online bookkeeping business plan

How To Start A Virtual Bookkeeping Business

Starting a virtual bookkeeping business isn't as hard as it looks. Use this step-by-step guide as a starting point for learning how to set up your virtual bookkeeping services business.

There are few boundaries to who can become a great virtual bookkeeper. You don’t need a college degree, or a bunch of money or business experience to get started. All you need is the drive to want to make extra income from home.

Maybe you’ve been looking around for home business ideas — and that’s why you’re here. Or maybe you want to know that the work you do matters.

Do you know what’s awesome about starting a virtual bookkeeping business?

You get to make your own schedule.

You can work with whatever type of business you want.

And of course, you can make a living working from home.

So, you want to learn how to start a virtual bookkeeping business?

In this guide, we’ll be covering everything you need to know about starting an online bookkeeping services company and more.

Let’s get started.

What is virtual bookkeeping?

Virtual bookkeeping is a way to record, store, and manage all financial transactions for a business from a remote location.

The goal is simple: track income and expenses for a company to improve profitability.

A virtual bookkeeper helps companies stay on financial track, understand their bigger financial picture, and decide where to spend money.

When people talk about virtual bookkeeping, they are usually referring to online bookkeeping services. Or an outsourced contractor that helps with monitoring individual accounts, filing taxes, and preparing financial statements , and more.

Virtual bookkeeping services help business owners focus on running their business.

Some small businesses choose to do their own bookkeeping to save on costs, while others prefer to hire bookkeeping professionals.

A virtual bookkeeper allows firms both large and small to get expert record-keeping with greater flexibility and reduced cost.

Plus, you get to balance their books from home in your underwear — ain’t nothing better than that. It’s a win-win situation.

How virtual bookkeeping works

In a nutshell, when a company hires a virtual bookkeeper, they give the bookkeeper (you!) remote access to their bookkeeping software, and financial documents.

You can log in from home and access records and documents just as if you were sitting in their office with them.

There are three main ways to work remote with clients that use cloud technology:

• Connect remotely to your client’s computer to balance the books, just like if you worked on-site.
• Work through an online cloud-based bookkeeping software (such as QuickBooks Online  or Xero ) with your own secure login.
• Use the same desktop software you’re used to, but accessed through a hosted virtual desktop .

Sounds simple — right? And it is, but you may still be asking yourself, “Well, what’s it like to run a virtual bookkeeping business? ”.

Here’s your answer:

Some clients will want you to handle all or most bookkeeping tasks; like invoicing, billing customers, or preparing payroll. You may even need to email invoice copies to a client for approval and have a signature stamp for paying invoices.

Some clients will do work at their site, like entering bills, writing checks, sending invoices, and more. In this case, you’ll be responsible for ensuring they make proper entries, reconcile accounts and bank statements, get financial documents, and more.

Virtual bookkeepers also make themselves available for discussions around budget planning, late customer payments, cash flow, and any other finance-related questions.

A virtual bookkeeper’s job will include some data entry and receipt tracking. You are responsible for categorizing expenses, indicating who and how much was paid, and keeping track of receipts. For income, you’re responsible for tracking payments and handling any invoice issues.

But your work is so much more than numbers in a spreadsheet. Bookkeepers are also responsible for drawing up to four significant financial statements:

• Balance sheets, or a summary of the clients’ financial position.
• Income statement, or a look at the clients’ income and expenses over a period of time.
• Statement of changes in equity , or a statement of retained earnings, which shows owners share capital, retained earnings, and reserves change over a period of time
• Cash flow statement, or a record of the cash and cash equivalents that enter and leave the company.

What do you need to become a virtual bookkeeper?

To become a virtual bookkeeper, you should have the same essential qualifications as an on-site bookkeeper. Plus, reliable internet and a laptop. Bookkeepers tend to be pretty good at accounting, have good math and basic computer skills.

Even if you don’t have formal training, don’t sweat it. You can choose from a bunch of certification courses or classes to learn new skills and take your business to the next level.

Benefits of virtual bookkeeping

Now, there are a lot of wonderful things about owning your own virtual bookkeeping business and working from home. The perks are real, you can :

• Set your own schedule, which means it can be as flexible as you want it to be
• Start your day whenever you want
• Wear sweatpants most days
• Challenge yourself to earn more because no one sets your salary
• Cook lunch at home
• Hang with your pets, and take breaks whenever you want

I mean, what sounds better than that? But let’s talk more about the actual benefits of virtual bookkeeping.

How many hours a week do virtual bookkeepers work?

In a typical work week as a virtual bookkeeper, you can expect to work … as much or as little as you want.

If you want to be your own  part-time employee , you can work 20 hours a week.

If you want to be a chicken with its head cut-off, you can work 50 hours a week.

Remember, this isn’t a bookkeeping job — it’s your own business. So you set the number of clients, hours, and the amount of time you want to work each week.

What kinds of clients do a virtual bookkeeper work with?

Here’s the beauty of being a remote bookkeeper; you can also work with almost any type of small business you want.

Accounting principles change country-by-country, but bookkeeping is a universal language spoken the same no matter where a client is based.

Thanks to new cloud-based technology, you have the opportunity to reach a broader audience. Receiving documents by fax, face-to-face client meetings, paper receipts — all of these are now a thing of the past.

Cloud apps also help you position yourself in a competitive market. You can take a load of some administrative tasks, update reports, and let clients see their financial data in real-time.

The benefits of being an outsource bookkeeping service

If you want to sell yourself to potential clients, you should know how valuable you are to their small business.

Bookkeepers are experts at managing the day-to-day finances of a business. They give small business owners vital information to make better financial investments down the road.

It doesn’t matter what type, industry, or size a business is — it needs accounting services and bookkeeping.

Outsourced bookkeepers like yourself can offer flexibility to adapt, see things from an outside perspective, and be more cost-effective for the company. Your client doesn’t have to pay for your time-off, health insurance, 401k, and share of payroll taxes.

But besides the boring technical stuff, you also offer a core set of working benefits that can make an immediate impact on a company’s financial health.

1. You balance books like a champ

Missing deadlines, inefficiencies, and lack of accuracy can plague on-site bookkeepers — but not you.

You put customized procedures in place for each client based on their bookkeeping needs. Your clients can expect consistency and accurate results from your bookkeeping services, and avoid:

• Hiring and training new staff ($)
• Mishandling receipts
• Forgetting to record something
• Misfiling expenses

Fast-growing businesses may also turn to you, as their bookkeeper, to manage payroll and payroll taxes too. So it’s important you make timeliness and accuracy a critical part of your business.

2. You’re more cost-effective than an in-house bookkeeper

One of the biggest benefits of virtual bookkeeping is helping companies save a ton of time and money versus hiring an in-house bookkeeper.

Think about it: reading resumes, interviewing, hiring and training, potential turnover. Some businesses may not want to take on the cost of a full-time employee who can do less work than you.

3. Fewer distractions, better data and reporting

As a bookkeeping service, you can provide companies with better and more comprehensive data. And because you work from home, you may work with fewer distractions (and stress!), which in turn makes you more efficient.

Outsourced bookkeepers can deliver reports — like profit and loss, trends, expenses, etc. — on a daily, weekly, and monthly basis.

The goal is to make clients feel confident in you, so they continue working with you in the long run.

4. You can offer your clients remote access to data

Virtual bookkeeping involves providing a way to access data for important folks in your client’s organization.

In the early days of accounting, we relied on the abacus then PC’s and floppy disks to show our work to clients.

Today, virtual bookkeepers are more strategic about using cloud-based accounting software to let stakeholders (the small business owners) see data on mobile and from any location.

That’s the key: continue to deliver convenient experiences that further your working relationship. You need a personalized approach to avoid becoming stale and losing your client’s interest.

5. Better security

As any good bookkeeper knows, one of your primary jobs is making sure your clients’ financial data is safe and secure. That means communicating with them about who should have access to information and how you prioritize security.

Are the bookkeeping and accounting records protected from fires, floods, or power outages?

Does your software have data backup? (This is automatic with online bookkeeping software like QuickBooks and Xero.)

How do you stop information from falling into the wrong hands?

It’s these types of questions your clients will have in and around data security. Your goal is to make them feel secure with leaving their most valuable company information in your hands.

Big bookkeeping business challenges

As with starting any business, working in virtual bookkeeping does have its challenges. Some you might face if you start selling online bookkeeping services include:

• Upfront costs to buy and update software may be expensive
• You need to be tech-savvy and able to troubleshoot fundamental computer problems
• There are liability issues around incomplete records, regulatory oversight, legal changes, and more.
• You must protect clients’ data in a secure and encrypted environment

How to start a virtual bookkeeping business step-by-step

Alright, we know you may be a little tired — but we promise you can get started on your virtual bookkeeping practice in eight steps.

Not as bad as you thought, right? In the steps below, we’ll dive into what each point means and why it’s essential for your bookkeeping business success.

1. Decide on funding.

Of course, you’re good with numbers. You wouldn’t do excellent bookkeeping work without it, right?

However, you still need to decide how you’ll fund your business before you get started. Choose from self-funding or taking out a bank loan.

We urge you to forgo the loan route if at all possible. A virtual bookkeeping business is one of the lowest-cost businesses in existence. And…it’s the #1 most profitable business according to Entrepreneur Magazine.

If you’re still asking, “What kind of capital do I need to start a virtual bookkeeping business?” , we’ve got an answer:

Minimally, you’ll need $1,000 to get started if you already have a laptop. This can cover a DIY website and subscription to a bookkeeping software like QuickBooks. Plans start at $20 a month.

Don’t forget to give yourself a safety net of extra cash during the beginning stretch.

2. Create a business plan.

To figure out how you’ll make money as a virtual bookkeeper, you’ll need to write a business plan.

Preparing a business plan is essential for everyone should do before they start a business.

At a minimum, your business plan should include:

• Market research about your target clients, competitors, and industry
• A look at your strengths, weaknesses, opportunities and threats
• Research about the problem you help customers solve
• How your service is a cost-effective solution to that problem
• How much money you have, your projected cash flow, and expenses, and profits (… you are a bookkeeper after all!)
• How you plan to grow your business
• Your marketing strategy

3. Business Name and Structure

Whenever you start a business, you need to decide what type of business entity to be. There are four common structures in the U.S. to choose from:

• Sole proprietorship (Schedule C)
• Partnership
• Limited Liability Company (LLC)
• Corporation

If you’re just starting out and limited on funds, you might consider a sole proprietorship. However, PROCEED WITH CAUTION and consult with an attorney before you begin your business.

