounts.
Social media is a quick and easy way to get your business noticed. Make sure you use the same social media handle for all your accounts to make it easier for clients to find you.
You can use your social media accounts as well as a blog to craft well-written posts that show your knowledge and expertise. These posts also grab clients' attention and loyalty as they will be grateful for the tips and advice.
Consider sending out a regular newsletter.
A newsletter can be used to build your client base and improve client loyalty by sending updates, discounts, and blog snippets to your clients.
Consider making YouTube videos or podcasts. Nowadays, people don't always have time to read through long posts, so being able to listen to industry news while doing something else, like driving, is a bonus.
Engage in networking opportunities.
There are several different ways to network and gain contacts. You could join the Small Business Development Center as a business advisor, offer your services as a adjunct instructor, sign up with bookkeeper freelancer websites, or join local meetup groups.
Also consider advertising on crowdsourcing platforms, such as Upwork. You will be able to sign up for short-term projects, full-time work, or recurring projects.
Establish a client referral program.
Client referral programs work by offering your existing clients a bonus or reward for referring you to their contacts. These programs have the additional bonus of improving client loyalty.
Use traditional marketing.
Don't forget the more traditional marketing methods, such as posting advertisements in newspapers, handing out business cards, asking friends and family for referrals, and having a great elevator pitch.
Stay on top of bookkeeping industry trends.
Join one or more professional bookkeeping associations.
There are many benefits to joining professional bookkeeping associations, such as the American Institute of Professional Bookkeepers, including a newsletter full of industry updates, access to education and training, and help from other professionals.
Sign up for bookkeeping blogs and newsletters.
Blogs and newsletters can offer valuable information on the bookkeeping industry and are a fun way to keep up-to-date.
Some interesting blogs and newsletters include The QuickBooks Blog, Xero's blog, the Journal of Accountancy, Insightly Accountant, and AIPB.
Attend bookkeeping conferences, if you can.
Taking the time to attend bookkeeping conferences will help you to continue your education and may even gain you credits towards earning your CPA certification. You will also be able to stay current with the latest industry trends and trends that are becoming obsolete.
When attending a bookkeeping conference, be sure to walk around and chat to other conference goers. You will gain contacts with other bookkeepers and accountants.
Best Books to Read Before Starting a Business:
- "Bookkeeping Essentials: How to Succeed as a Bookkeeper" — Steven M. Bragg.
- "Bookkeeping the Easy Way" — Wallace W. Kravitz.
- "Keeping the Books: Basic Recordkeeping and Accounting for Small Business" — Linda Pinson.
- "Bookkeeping Made Simple: A Practical, Easy-To-Use Guide to the Basics of Financial Management" — David A. Flannery.
- "Full Charge Bookkeeping, Home Study Course Edition" — Nick J. DeCandia, CPA.
- "How to Win Friends and Influence People" — Dale Carnegie.
- "The E Myth Revisited: Why Most Small Businesses Don't Work and What To Do About It" — Michael E. Gerber.
- "Secrets to Starting and Running Your Own Bookkeeping Business: Freelance Bookkeeping at Home"— Sylvia Jaumann.
Advice from Bookkeeping Professionals:
Don - AIPB | "Getting certified shows a level of competency in bookkeeping. Very recent knowledge and competency. If that doesn't help you gain new clients I don't know what would, other than completing a 2 to 4-year college degree with a major in accounting. And that is too time-consuming and expensive, and not necessary." |
Cathy Iconis, CPA - QBOchat | "I charge a flat fee, but it is based on how much time I expect my engagement to take monthly times what I want my hourly rate to be. I understand that the actual rate will fluctuate each month, but it gives me an expectation to compare to." |
Ben Robinson, CPA - Founder of Bookkeepers.com | “A lot of - actually most - business owners struggle with keeping accurate and up-to-date bookkeeping records. What I soon discovered is that great bookkeepers are hard to find. And, when I did find a great bookkeeper who owned their own business, they were buried with clients and had a waiting list of business owners who wanted their books done.” |
Ben Robinson, CPA - Founder of Bookkeepers.com | “Follow a proven system. Don't try and blaze your own trail. There are systems out there that work. Find one that is a good fit for you and stick to it.” |
