How to Start a Bookkeeping Business

how to start a bookkeeping and tax business

Today virtually everybody needs some professional guidance. Yet most small businesses can’t afford to hire or keep full-time bookkeepers. Your prospective clients need to know why they should hire you for bookkeeping instead of someone else.

How much can you make with a bookkeeping business?

According to the Bureau of Labor Statistics, the average bookkeeper can expect to earn $18.87 an hour, averaging around $49,000 per year.

The earning potential of bookkeepers and their businesses proves that it’s certainly a profitable area. At the end of the day, businesses will always need to record their profits, and doing this requires a bookkeeper. For example, if someone sues you, you could potentially go bankrupt and lose all your assets. While legal should not be ignored (documentation, in particular, is an area that start-ups ignore), registration costs should be kept as low as possible. If you’re entirely new to bookkeeping, there may be some further expenses involved.

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However, some of the most successful niches are the ones serving fellow professionals such as doctors, dentists, attorneys. Make sure you investigate and comply with any laws to ensure your home-based business isn’t operating illegally. That said, even if you don’t think you need one – or the website says it isn’t a requirement– most businesses are probably better off acquiring an EIN. Once you’ve selected a location and determined your goals, it’s time to consider the nuts and bolts of owning a business.

  • And they think that their accounting is being done by their tax preparer.
  • In addition, owning an accounting business typically requires a bachelors degree in accounting or finances—whereas owning a bookkeeping business does not require certification or a degree.
  • You can get a certificate by taking lessons at your own pace and passing tests.
  • Plus, there is always a need for smart people who can make connections across different business areas and find creative ways to save money.
  • So, if you are a new company, you should focus on micro-businesses .
  • You may also look to become a limited liability company and potentially even office space at the time you hire on employees, so bear those regulations and costs in mind as well.

The exact process will vary depending on how you plan on structuring your business and where you’re planning to do business. You’ll want to look up the exact rules for how to register your business with your secretary of state’s office. This may influence which products we review and write about , but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services.

Starting a Bookkeeping and Tax Business

If you’re looking to start a bookkeeping business, you’ve come to the right place. If you’re a busy small business owner with a million things to do, it’s easy to let bookkeeping fall by the wayside. The way you categorize transactions will how to start a bookkeeping business depend on your business and industry. Generally speaking, your transactions fall into five account types—assets, liabilities, equity, revenue, and expenses. Individual line items are then broken down into subcategories called accounts.

It just makes sense, because they’re already paying for their mortgage or their rent, it doesn’t cost any more to get started, and certainly there’s no specialized equipment, there’s no walk-in traffic. At some point in the growth, this will be a natural process, or a natural decision. At some point, they’ll decide I would rather do this away from home where I can lock up at night and I can go home and have my home life and my business life separate. When they get to that point, and its different for different people — they will choose to go rent a space. And as far as what type of space you choose depends upon the types of services you’re offering. In most cases, I recommend that you look at a professional office type space, it just works better. They don’t pay as much as some of the larger, more professional, more sophisticated returns, but you can do a lot of them, and that’s what they’re looking for, is the quantity.

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