Many bookkeepers (and small service-based business owners, for that matter) transition into a LLC as they grow. The business entity structure you choose determines your personal liability if your company ever gets sued, as well as your tax liability.

After you decide your business name and its structure, it’s time to register with your state.

First, you need to know what you need to be in business. Start by checking your state and local regulations. Some states may require a business license in order to file for LLC and get an EIN for your business.

One thing you should not skip is finding a great business banking account. Azlo offers a free, online business checking account that’s great for any online bookkeeping business. You can make payments, deposit checks, and schedule transfers from anywhere, and it takes a few minutes to open an account.

4. Get your hardware in order

Many virtual bookkeepers invest a little extra into their hardware. And for good reasons: A reliable laptop that uses cloud technology gives you more flexibility and a competitive advantage. Remember, you’ll be relying on this technology in your day-to-day.

Most software runs on either PC or Mac — so the type of computer you choose is personal preference.

One thing to consider is whether you want to work on a desktop or laptop. If you’re traveling the globe while offering bookkeeping services, for example, a laptop may be your better choice.

Regardless, it’s a good idea to invest in a bigger screen to reduce eye fatigue. Slamming away on an 11 or 13-inch screen all day can tire your eyes out quickly.

5. Make a website and branded email address.

Before you start to get clients, it’s a good idea to have a professional and slick website, plus a branded email address.

The goal should be an easy-to-follow site that highlights your experience and what bookkeeping services you offer.

As a potential client goes through your site, they should find it easy to contact you by email or phone.

Website builders.

Your website doesn’t have to be expensive.

Use a website builder like Squarespace to make a beautiful site fast, or, create a WordPress site to create a more customized site.

There’s a small learning curve for WordPress, but once you get the hang of it, you can turn your business site into anything you want.

Of course, if you have the budget, you can always hire a service to make one for you.

For example, you can get a customized website for your business with SavvySites . They work exclusively bookkeepers, and can create a site designed with your logo, images, and content.

Business email.

The more professional you look online, the more likely potential clients will want to work with you.

A business email address that uses your company domain (yourbusiness.com), and your name gives your virtual bookkeeping company a polished look. It’s a cost-effective way to show integrity and reliability.

There are many ways to get a branded email account, but here’s the easiest.

• Get your own domain name (through GoDaddy or DreamHost )
• Add it your to G-Suite account
• Pay ~$6 a month for a professional email.

Plus, G Suite gives you 30GB Cloud Storage, shared calendars, and access to G Docs, Sheets, Slides, and other office tools.

This helps you keep clients files organized, protected, and backed up on a cloud you can access from anywhere.

6. Bookkeeping service software

Outside of that, you’ll also need a decent tech stack. Start with these three necessary resources for virtual bookkeepers below:

1. Decide on a reliable bookkeeping business software.

A trustworthy software will help you stay on top of your clients’ bookkeeping and better manage the workflow. Having the right tools and support in place makes a big difference, and your clients will love you for it.

According to  Fundera , the three best software for virtual bookkeepers are:

Meeting clients with reliable, cloud-based software helps make the bookkeeping work easier.

There’s no need for a paper trail — you can log in to make sure they make proper entries, reconcile accounts and bank statements, retrieve statements, and more.

Software like QuickBooks also offer training so your client can learn how to use it and feel comfortable in their part.

2. Get a video conferencing platform.

When you conduct interviews or client meetings, you want to use a video call over text or phone call.

Why? Because face-to-face chats help humanize both parties. It also lets you get to know them better and work in a more personal, intuitive kind of way.

These three apps make online meetings easy (and they all have a free version):

• GoToMeeting

3. Get your own small business financial monitoring software.

This may seem like a given because, after all, you are a virtual bookkeeper. However, it’s important when starting out to choose the best software for your own accounting.

Payments are handled in two different ways: one, if you’re employed by the company, you’ll be paid according to their payroll cycle. Or two, as an independent contractor.

As a contractor, you’ll be responsible for invoicing for your time and receiving payment according to your policy.

There are two big names competing for your attention right now:  QuickBooks  and  Wave .

Wave is completely free and offers excellent small business features like expense tracking, contact management, invoicing, and even lending.

7. Promote your bookkeeping business

Even when you offer great virtual bookkeeping services, it might never be known if it’s not promoted. Promotion is critical to the success of your business as well as the success of your strategy in general. The more people who see your company, the more like you are to sell.

As a virtual bookkeeper, there are a few tactics you can use to spread the word about your business:

• Advertise with Facebook ads
• Join online forums
• Get published on guest blogging sites
• Start a client referral program
• Create business social media accounts

If you’re still asking:

“How do I find clients for my virtual bookkeeping business?” . Don’t worry, we cover all the in-depth tactics in the resources for starting a virtual bookkeeping business below.

8. Broaden your service offering

Some people get too busy to continue learning, or maybe they’re just part-time bookkeepers. To appeal to a broader audience, take classes and courses beyond simple bookkeeping services, then include them in your packages, such as financial planning and loan packages.

You can add value to your business over time, and each time you include a new offer you can also up your prices. It’s not only good for margins, but also for attracting new clients.

If you’re reading this and feel like it’s something you can do, do it. Many virtual bookkeepers start with zero experience and continue to earn up to $80/hr and more.

The market is there; small business owners and large corporations need bookkeepers. Starting your own business today may be the best thing you ever do for yourself.

Resources for starting a virtual bookkeeping business

Curious about where you should advertise your services as a virtual bookkeeper?

If you want to start a virtual bookkeeping business, one of the areas you’ll want to learn is marketing. To make sure your business gets seen and has a shot at generating leads, use these 9 promotion tactics.

1. Make a mobile-optimized website

One simple way to promote your bookkeeping work is to make your site optimized for mobile users.

Mobile users are more likely to  go to a competitor’s site  when your page loads slow.

Moreover, an optimized mobile site helps you get found on Google, plus, triggers 73% of mobile devices trigger additional action, according to research. A clean website is key to attracting the right clients.

2. Speak on podcasts

Small business owners don’t have a way to determine if you’re credible or not. A great way to show your expertise than speaking on a podcast. Active podcast listeners are  surging  in the U.S., so nows a smart time to jump on board.

To find podcasting opportunities, go to some popular industry podcasts on iTunes, see if you’re a good fit, then pitch your ideas to the host. Some great accounting podcasts to try for are:

• Accounting Play
• I Love Bookkeeping
• Accounting Best Practices
• The Xero Gravity
• The Beancounter
• ACCA Podcast
• THRIVEal Podcasts
• Cloud Stories
• College Info Geek

3. Offer free 60-minute consultations

Consultations are a relatively easy way to build rapport with potential customers, and they can often turn into paying customers. You can easily post the offer on your website and social media accounts, something you can handle on your own without hiring marketing help.

4. Get testimonials from past clients

When you promote testimonials, you show potential clients your services can make an impact on their company too. It helps you close the deal faster because they can see the positive results you’ve produced for other businesses.

Send an email or text to any past employer or clients and ask them to leave a genuine review about your freelance bookkeeping work.

5. Market on the right channels

Marketing yourself on social is a great way to gain exposure. You just have to be careful which way you go about it.

Once you know who your audience is, you can start on the channel they spend the most time on. For example, if you offer family or individual accounting, Facebook may be your best channel. If you only work with small business owners, LinkedIn may be a better fit.

If you’re going to market on social, make sure you’re profile is focused only on bookkeeping tips and information. Also, fill out all the sections in your social media bio. It helps potential customers get all the details they need from you.

6. Sign up for freelancer websites as bookkeeper

Before you pay for any advertising, visit freelancer sites that help businesses locate freelance bookkeepers and accountants. Most don’t charge you to set up a profile, but will take a small fee once you book a gig and get paid.

Some top sites to find remote freelance bookkeeping jobs are:

• Upwork for all types of bookkeeping gigs
• Flexjobs for bookkeepers who want flexible schedules
• Freelancer . com for remote accounting and bookkeeping projects
• Peopleperhour for access to global clients
• Entertainment careers for entertainment industry bookkeepers

To start finding new bookkeeping jobs, simply:

• Sign up for each job site above.
• Fill out your profile including picture, experience, skills, services, rates, etc.
• Enroll to get job alerts.

7. Get published on industry blog sites

One effective way to get your name out there is guest-posting. Simply put, it means you write original articles for popular websites in your industry.

To discover guest posting possibilities, go to your favorite industry blogs, and see whether they have information about guest-posting. Or, you can type in accounting + “guest posts” or “contribute” into Google — and see what opportunities come up.

8. Start a loyalty program.

When clients enjoy working with you, they are more likely to offer referrals for you. Referrals are the most effective marketing tool for virtual bookkeepers and accounts. People trust them more than paid Facebook ads or social posts.

To get more referrals, start a loyalty program. When a referral becomes a new client, you can thank your client with a discount on your services, gift card, or a charitable donation in their name. Getting referral doesn’t take too much time or effort, and can attract new clients to your business.

9. Advertise with Facebook ads.

One of the easiest ways to reach your exact audience is through Facebook advertising. You can promote videos, images, or offers to people by age, interest, behavior, and location — needless to say, it’s the most targeted type of advertising.

What are some good resources for starting a virtual bookkeeping business?

To help you stay up to date on all things virtual bookkeeping and accounting, we’ve compiled a shortlist of resources to help you stay up to date with what’s going on in the industry. You can find information about international and national associations, publications, blogs and more.

Blogs and newsletters.

Look, we’re not saying you have to sign up for every bookkeeping blog around, but you should subscribe to a few to say in the know. Here’s a list to check out:

• e-News subscriptions (IRS.gov)
• Journal of Accountancy
• The QuickBooks Blog
• Insightly Accountant

Look, we don’t want to toot our own horn — but if you need more help on getting started in bookkeeping, you’re in the right place.

We make it easy for you to create a life of freedom with free training, resources, and more on how to start and grow a profitable bookkeeping business — from anywhere in the world.

Over to you

Bookkeeping is quickly changing with new cloud technology and being able to work remote with clients. Virtual bookkeepers have to embrace it to give your business the edge on your competition.

Remember to focus on providing clients convenient and valuable experiences. People buy from people, not just a company.

If all this seems like a lot — take a deep breathe. Taking the effort to understand what virtual bookkeeping is and how it works will help you start an excellent business.

Here’s your action plan:

• Decide on funding
• Create a business plan
• Get necessary bookkeeping certifications
• Choose a business name and structure
• Get your hardware together
• Make a website and branded email address
• Choose your bookkeeping software
• Promote your bookkeeping business
• Learn, grow, and expand your offering

But if you need more personalized, specific advice on how to start your own virtual bookkeeping business, and make money from home, see our other resources today to get started.

Ben Robinson

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How To Start a Virtual Bookkeeping Business

There’s a real demand for bookkeeping services. So, if you’re trying to figure out how to start a virtual bookkeeping service, you’re on a lucrative path.

This isn’t much of a surprise since numerous studies have proven that practicing bookkeeping basics can increase profits and reduce expenses for a small business.

But before you start your own virtual bookkeeping business , it’s important that you understand a few things:

First, you’ll want to set the foundation for a strong business. This includes making sure your bookkeeping skills are top-notch.

Like all businesses, there are certain rules and regulations that apply to bookkeeping. If you fail to understand these, you’ll be unable to make progress in your career. It’s also important to have reasonable expectations of the salary you can expect and what licenses you need to start your business. 

So, if you want to learn everything you need to know in order to start a business offering virtual bookkeeping services, keep reading!

Step-by-Step Guide to Setting Up Your Online Bookkeeping Business

Before you delve into the world of virtual bookkeeping, it’s imperative to have a sturdy foundation.

1. Choose Your Business Structure

Selecting the appropriate business structure is a pivotal decision for your virtual bookkeeping venture. Each option carries its own set of legal and tax implications, as well as varying degrees of personal liability. Here’s a breakdown of common structures and the reasons why one might choose them for a virtual bookkeeping business:

Sole Proprietorship

• Simplicity in Setup: Ideal for those starting solo, the ease of setting up a sole proprietorship is unmatched. There’s no need for complex paperwork or fees that come with forming a corporation.
• Direct Control: You have full authority over all business decisions, which can lead to quicker, more streamlined operations.
• Tax Advantages: Profits are taxed once, directly through your personal income, avoiding the double taxation that can occur with corporations.
• Reason to Choose: Opt for a sole proprietorship if you’re testing the waters of virtual bookkeeping, keeping initial costs low, and maintaining simplicity in business operations.

Limited Liability Company (LLC)

• Personal Asset Protection: An LLC provides a legal separation between your personal assets and business liabilities, safeguarding your savings and property.
• Flexible Taxation: You can choose to be taxed as a sole proprietor, partnership, or corporation, giving you flexibility to optimize for tax savings.
• Professional Credibility: Having ‘LLC’ in your business name can enhance your professional image and may help attract more clients.
• Reason to Choose: An LLC is a smart move if you’re looking to minimize personal risk, plan to grow your business, or prefer tax flexibility.

S Corporation

• Tax Benefits: S Corps allow profits (and some losses) to be passed directly to owners’ personal income without being subject to corporate tax rates.
• Investment Opportunities: It’s easier to attract investors with an S Corp, as you can issue stock and have up to 100 shareholders.
• Employee Benefits: Owners can be treated as employees and receive salaries, along with standard employee benefits.
• Reason to Choose: If you’re planning to expand your business significantly, want to prepare for investors, or aim to optimize your salary and benefits as an owner-employee, an S Corp may be beneficial.

C Corporation

• Limited Liability: Like an LLC, a C Corp offers strong protection of personal assets.
• Growth Potential: C Corps can issue various classes of stock, which can be attractive to venture capitalists and investors.
• Perpetual Existence: A C Corp can outlive its owners, providing a clear path for business continuity.
• Reason to Choose: Choose a C Corp if you envision your bookkeeping business growing into a large entity with significant capital needs and a desire to go public.

Each structure serves different business strategies and personal preferences. For a virtual bookkeeping business, the key is to balance your current needs with your future goals, considering how much risk you’re willing to take, the level of complexity you can manage, and how you plan to evolve your business over time.

2. Create a Business Plan

A business plan is not just a document; it’s a comprehensive roadmap that guides your virtual bookkeeping business to success. It’s an essential tool that serves multiple purposes and provides numerous benefits.

Benefits of a Business Plan

• Clarity of Vision: It forces you to articulate your vision for the business and define what success looks like.
• Strategic Focus: A business plan helps you to prioritize tasks, focus on key objectives, and manage your resources effectively.
• Financial Planning: It’s crucial for understanding financial requirements, managing cash flow, and predicting profitability.
• Risk Management: By identifying potential risks and challenges, you can develop strategies to mitigate them.
• Attracting Investors: A well-crafted business plan is vital for attracting investors or securing loans from banks.

Why You Should Draft a Business Plan

• Setting Goals: It helps you set realistic and timely goals, and provides milestones to track progress.
• Understanding the Market: A business plan requires you to research the market, understand your competition, and identify your target clients.
• Operational Planning: It outlines the operational structure of your business, from client onboarding processes to service delivery.
• Marketing Strategy: Your business plan should detail how you intend to market your services and acquire clients.

What Should Be Included

• Executive Summary: An overview of your business, including your mission statement, services offered, and fundamental goals.
• Company Description: Details about your business structure, ownership, and the specific niche you plan to serve.
• Market Analysis: An in-depth look at your industry, market trends, target demographics, and competitive landscape.
• Organization and Management: How your business is structured, the roles of team members, and the legal structure of your company.
• Services Offered: A detailed description of your bookkeeping services, including any specialized services that set you apart from competitors.
• Marketing Plan: Strategies for reaching your target market, including pricing, sales, and advertising.
• Operational Plan: Day-to-day operations, the technology you’ll use, and how you’ll deliver your services.
• Financial Plan: Projections for startup costs, pricing strategy, revenue, expenses, and cash flow analysis.
• Appendices: Supporting documents, such as resumes, letters of reference, legal documents, and detailed financial forecasts.

Additional Considerations

• Adaptability: Your business plan should be a living document, adaptable as your business grows and market conditions change.
• Detail-Oriented: Be as detailed as possible in every section to ensure you’ve thought through all aspects of your business.
• Evidence-Based: Support your assumptions with data and evidence, especially in the market analysis and financial plan sections.

Creating a business plan for your virtual bookkeeping business is an investment in your future success. It’s a step that shouldn’t be rushed or taken lightly, as it lays the foundation upon which your business will be built and grow. Remember, the more thorough and detailed your business plan, the more it will benefit you in the long run.

3. Invest in Improving Your Bookkeeping Skills

To establish a thriving virtual bookkeeping business, you must cultivate a skill set that goes beyond the basics. Mastery in bookkeeping requires a blend of technical know-how, analytical thinking, and continuous learning. Here’s a detailed look at the essential skills you should aim to develop, which can be honed through top-tier bookkeeping courses like the Bookkeepers.com Launch program:

• Understand the principles of accounting, including the double-entry system, accrual and cash basis, and how to prepare financial statements.
• Grasp the nuances of debits and credits, general ledgers, and the chart of accounts.
• Gain hands-on experience with industry-standard software such as QuickBooks, Xero, and FreshBooks.
• Learn how to set up accounts, categorize transactions, reconcile bank statements, and generate reports.
• Develop an eye for detail to ensure accuracy in recording financial transactions.
• Learn to spot discrepancies and errors that could lead to financial misstatements.
• Stay informed about the latest tax laws and regulations that affect bookkeeping practices.
• Understand the requirements for different business structures and industries.
• Become adept at efficiently entering data without errors.
• Learn to organize financial data in a way that’s both accessible and secure.
• Hone the ability to communicate complex financial information in a clear and understandable manner to clients.
• Build skills in writing professional reports and correspondence.
• Cultivate the ability to analyze financial data and provide insights to clients.
• Develop critical thinking to advise on financial decisions and strategies.

Using one of the best bookkeeping courses to improve your abilities can help with getting your business off the ground. Bookkeepers is currently one of the best, and the Bookkeepers.com Launch program will walk you through setting up your business and teach you the tools to run it. Plus, you’ll gain access to a support community whenever you need some extra help.

Investing in a course like this is not just about learning the ropes; it’s about setting yourself up for long-term success. With the right skills and knowledge, you’ll be well on your way to building a bookkeeping business that’s both profitable and rewarding.

4. Choose Your Software and Tools

In the digital era, the caliber of your tools can set you apart. Investing in top-tier bookkeeping software is not just keeping pace with technology; it’s about optimizing your workflow for peak efficiency. Consider how QuickBooks Online has transformed bookkeeping, with Fundera reporting that 64% of small businesses are now powered by such accounting software.

Here’s a curated list of popular accounting software and tools that can elevate your virtual bookkeeping business:

• QuickBooks Online : A market leader, QuickBooks offers a comprehensive suite of accounting features, cloud-based access, and a user-friendly interface. It’s ideal for managing invoices, tracking expenses, and preparing for tax season.
• Xero : Known for its robust functionality and ease of use, Xero is a favorite among small to medium-sized businesses. It provides real-time financial insights, integrates with over 800 tools, and offers a mobile app for on-the-go management.
• FreshBooks : If you’re looking for software that excels in invoicing and time tracking, FreshBooks is a top contender. It’s designed for freelancers and small agencies, offering straightforward usability and excellent customer service.
• Wave : A great option for those just starting out or operating on a tight budget, Wave’s accounting software is free and includes features like income and expense tracking, invoicing, and receipt scanning.
• Sage 50cloud : For those who need advanced accounting capabilities, Sage 50cloud combines the reliability of desktop software with the flexibility of the cloud, offering features like inventory management and industry-specific solutions.
• Zoho Books : Part of the Zoho suite of services, Zoho Books is an excellent choice for those who value automation. It offers features like automatic bank feeds, collaborative client portals, and custom workflows.
• Kashoo : Simple yet powerful, Kashoo prides itself on its straightforward approach to accounting. It’s a solid choice for small businesses looking for an uncomplicated, no-frills solution.

Each of these tools comes with its own set of strengths, and the best choice for you will depend on the specific needs of your virtual bookkeeping business. Consider factors like the size of the businesses you’ll be servicing, the complexity of the bookkeeping tasks, and your own familiarity with accounting principles when making your selection.

5. Get a Business Bank Account

Establishing a business bank account is a pivotal step in laying the financial groundwork for your virtual bookkeeping business. It’s not merely a separate container for your business transactions; it’s a tool that reinforces the integrity and efficiency of your financial operations. Here’s a comprehensive guide to understanding the importance of a business bank account, setting one up, and utilizing it to its full potential:

The Importance of a Business Bank Account

• Clear Financial Demarcation: A dedicated business account ensures that your personal and business finances do not intermingle, which is crucial for accurate bookkeeping and financial analysis.
• Enhanced Credibility: Clients and vendors perceive your business as more credible and established when payments are made from a business account.
• Audit-Ready Finances: Should your business be audited, a separate bank account with well-organized records will facilitate a smoother process.
• Creditworthiness: A business bank account is often required when applying for business credit or loans, as it demonstrates financial responsibility and stability.

Setting Up Your Business Bank Account

To set up a business bank account, you’ll typically need the following:

• Identification: Personal identification, such as a driver’s license or passport, is required to verify your identity.
• Business Documentation: This includes your business license, articles of incorporation, or a DBA (Doing Business As) certificate, depending on your business structure.
• Tax Identification Number: An EIN (Employer Identification Number) for corporations and LLCs, or your SSN (Social Security Number) if you’re a sole proprietor.
• Initial Deposit: Many banks require an initial deposit to open your account, so be prepared with the necessary funds.

Choosing the Right Bank and Account Type

• Bank Selection: Consider banks that offer services beneficial to small businesses, such as low fees, high transaction limits, and robust online banking platforms.
• Account Type: Decide whether a business checking account, savings account, or both are necessary based on your operational needs and financial goals.
• Fee Structure: Understand the fee structure, including monthly maintenance fees, transaction fees, and any potential charges for additional services.

Utilizing Your Business Bank Account

• Transaction Management: Use your business account for all business-related transactions, including client payments, vendor invoices, and business expenses.
• Online Banking: Take advantage of online banking features to monitor your account activity, transfer funds, and manage payments efficiently.
• Reconciliation: Regularly reconcile your bank account with your bookkeeping records to ensure accuracy and to catch any discrepancies early.
• Financial Reporting: Use the data from your business bank account to generate financial reports that can inform business decisions and strategies.

Maintaining Your Business Bank Account

• Review Statements: Regularly review your bank statements to keep track of spending and to monitor for fraudulent activity.
• Maintain Minimum Balances: Be aware of minimum balance requirements to avoid fees and maintain a healthy account status.
• Update Information: Keep your bank informed of any changes to your business, such as address changes or changes in ownership.

In essence, your business bank account is more than just a repository for funds; it’s a reflection of your business’s financial health and operational maturity. By meticulously managing this account, you’ll set a professional tone for your bookkeeping business, streamline your financial processes, and prepare your enterprise for growth and success.

6. Get Professional Liability Insurance Business Insurance

In the meticulous world of bookkeeping, even the most diligent professionals are not immune to the risk of errors or misunderstandings. Professional liability insurance, often referred to as Errors and Omissions (E&O) insurance, is a critical safeguard for any bookkeeper. Here’s an in-depth exploration of why this insurance is essential, what it covers, and how to obtain it:

Why Professional Liability Insurance is Essential

• Risk Mitigation: Bookkeeping involves handling sensitive financial data where mistakes can lead to significant financial loss for clients. Professional liability insurance helps mitigate the risks associated with potential errors or omissions in your work.
• Client Trust: Having insurance can enhance your credibility and trustworthiness in the eyes of clients, knowing that there’s a safety net in place.
• Legal Defense: In the event of a lawsuit, professional liability insurance can cover legal defense costs, which can be financially crippling without coverage.
• Peace of Mind: Knowing you’re insured allows you to focus on your work without the constant worry of potential financial repercussions from inadvertent mistakes.

What Professional Liability Insurance Covers

• Negligence: Covers legal defense costs and settlements if you’re accused of making a mistake in your professional services.
• Defense Costs: Pays for lawyer fees, court costs, and settlements or judgments.
• Services Rendered: Covers claims related to services provided in the past and for the duration of the policy.
• Claims and Damages: Includes claims made by clients for perceived financial loss due to your services.

How to Obtain Professional Liability Insurance

• Assess Your Needs: Evaluate the level of risk associated with your bookkeeping services to determine the amount of coverage you need.
• Shop Around: Obtain quotes from multiple insurance providers to compare coverage options and premiums. Websites like Insureon or The Hartford can provide quick online quotes.
• Read the Fine Print: Understand what is and isn’t covered by the policy. Pay special attention to policy limits, deductibles, and any exclusions.
• Consult with a Professional: Consider speaking with an insurance agent or broker who specializes in business insurance for professional services. They can provide personalized advice based on your specific business needs.
• Regular Reviews: Your insurance needs may change as your business grows. Regularly review and update your coverage to ensure it remains adequate.

Implementing Professional Liability Insurance

• Communicate with Clients: Let clients know that you have professional liability insurance. It can be a selling point for your services and provides reassurance of your professionalism.
• Keep Records: Maintain thorough records of all your work and communications with clients. Good record-keeping can be invaluable if you ever need to file a claim.
• Stay Informed: Keep abreast of changes in bookkeeping standards and regulations to minimize the risk of errors and ensure your insurance coverage remains relevant.

Professional liability insurance is not just an optional extra—it’s an integral component of a robust risk management strategy for your virtual bookkeeping business. It protects not just your financial stability, but also your reputation, which is paramount in the finance industry. By securing the right coverage, you’re not only safeguarding your business—you’re also reinforcing your commitment to providing reliable, trustworthy service to your clients.

7. Finding Paying Customers for Your Online Bookkeeping Business

Launching your virtual bookkeeping business is just the beginning; the next crucial step is drawing in clients. Here’s how to effectively market your services and build a robust client base.

Networking with Purpose

• Identify Target Groups – Engage with organizations like the Small Business Administration and local chambers of commerce, which can connect you to small businesses in need of bookkeeping services.
• Engage Online – Join and actively participate in forums such as the Accounting & Bookkeeping group on LinkedIn or Reddit’s r/Bookkeeping , where you can share insights and attract clients.
• Leverage Relationships – Inform your circle about your venture. Tools like Meetup can help you find and organize local networking events to spread the word.

Strategic Discounting

• Introductory Offers – Design attractive introductory offers and promote them on platforms like Groupon to reach potential clients.
• Referral Incentives – Create a referral program with clear benefits, and use services like ReferralCandy to manage and promote it.
• Bundle Services – Package your services and highlight the savings on your business website, making sure to explain the added value of each bundle.

Demonstrating Your Expertise

• Content Creation – Publish articles on platforms like Medium or your personal blog, addressing key bookkeeping topics and how you resolve them.
• Webinars and Workshops – Use tools like Zoom or Eventbrite to organize and advertise educational sessions that can demonstrate your expertise.
• Social Proof – Gather client testimonials and case studies, and feature them prominently on your website or on review sites like Trustpilot .

Cultivating Client Relationships

• Solicit Feedback – After service delivery, use survey tools like SurveyMonkey to collect client feedback efficiently.
• Act on Insights – Analyze feedback to improve your services, documenting changes and updates in a transparent way on your business blog or newsletter.
• Follow-Up – Maintain client engagement with regular updates using email marketing services like Mailchimp , sharing useful bookkeeping tips and updates about your services.

By implementing these strategies, you can create a steady stream of clients for your virtual bookkeeping business. Remember, the key to attracting and retaining clients is not just about the services you offer, but also about the relationships you build and the value you provide.

Managing Growth and Scaling Your Business

Client feedback is the cornerstone of continuous improvement for your virtual bookkeeping business. Here’s how to solicit and utilize feedback effectively.

Solicit Feedback

• Implement Feedback Mechanisms – After delivering your services, invite clients to share their experiences using intuitive tools like Google Forms or Typeform , which offer user-friendly interfaces for survey creation.
• Make It Easy – Ensure that the process of giving feedback is as straightforward as possible. Provide direct links to surveys in your email signatures or on your invoice receipts.
• Encourage Honesty – Let clients know that their honest feedback is valued and crucial for your business growth. Assure them that all responses will be used constructively.

Act on Insights

• Data Analysis – Utilize feedback analysis tools such as Qualtrics to delve into the data and extract actionable insights.
• Transparent Communication – Share how you’re addressing feedback through regular posts on your business blog or updates in your newsletter. This transparency can build trust and show clients that their opinions lead to real change.
• Continuous Improvement – Set up a dedicated section on your website where clients can see the changes implemented based on their suggestions, reinforcing the value you place on their input.
• Engage with Content – Use platforms like Mailchimp to send out personalized follow-up emails that include bookkeeping tips, industry news, and updates about your services, keeping your brand at the forefront of clients’ minds.
• Offer Exclusive Insights – Provide subscribers with exclusive content, such as in-depth guides or early access to new services, to maintain interest and engagement.
• Seek Ongoing Feedback – Regularly reach out to your client base for feedback on specific aspects of your service or new offerings. Tools like HubSpot can help automate and manage these communications effectively.

Expanding Your Team

• Hiring Assistance – As your client base grows, the need for additional help may arise. Platforms like Upwork or FlexJobs can connect you with skilled freelance bookkeepers. For permanent roles, consider job boards such as Indeed for in-house positions.

Commit to Continuous Learning

• Stay Updated – The financial landscape is constantly changing. Engage in ongoing education through platforms like Coursera or Udemy to keep abreast of the latest in GAAP, IFRS, and other accounting standards.

Building Client Relationships

• Virtual Client Meetings – Even in a digital-first business, the human touch is irreplaceable. Regularly connect with clients using video conferencing tools like Zoom or Skype to maintain a strong, trust-based relationship.

By integrating these practices into your virtual bookkeeping business, you ensure that your service remains client-focused, up-to-date, and scalable. This holistic approach to client feedback and service improvement will set the foundation for a resilient and client-centric business.

Essential Regulations for Virtual Bookkeepers

Bookkeepers are accountable for the finances of the people and companies they represent. This means you have a responsibility as a bookkeeper to ensure that your financial statements are accurate and you protect your clients from fraud, risk, and more. In that vein, there are 4 specific regulatory areas that you need to account for outside of these general principles.

Generally Accepted Accounting Principles (GAAP)

Anyone operating a virtual bookkeeping business in the US needs to make sure that they’re aligned with GAAP when working on financial reporting. GAAP forms the basis for all bookkeeping businesses and outlines the assumptions, principles and standards used to analyze transactions. GAAP standards were created and are regularly updated by the Financial Accounting Standards Board ( FASB ). 

You most likely won’t need to worry about the more complex transactions and concepts, since those apply more to accountants. However, you will need to follow the basic guidelines laid out by GAAP if you plan on running your own bookkeeping business.

International Financial Reporting Standards (IFRS)

Additionally, you need to understand the IFRS if you plan on serving any international clients through your bookkeeping business. Journal entries have very specific reporting requirements when you’re working with someone from another country. Currently, these standards are managed by the IFRS Foundation . These are frequently updated, so you may need to adjust your business as time goes on.

Don’t worry too much if this is already sounding complicated. There’s a lot of overlap between the GAAP and IFRS regulations. You likely will only need to make small adjustments in your reporting. Plus, both sets of regulations have started to converge in recent years.

Document Retention Standards

Another key aspect of operating a bookkeeping business is making sure you retain accounting records. These are essential for auditors, IRS agents, and government regulators during financial inspections of any client or business owner you work for. 

Luckily, these guidelines tend to be fairly straightforward. 

Most of the documents you work with (journal entries, tax returns, or more) will come with an allotted retention period. Just make sure you keep everything until at least that time period, and you’ll easily meet all document retention standards for virtual bookkeepers.

Personally Identifiable Information 

One of the most important aspects you’ll need to consider before you start a virtual bookkeeping is how you treat your customers’ personal information. You must protect their birth dates, Social Security numbers, addresses, and more when you’re doing their bookkeeping. Failure to do so won’t just lead to your business failing— you’ll have to pay hefty fines or even face jail time.

Remember that your business is legally liable for failure to follow regulations based on personal information. Make sure you’re an expert in this area before you start your virtual bookkeeping business. I can’t reiterate enough how important these standards are!

Required Licenses for Virtual Bookkeepers

Now that you’re aware of what regulations to follow, it’s important that you earn the required licenses to start a virtual bookkeeping business. 

Business Licenses: In the US, you need a general business license or permit to start your bookkeeping business or perform online bookkeeping services. I recommend checking with your state board to see exactly what licenses are required for your virtual business.

You’ll also need to register a name for your business . Once again, this process is state-specific, so you’ll need to see what the requirements are for where you live. Fortunately, this step is a lot easier than getting a general business license.

Next up, some states require you to get a sales tax permit . This creates an account number with your state’s Department of Revenue. Bear in mind that you may be able to skip this step, as many states don’t require this.

Lastly, you’ll need a certificate of occupancy for the location where you plan on operating your business. This mainly applies to commercial buildings, but you’ll still need one of these if you plan on working out of your home.

Virtual Bookkeepers Salary and Earning Potential

How much can you make as a virtual bookkeeper?

Honestly, it’s up to you!

The financial prospects of a virtual bookkeeper are both promising and flexible, hinging on various factors such as experience, client base, and the services offered. Here’s a closer look at what you can expect to earn in this field.

Understanding the Salary Range

• Industry Benchmarks – While traditional bookkeepers have an average salary that Payscale reports to be around $45,000 annually, virtual bookkeepers often have the potential to earn more due to lower overhead costs and the ability to serve clients globally.
• Virtual Variability – Salaries for virtual bookkeepers can vary widely. According to ZipRecruiter , as of recent data, virtual bookkeepers can earn anywhere from $35,000 to over $70,000 annually, with variations depending on factors like client load, specialization, and efficiency of service delivery.
• Experience and Growth – With experience and a growing client list, your earning potential increases. Seasoned virtual bookkeepers who have built a reputation for reliability and expertise can command higher rates.

Maximizing Your Income

• Setting Rates – As a self-employed professional, you have the autonomy to set your own rates. Consider the value you provide, your experience, and the going market rates when determining your fees.
• Cost of Living Considerations – The beauty of virtual work is the freedom to live where you choose. This means you can reside in an area with a lower cost of living while serving clients in higher-paying regions or countries.
• Expanding Services – Offering specialized services, such as financial analysis or compliance auditing, can allow you to increase your rates. Continuously expanding your skill set and services can lead to higher earnings.

The Entrepreneurial Edge

• You’re in Control – Your income as a virtual bookkeeper is not capped. By effectively managing your business, scaling your client base, and optimizing your services, you can significantly exceed the average salary figures.
• Flexibility – The flexibility of being self-employed means you can adjust your workload to meet your financial goals. Whether you’re looking for part-time income or aiming to build a full-scale bookkeeping firm, the control is in your hands.

At the end of the day, as an entrepreneur, you can make your salary what you want it to be depending on how you can grow and scale out your business!

Final Thoughts

Starting a virtual bookkeeping business is a comprehensive endeavor that necessitates a deep understanding of various elements. From laying the initial foundation with a proper business structure and plan to acquire essential bookkeeping skills, the journey is exhaustive but rewarding.

Investing in high-quality software tools, ensuring you have professional liability insurance, and mastering the art of client acquisition through networking, offering discounts, and showcasing expertise are pivotal steps. As you navigate the complexities of GAAP and IFRS standards, the responsibility of adhering to document retention standards and safeguarding personally identifiable information becomes paramount.

Moreover, obtaining the necessary business licenses to operate legally in your state ensures that you’re on the right side of the law. The world of virtual bookkeeping offers a unique blend of challenges and opportunities. For those willing to invest the time and effort, it can be a fulfilling venture, enabling you to serve clients across the globe while maintaining the flexibility and autonomy of a virtual workspace.

Virtual Bookkeeper FAQs

On average, a virtual bookkeeper charges between $30 to $60 per hour. Rates can vary based on experience, expertise, and the complexity of the bookkeeping services offered.

To start a virtual bookkeeping business, you should have a good understanding of accounting principles and be proficient with bookkeeping software. While formal qualifications like a degree in accounting or finance can be beneficial, they are not always necessary. Certifications from recognized bodies can also enhance credibility.

Starting with no experience is challenging but possible. You may want to consider taking online courses, obtaining certifications, or working under an experienced bookkeeper to gain knowledge and confidence.

Initial costs can include business registration fees, software subscriptions, marketing expenses, and any educational courses you may need. It’s also wise to factor in the cost of a good computer and a reliable internet connection.

Essential software for virtual bookkeeping includes accounting software like QuickBooks Online or Xero, document management tools, and secure communication platforms for client interactions.

Utilize social media, create a professional website, network with other professionals, and consider offering free webinars or workshops to showcase your expertise.

You’ll need to understand the tax obligations for your business, any licensing requirements, and ensure you have contracts in place for your services. It’s also important to have a privacy policy to protect your clients’ data.

Invest in secure software, use strong passwords, enable two-factor authentication, and educate yourself on cybersecurity best practices to protect your clients’ data.

Provide exceptional service, maintain regular communication, and seek feedback to improve your services. Consider offering additional value through financial insights and reports.

Research the market to understand the going rates, factor in your experience and the complexity of the services you offer, and consider the value you bring to your clients when setting your rates.

Specializing in a niche can set you apart from competitors, allow you to charge higher rates, and enable you to become an expert in a specific industry, which can be a strong selling point for potential clients.

Most of the process is extremely similar to starting a business in the United States. You still need to register your business and get all required licenses. However, you’ll need to check with your province to see what specifications you need to meet. You should also plan to open a business bank account to separate your finances.

Kenneth W. Boyd

Kenneth W. Boyd is a former Certified Public Accountant (CPA) and the author of several of the popular "For Dummies" books published by John Wiley & Sons including 'CPA Exam for Dummies' and 'Cost Accounting for Dummies'.

Ken has gained a wealth of business experience through his previous employment as a CPA, Auditor, Tax Preparer and College Professor. Today, Ken continues to use those finely tuned skills to educate students as a professional writer and teacher.

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• Bookkeeping Tips

How to Start a Successful Virtual Bookkeeping Business in 2024

You’ve decided to open a virtual bookkeeping business, but you might be wondering how to get started. In this article, we’ll outline the steps to build your business so you can get up and running and build a full client roster.

But first, there is one action to take before you do anything else.

Naturally, getting paying customers is the most important part of starting any business , and this is also true for your own bookkeeping business. Getting your first client means you’ll have someone who can back your claims of offering high-quality and cost-effective services.

While the steps outlined below need to be completed at some point as you establish your business, getting your first virtual bookkeeping client should be the first thing you do. This way, you’ll be growing your reputation alongside building your business. 

Let’s get started! (You don’t need to complete the steps below in this order.)

14 Steps to Start a Successful Virtual Bookkeeping Business

1. establish your company.

You should figure out the business structure you want to create. Many bookkeepers start as sole proprietorships, meaning you work alone and provide all the services yourself. But you may also think about forming a limited liability company (LLC) or corporation.

The ideal business entity type for your virtual bookkeeping services will depend on your long-term goals and revenue expectations. Each state also has different rules for business taxes, so you’ll need to consider how state taxes would apply to your business.

If you are starting the company with a partner, make sure a partnership agreement is part of your business plan. This agreement ensures you are both on the same page concerning business operations.

Lastly, part of this process is picking a business name, which you should do with care. You’ll be using the name for years, so be sure it’s a professional and accurate description of your work.

2. Get the Necessary Licenses and Permits

Permit and licensing requirements vary by state and locality. 

If you’ve established a corporation or LLC, the entity needs to get registered with your state. Sole proprietorships do not require formation filings, though they often require business licenses.

Once you’ve formed your entity, you must apply for an employee identification number (EIN) with the Internal Revenue Service (IRS). The EIN identifies your business and is separate from your social security number (SSN). An EIN is optional for sole proprietors, but it allows you to receive 1099s at the end of the year from your clients without giving them your SSN. 

You are required to register for a business permit in most locations. Fees vary from a few dollars to a percentage of revenue, depending on your business location. You should consider the licensing fees when deciding where to locate your virtual bookkeeping business.

If you plan on operating under a fictitious business name or several different names, you may need to file a “Doing Business As” (DBA) statement. DBAs can usually be filed with your county or parish.

3. Get Insurance

Business insurance will protect you from claims against your business, but you need the correct types of insurance policies. 

One of the most critical steps to take in your virtual bookkeeping business is to invest in professional liability insurance, also known as errors and omissions (E&O) insurance. This insurance will cover you against claims you made a mistake in preparing a client’s books. The amount of coverage you need will depend on your client list. 

Professional liability insurance will protect you against errors, negligence, and omissions that may occur during your bookkeeping engagements. Your premiums will vary depending on what type of services you offer and your projected revenue. 

For a bookkeeping business just beginning, an insurance policy costs less than your daily cup of coffee. You should request quotes from several agencies to ensure you get a good deal.

You should also consider health insurance as an added expense, especially if you previously had health insurance through your employer. Replacing employer-sponsored coverage can be one of the most expensive costs of going into business for yourself. 

Many states require residents to have some level of health insurance coverage. Health insurance is a much sought-after benefit if you plan to hire employees. If your virtual bookkeeping firm has employees in several states, you may want to work with an insurance agent to find coverage that works for all your employees.

4. Create a Web Presence

Websites are essential for virtual bookkeeping firms. Without a website—and since you have no physical office—your business may appear to be fly-by-night. 

You do not need an expansive or expensive website to get started. You can create a simple website for less than $50, including the domain name. If you don’t have experience, you can find many predesigned websites online or have one put together for less than $500.

5. Get Equipment

Starting up a virtual business doesn’t require ordering a bunch of office supplies. We no longer need ten keys or ledger paper, especially in a virtual bookkeeping firm. 

That doesn’t mean that there aren’t any startup costs. You will need a complete office setup, including a good scanner and possibly a printer. You’ll need a reliable internet connection and a computer that can run accounting software quickly. 

Virtual bookkeepers juggle several files constantly. Having multiple monitors is key to working efficiently. You should also consider a reputable webcam and headset for client meetings. Sign up for meeting software such as Zoom or Teams.

6. Pick a Focus

Virtual bookkeeping firms have the benefit of being able to work with anyone regardless of their location. But do you have a specialty? Are you knowledgeable about specific types of businesses? 

Picking a focus is optional, but consider choosing a specific niche for your business . It allows you to target your advertising and outreach. You can rank higher in online searches by having a niche. 

You can base your niche on a specific location or specific profession. By becoming an expert in a particular area, you will complete your work more efficiently and potentially earn more for your expertise, all of which frees up time for you to work on getting more clients . 

Sometimes niches are created organically. If your current clients start referring you to other businesses in the same industry, you might end up in an unexpected niche.

7. Set Pricing

One of the first questions potential clients will ask is about your prices. You need to be ready to answer! Start by deciding how you are going to price your services . 

If you got into virtual bookkeeping for the freedom and flexibility, you might want to work off retainers, but you also have the option to bill hourly. You should consider the following questions when picking a billing method.

Do You Want to Track Your Time?

Billing hourly has been standard practice in the bookkeeping industry for decades. It can be a very profitable way to bill your clients. But there is a downside: you need to track how all your time is spent . 

There is also no reward for working efficiently since fewer hours means less billing. As a virtual bookkeeping firm, you’ll need to determine a reasonable rate for your clients, even if they’re located in other areas.

How Will You Handle Scope Creep for Fixed Payment Clients?

If you’d prefer not to bill hourly, you can set a fixed fee or retainer bill for each client. This method rewards you for working efficiently as long as you’re getting the work done. When you finish your work, you can stop for the day or focus on getting more clients.

The tricky aspect of this type of pricing is that it’s easy for the scope to expand. You need an engagement letter with your clients that clearly states any request outside the scope of your work comes at an additional cost. This way, your clients don’t monopolize your time.

Do You Have the Time to Bill Your Clients by Hourly Invoices Each Month?

Hourly billing is a lot of work. You need to review the hours billed to each client and invoice based on those hours. Make sure you have time to complete the invoicing each month if you decide to bill hourly.

8. Set Up Your Software

Be ready to do the work. Have all your accounting software subscriptions in place before you get a client. As your business expands and you add team members, you may need to reevaluate your software needs. 

Virtual bookkeeping firms also need several non-accounting software subscriptions. You should have PDF editing, presentation, and time management or workflow software. Microsoft Office Suite used to be a requirement, but many virtual bookkeeping businesses use the free Google Workspace products. 

For firms planning on holding virtual meetings with clients, you will want to invest in a Zoom Pro subscription to schedule longer meeting times with larger groups of attendees.

9. Track Your Expenses

Don’t forget to maintain your own books. It’s easy to get caught up in client work and neglect yours. Think of all you recommend to your clients and implement those same procedures for your business. 

Have an expense log ready, and track expenses paid through personal accounts. Set up separate accounts for your business, just like you’d want your clients to do. 

Keeping your books in good shape means you can spend more time working on your client files, especially at the end of the year when you’ll be extra busy!

10. Build Your Team

Most virtual bookkeeping firms start with the owner as the sole employee. But as your business grows, you’ll need more team members to support your clients. 

When you launch your business, be aware of people you meet who could add value as employees. Don’t limit yourself to only bookkeepers; you should consider adding administrative assistants or marketing specialists to your team. 

To preserve your time for expanding your business, think about how to outsource tasks to other team members. Outsourcing tasks might cost some money upfront but frees up time for running your business, working with your clients, and acquiring new ones. 

Don’t wait until the last minute to add a new team member. If you suspect you’re getting close to expanding, start looking! Give yourself time to find the right person and get them up to speed.

11. Implement a Project Management System

Virtual bookkeeping firms can’t rely on physical files to track their to-do lists. If your team is in different locations, you won’t always be able to see what they’re working on, so a to-do list won’t cut it.

Spreadsheets are an option. You could use Google Sheets or a shared Excel file to manage your team and allocate tasks. However, this method isn’t helpful if you have a large team. 

Consider a workflow management system like Jetpack Workflow . The right workflow management system can save you hours and allow you to monitor your team without micromanaging it.

12. Advertise Yourself

A virtual bookkeeping firm can’t rely on signs outside an office building to advertise itself. You need to find a way to put yourself out there. 

Think about various ways you can reach out to potential clients or get your business in front of them. Every contact with a business owner is an opportunity to land a new client. 

Business cards are a bit old school, but they still work well when trying to land a new client. Cards are great for in-person meetings if you have a local client. 

For virtual bookkeeping companies, your focus should be on online advertising. You can use Facebook or Google Ads, but consider social media options such as TikTok, Instagram, Twitter, and Pinterest, which have also proven successful for some firms. For more ideas, check out Jetpack Workflow’s suggestions on how to market your virtual bookkeeping business .

13. Network

Virtual businesses sometimes forget about networking, but several online platforms help businesses to meet and grow virtually. 

Credentials can also help you advertise your business. You should consider joining the American Institute of Professional Bookkeepers (AIPB) or the National Association of Certified Public Bookkeepers (NACPB).

14. Enjoy Your Success… But Keep Hustling

Get excited about your first client, then get back out there and find more. Keep your long-term goals in mind, and keep working towards them. Having a five- or ten-year plan allows you to track your progress and make adjustments along the way.

Keep looking at what’s working and what’s not. Check in with your team, and evaluate your software. Watch out for trends and new opportunities.

Be proud of your success, but keep moving forward!

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How to start a virtual bookkeeping business (In 5 Steps)

• 11 min read

What is a virtual bookkeeping business?

Is virtual bookkeeping profitable, what are the benefits of a virtual bookkeeping firm.

• steps to start a virtual bookkeeping business

Establishing a good remote culture

As an accounting professional or CFO, you may be curious about starting your own accounting or virtual bookkeeping firm. Creating your own small business is more than a full-time job. However, there are many advantages to being a founder and small-business owner. The flexibility to run a company how you want, more intimate collaborations, and the pride of opening your own business are all great reasons to consider opening your own accounting firm.

As you start on your new small business journey and start tossing ideas around with colleagues, the dreaded question of finding a physical location will eventually come up. High rent, logistics, and the shift to remote work have most professionals feeling tentative about in-office working. Luckily, there are accounting offices that are entirely virtual firms allowing for remote work for all employees, whether you plan on offering virtual accounting services or virtual bookkeeping services. Virtual firms have many benefits, but what does starting a virtual CPA firm mean?

A virtual bookkeeping business is a professional service that allows accountants to offer accounting and financial management assistance to clients remotely. This business model deviates from the traditional, physical office setup, opting instead for a fully online or digital structure.

Like a virtual accounting firm, a virtual bookkeeping business operates mainly through internet-based platforms. Instead of a brick-and-mortar location, these firms establish their presence in a virtual setting — be it a satellite office setup or a fully remote hub.

The backbone of a virtual bookkeeping business lies in its strategic use of various software solutions . These tools support and streamline operations, covering tasks ranging from bookkeeping and financial analysis to client communication and data storage. For example, accounting software is used for tracking financial transactions, creating financial reports, and ensuring compliance with tax laws. Communication tools help in maintaining open and clear channels with clients, while secure storage systems, sometimes utilized as an alternative to cloud storage, ensure that sensitive financial information is safely archived.

This flexible and remote setup allows virtual bookkeeping businesses to serve clients from different geographical locations. Furthermore, they offer professionals the advantage of working remotely, contributing to work-life balance while providing cost efficiencies in operation.

The rise of virtual bookkeeping businesses is a testament to the digital age's influence on industries, proving that even sectors as traditional as accounting can successfully adapt and thrive in an online environment.

Running your own bookkeeping business can be a highly profitable venture, given that you equip yourself with the right know-how and tools. Profitability often comes down to a mix of factors such as the utilization of efficient bookkeeping software, a clear pricing strategy , and a solid network of potential clients and referrals.

The use of powerful bookkeeping software allows for effective management of your clients' financial records. This not only enables you to serve more clients effectively but also reduces overhead costs associated with manual bookkeeping.

Choosing the right business structure, such as a sole proprietorship, partnership, or LLC, is also important. It impacts tax obligations, personal liability, and your ability to raise capital, so it's important to consider the advantages and disadvantages of each type. Depending on your chosen business structure, you may need a business license, and it's always advisable to separate your personal and business finances with a dedicated business bank account.

Pricing your services correctly is critical to profitability. Too high, and you risk alienating potential clients; too low, and you may struggle to cover your costs and turn a profit.

Finally, establishing a strong network is crucial for obtaining potential clients and referrals. The more relationships you build, the wider your client base becomes. Good customer service often results in repeat clients and referrals, driving business growth.

Starting your own bookkeeping business requires knowledge, skills, and dedication. But with the right approach and tools, it can certainly be a profitable venture.

Virtual bookkeeping and accounting firms have a lot of benefits over their physical-office counterparts. While some users have a hard time initially adjusting to using Zoom for meetings and may miss the in-person interactions, there are many ways that virtual firms can offer a healthier work environment for your employees while being beneficial to you as a business owner.

Lower overhead expenses

First and foremost, virtual accounting firms are cost-effective because you are spending (in many cases) no money at all on office rent or utilities. While you may spend some initial money as you shift to offering remote hardware, such as laptops, tablets, or monitors, for your employees, the money you will save will easily make up for these upfront costs.

No wasted time commuting

Commuting can take a significant chunk out of every employee's day. The average one-way commute is 27.6 minutes, according to the U.S. Census Bureau . 27.6 minutes equates to about 240 hours a year spent just commuting to work. In higher-population areas with even longer commutes, that time can be doubled or tripled, turning your traveling into a significant portion of your year. Many people consider all of their time stuck in a car much better spent at home with family at the beginning and end of their day, something made possible with remote work.

Better work-life balance

A Flexjob survey showed that 73% of respondents said they had an improved work-life balance when working from home, including more time with their family, partners, and pets. A Thomson Reuters study saw that 36% of people said that working remotely had a strongly positive effect on their wellbeing, while another 35% said it had a slightly positive impact. Working remotely has proven to reduce stress and improve overall work-life balance, making employees more likely to stay with your company long term and be happier in their roles. Remote work also has shown to reduce mental health-related sick days, meaning employees use PTO for positive vacation experiences that facilitate better work-life balance.

5 steps to start a virtual bookkeeping business

Starting a virtual bookkeeping business requires strategic planning to attract positive cash flow and garner a dedicated client group. Step one is to understand your goals and values.

1. Understanding your goals

The first step in creating any successful business is deciding your goals as a company. By having a clear plan for where you want to be, you can more actively make subgoals and steps to achieve your ideal client base and provide outstanding services.

What services do you want to provide?

Will your accounting firm focus on tax preparation and tax planning? Are you more interested in working with financial reports and general financial data analytics? Deciding what services you want to provide helps you understand what employees you will need to hire, what software you will need to implement, and the overall feasibility of your business plan.

Who do you want to work with?

Picking an ideal client base helps you better market yourself to them. Are you looking to work with large corporations, individuals, or small business clients? Describing in detail who your perfect customer is will help you understand how you need to position yourself in terms of scale and services.

How large do you want to scale to?

Now that you know your ideal services and clients, you may have a better idea of how large you want to scale your company. Knowing ahead of time that you will be planning on expanding can help you set your architecture up for easy scaling in the future.

Do you want to be very hands-on in the next 5 years?

Some accounting firms like being extremely hands-on, something you should consider as a virtual firm. Nailing down exactly how you want your interactions with clients to look can help you decide if entirely virtual is the answer for your company or if a hybrid setup may be more advantageous.

2. Developing your core values

Creating core values in a remote or hybrid virtual bookkeeping business can help develop culture and keep everyone on the same page. Approaching clients and issues with these values in mind can keep your firm providing quality assistance uniformly regardless of where people work.

Your vision

Coming up with a vision statement helps outline your company's goals and what you want to accomplish long-term. Ideally, your vision statement will be one or two sentences that help give an idea to all employees of what goal you are working towards as a company.

What you value

Consider your core values. Is your focus quality work, excellent client relationships, valuable and considerate service, or meticulous analytical services? Once you think about what you value most, it can help you create direction within your vision statement.

What your clients value

What your clients value about your company should be part of your vision as well. Decide what will put you above your competitors, whether personal one-on-one support or exceedingly punctual problem resolution.

3. Create efficient remote workspaces

Making sure your home workspaces are efficient is vital to creating a positive remote experience. Building a tech stack that best fits your company's needs and supports hardware and equipment needs is essential to facilitating happy employees.

Home office

Having a healthy home office is step one in having a positive, effective remote workspace. There are many ways that you can make a home office feel comfortable. We suggest the following when setting up a remote office :

• Pick a dedicated space to promote privacy when needed
• Choose appropriate lighting for your home office space
• Consider noise when picking an area for your desk
• Surround yourself with inspiration
• Make the office space your own through customization
• Add green spaces to your home office to increase productivity and lower stress
• Set up ergonomic equipment such as a desk, chair, and keyboard
• Consider other equipment needs such as internet, routers, headsets, webcams, whiteboards, etc.

For your team

When helping your team set up their ideal workspaces, consider the hardware they will need. Fully remote teams also won't always be in their homes and may benefit from co-working spaces or areas where they can host meetings with clients.

Equipment stipends

Providing stipends for employee equipment can help everyone gain access to the tools they need to work remotely. Never assume that all employees will have a functioning computer at home or all of the tools they need to succeed. Identify hardware needs and make them accessible to those who need them.

Co-working spaces

Sometimes your employees may prefer to co-work or might need to meet with clients. In these cases, consider providing access to different co-working spaces, which have become more popular due to the increased popularity of remote work. Some virtual firms take advantage of public co-working spaces, while others rent specific spaces for their employees to use. Still, others provide a remote working stipend to be used as the employee prefers. Remember to be considerate of employee and client communication preferences, as virtual communications can sometimes cause misunderstandings and unhealthy work/life balance. Some clients and employees prefer voice or video to make introductions and communicate, and co-working spaces may be great to help create that connection.

4. Consider data security

Remote work comes with an increase in risk for data security. When using mobile devices and laptops for work, it is much easier for devices to be stolen or hacked. Keep a robust data security policy in place for employees, and plan for disaster ahead of time. By taking precautions and having actionable steps for when something does happen, you will be able to prevent large-scale damage to your company.

5. Choose the right productivity tools

Picking the right tech stack and productivity tools helps your team excel. Working remotely can be equally or even more collaborative and efficient if you use the right tools that can help with automation and project management.

Project management software

Implementing project management software allows your whole team to be on the same page. Assigning tasks is easy and visual, and you can even automate your workflow to send reminders directly to assignees. Tracking productivity is something that many remote companies struggle with, and excellent project management software is the key to ensuring work is getting done by your employees.

Messaging and conferencing software

Virtual meetings and instant messaging software help employees stay just as connected as if they were in the office. While your workers may not be chatting around the water cooler, they will be keeping up with each other by sending quick meeting invites to get in touch or through messaging systems. Some companies have increased significantly in popularity over the pandemic, such as Zoom, Microsoft Teams, and Slack. Messaging and video functions can also come rolled into other products that you may acquire in your tech stack.

eSignature collection software

eSignatures are going to be a large part of your firm if you plan on working entirely remote. Finding software that can help you collect client signatures will save you time by not seeing every customer in person and will streamline your workflow.

Streamline workflows with eSignature collections.

Client Portal and CRM

Having a client portal and CRM can help your employees track projects and clients efficiently. Good CRM technology will help your team stay on top of critical deliverables. A great client portal keeps your employees from having to do as much footwork to collect forms and information for your customers.

Copilot is a CRM, client portal, and all-in-one commerce solution, including billing and invoicing, file sharing, eSignature collection, messaging, client intake form collection, invoicing, and accounting, while also providing a home for your knowledge base. Copilot packages all of its features into a streamlined, custom-brand-able experience so that clients feel secure using your client portal. Picking client management software like Copilot keeps your tech stack uncomplicated by hosting most of your needed software under one umbrella.

Creating a positive remote culture can be difficult for those who don't have prior experience. Company culture is what helps motivate employees and makes them feel good about their employer. Remote flexibility will help your workers feel trusted and improve morale, but having a quality remote culture is also crucial to happy employees. A Randstad report saw that 58% of employees have left a job or would consider leaving if there was a negative office culture. Additionally, a Gallup poll reported that having a positive culture that brings in high-talent leads to 33% higher revenue. With a good culture being so crucial, how do you foster it in a remote environment?

GitLab is a great case study for positive remote work structures and cultures. As they moved into remote working, they documented a detailed guide on approaching the challenges they faced within a remote working environment. GitLab talks about the importance of displaying your values and reinforcing them in a place where everyone can access them. Gratitude and transparency are two things that GitLab has found vital in its remote working, and they encourage showcasing those who are great cultural ambassadors. You can learn more about their building culture here when they talk about how essential intentionality is to their methods. Following GitLab's positive case study and others can help give you some initial ideas on how to foster company culture and values even when not under the same roof.

As remote work becomes more and more prevalent, now is a great time to consider starting your own virtual bookkeeping company. The allure of flexible work schedules, heightened productivity, and reduced startup costs make this an opportune moment to venture into this thriving field. As you begin, make sure you outline clear business objectives and values to form a robust foundation for your venture.

Don’t get caught up in selecting a catchy and relevant business name from the start. First, make sure you learn to productize your services and identify your ideal type of client. Then, you can make sure your business entity type is carefully chosen, taking into account tax implications, potential liabilities, and compliance with the IRS. Incorporate reliable business insurance to safeguard your enterprise against unforeseen challenges.

To help you network and find more clients, you can also consider investing in professional business cards and fostering a dynamic presence on social media platforms, particularly LinkedIn, to attract your ideal clients online. This will increase the chances of gaining your first client and continue to attract new clients over time.

Also, make sure you are well equipped to handle essential financial statements such as balance sheets and income statements, as this will be a core aspect of your service offering. Prioritize the establishment of a comprehensive client onboarding process to secure bookkeeping clients swiftly and efficiently.

Remember, nurturing a strong remote company culture from the get-go is vital for team cohesion and overall success. As you navigate the course of providing virtual bookkeeping services, remember to stay updated with market trends and leverage these to stay ahead of competitors. With the right planning and execution, your virtual bookkeeping business is well-positioned for success!

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Bookkeeping Business Plan Template

Written by Dave Lavinsky

Bookkeeping Business Plan

Over the past 20+ years, we have helped over 9,000 entrepreneurs create business plans to start and grow their bookkeeping companies. On this page, we will first give you some background information with regards to the importance of business planning. We will then go through a bookkeeping business plan step-by-step so you can create your plan today.

Download our Ultimate Business Plan Template here >

What is a Bookkeeping Business Plan?

A business plan provides a snapshot of your business as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategy for reaching them. It also includes market research to support your plans.

Why You Need a Business Plan for a Bookkeeping Business

If you’re looking to start your own bookkeeping business or grow an established business, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your bookkeeping business in order to improve your chances of success. Your business plan is a living document that should be updated annually as your company grows and changes.

Sources of Funding for Bookkeeping Startups

With regards to funding, the main sources of funding for a bookkeeping business are personal savings, credit cards, bank loans, and angel investors. With regards to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to confirm that your financials are reasonable. But they will want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business.

The second most common form of funding for a bookkeeping company is angel investors. Angel investors are wealthy individuals who will write you a check. They will either take equity in return for their funding or, like a bank, they will give you a loan.

Finish Your Business Plan Today!

How to write a business plan for a bookkeeping company.

Your business plan should include 10 sections as follows:

Executive Summary

Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.

The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of business you are operating and the status; for example, are you a startup, do you have a bookkeeping business that you would like to grow, or are you operating a chain of bookkeeping companies.

Next, provide an overview of each of the subsequent sections of your plan. For example, give a brief overview of the bookkeeping business industry. Discuss the type of business you are operating. Detail your direct competitors. Give an overview of your target market. Provide a snapshot of your marketing strategy. Identify the key members of your team. And offer an overview of your financial plan.

Company Analysis

In your company analysis, you will detail the type of bookkeeping business you are operating.

For example, you might operate one of the following types:

• Traditional Bookkeeping and Accounting Business : the traditional bookkeeping and accounting business can provide the entire range of bookkeeping services, including maintaining journals and ledgers, balancing and reconciling accounts, preparing payroll, preparing and filing taxes, and providing billing and collection services.
• Tax Preparation Services : this type of bookkeeping business primarily prepares, reviews, and/or files tax returns and supplementary documents.
• Payroll Services : this type of bookkeeping business typically collects payroll information, processes paychecks, processes withholdings, and files reports.
• Billing Services : this type of bookkeeping business deals with sending bills and collecting payments.

In addition to explaining the type of business you operate, the Company Analysis section of your business plan needs to provide background on the business.

Include answers to question such as:

• When and why did you start the business?
• What milestones have you achieved to date? Milestones could include sales goals you’ve reached, new store openings, etc.
• Your legal structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.

Industry Analysis

In your industry analysis, you need to provide an overview of the bookkeeping business.

While this may seem unnecessary, it serves multiple purposes.

First, researching the bookkeeping industry educates you. It helps you understand the market in which you are operating. 

Secondly, market research can improve your strategy particularly if your research identifies market trends. For example, it would be helpful to ensure your plan takes into account the seasonal nature of certain services such as tax preparation.

The following questions should be answered in the industry analysis section:

• How big is the bookkeeping industry (in dollars)?
• Is the market declining or increasing?
• Who are the key competitors in the market?
• Who are the key suppliers in the market?
• What trends are affecting the industry?
• What is the industry’s growth forecast over the next 5 – 10 years?
• What is the relevant market size? That is, how big is the potential market for your bookkeeping business. You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.

Customer Analysis

The customer analysis section must detail the customers you serve and/or expect to serve.

The following are examples of customer segments : families, entrepreneurs, businesses, retirees, etc.

As you can imagine, the customer segment(s) you choose will have a great impact on the type of bookkeeping business you operate. Clearly, families would want different pricing and product options and would respond to different marketing promotions than established businesses.

Try to break out your target market in terms of their demographic and psychographic profiles. With regards to demographics, including a discussion of the ages, genders, locations, and income levels of the customers you seek to serve. Because most bookkeeping companies primarily serve customers living in the same city or town, such demographic information is easy to find on government websites.

Psychographic profiles explain the wants and needs of your target customers. The more you can understand and define these needs, the better you will do in attracting and retaining your business clients.

Finish Your Bookkeeping Business Plan in 1 Day!

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With Growthink’s Ultimate Business Plan Template you can finish your plan in just 8 hours or less!

Competitive Analysis

Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.

Direct competitors are other bookkeeping services and companies.

Indirect competitors are other options that customers have to purchase from that aren’t direct competitors. This includes accountants, companies’ internal accounting departments, professional employer organizations, and entrepreneurs/individuals doing their own bookkeeping. You need to mention such competition to show you understand that not everyone engages in bookkeeping services.

With regards to direct competition, you want to detail the other bookkeeping companies with which you compete. Most likely, your direct competitors will be bookkeeping companies located very close to your location.

For each such competitor, provide an overview of their businesses and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as:

• What types of customers do they serve?
• What services do they offer?
• What is their pricing (premium, low, etc.)?
• What are they good at?
• What are their weaknesses?

With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.

The final part of your competitive analysis section is to document your areas of competitive advantage. For example:

• Will you provide superior bookkeeping services?
• Will you provide bookkeeping services that your competitors don’t offer?
• Will you make it easier or faster for customers to acquire your services?
• Will you provide better customer service?
• Will you offer better pricing?

Think about ways you will outperform your competition and document them in this section of your plan.

Marketing Plan

Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a bookkeeping business plan, you should include the following:

Product : in the product section, you should reiterate the type of business that you documented in your Company Analysis. Then, detail the specific products you will be offering. For example, in addition to account reconciliation, will you offer services such as tax preparation?

Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections, you are presenting the services you offer and their prices.

Place : Place refers to the location of your business. Document your location and mention how the location will impact your success. Discuss how your location might provide a steady stream of customers. 

Promotions : the final part is the promotions section. Here you will document how you will drive customers to your location(s). The following are some promotional methods you might consider:

• Email marketing to prospective clients
• Advertising in local papers and magazines
• Reaching out to local bloggers and websites 
• Social media advertising
• Pay per click advertising
• Local radio advertising
• Banner ads at local venues

Operations Plan

While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.

Everyday short-term processes include all of the tasks involved in running your bookkeeping business such as serving customers, procuring supplies, keeping the office clean, etc.

Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to serve your 1,000th customer, or when you hope to reach $X in sales. It could also be when you expect to hire your Xth employee or launch a new location.

Management Team

To demonstrate your bookkeeping business’s ability to succeed as a business, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company. 

Ideally, you and/or your team members have direct experience in the bookkeeping or accounting business. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.

If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act as mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in bookkeeping businesses and/or successfully running small businesses.

Financial Plan

Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet, and cash flow statements.

Income Statement An income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenues and then subtracts your costs to show whether you turned a profit or not.

In developing your income statement, you need to devise assumptions. For example, will you serve 10 customers per week or 20? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.

Balance Sheets While balance sheets include much information, to simplify them to the key items you need to know about, balance sheets show your assets and liabilities. For instance, if you spend $100,000 on building out your bookkeeping business, that will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a bank writes you a check for $100.000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.

Cash Flow Statement Your cash flow statement will help determine how much money you need to start or grow your business and make sure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt.

In developing your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a bookkeeping or accounting business:

• Location build-out including design fees, construction, etc.
• Cost of equipment like computers and software
• Cost of maintaining an adequate amount of office supplies
• Payroll or salaries paid to staff
• Business insurance
• Taxes and permits
• Legal expenses

Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your office design blueprint or location lease.

Bookkeeping Business Plan Summary

Putting together a business plan for your bookkeeping business is a worthwhile endeavor. If you follow the template above, by the time you are done, you will have an expert bookkeeping business plan; download it to PDF to show banks and investors. You will really understand the bookkeeping business, your competition, and your customers. You will have developed a marketing plan and will really understand what it takes to launch and grow a successful bookkeeping business.

Don’t you wish there was a faster, easier way to finish your Bookkeeping business plan?

OR, Let Us Develop Your Plan For You

Since 1999, Growthink has developed business plans for thousands of companies who have gone on to achieve tremendous success.   Click here to see how a Growthink business plan consultant can create your business plan for you.

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Understanding the Legal Requirements

Acquiring bookkeeping skills, creating a business plan for your bookkeeping business, marketing strategies for your bookkeeping business, managing finances in your bookkeeping business, acquiring clients for your bookkeeping business, is bookkeeping a profitable business, can you start your own bookkeeping business, how much should i charge my bookkeeping clients, the bottom line.

• Small Business
• How to Start a Business

How to Start Your Own Bookkeeping Business: Essential Tips

Understanding the legal requirements

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• How to Do Market Research, Types, and Example
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• Marketing in Business: Strategies and Types Explained
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• Business Development: Definition, Strategies, Steps & Skills
• Business Plan: What It Is, What's Included, and How to Write One
• Small Business Development Center (SBDC): Meaning, Types, Impact
• How to Write a Business Plan for a Loan
• Business Startup Costs: It’s in the Details
• Startup Capital Definition, Types, and Risks
• Bootstrapping Definition, Strategies, and Pros/Cons
• Crowdfunding: What It Is, How It Works, and Popular Websites
• Starting a Business with No Money: How to Begin
• A Comprehensive Guide to Establishing Business Credit
• Equity Financing: What It Is, How It Works, Pros and Cons
• Best Startup Business Loans
• Sole Proprietorship: What It Is, Pros & Cons, and Differences From an LLC
• Partnership: Definition, How It Works, Taxation, and Types
• What is an LLC? Limited Liability Company Structure and Benefits Defined
• Corporation: What It Is and How to Form One
• Starting a Small Business: Your Complete How-to Guide
• Starting an Online Business: A Step-by-Step Guide
• How to Start Your Own Bookkeeping Business: Essential Tips CURRENT ARTICLE
• How to Start a Successful Dropshipping Business: A Comprehensive Guide

Papakon Mitsanit / Getty Images

Starting a bookkeeping business is something you might be interested in if you naturally love numbers and want to break free of the traditional nine-to-five. It’s possible to offer bookkeeping services to clients in person or remotely, which may be ideal if you would prefer a work-at-home job.

Before starting a bookkeeping business, you’ll first need to know the basics of operating legally. It’s also helpful to understand how to market your services and manage the financial side of running a business.

Key Takeaways

• A degree in accounting is not required to start a bookkeeping business, though a certification in bookkeeping can be helpful to have.
• You’ll need to choose a business structure, and register your business with the proper state authorities if required by law where you live.
• If you plan to hire employees, you may need to obtain workers’ compensation insurance in compliance with state law.
• Developing a solid marketing plan can help you build your brand and attract clients to your business.

Investopedia / Zoe Hansen

The legal requirements for starting a bookkeeping business are similar to any other type of business. Some of the most important things you’ll need include:

• Selecting a business structure (i.e., sole proprietorship, limited liability company, etc.)
• Choosing a name for the business
• Registering your business with the proper state agencies
• Obtaining a federal Employer Identification Number (EIN) and state identification numbers, if necessary
• Applying for any necessary licenses or permits
• Opening a business bank account
• Getting business insurance , including liability coverage and/or home-based business insurance

The exact requirements for starting a small business will depend on the state in which you live. You may need to contact your secretary of state or department of revenue for more information on what paperwork you may need to complete to legally establish your bookkeeping business.

There may be additional steps required if you plan to hire employees for your business. For instance, you may need to obtain workers’ compensation insurance. The requirements for workers’ compensation vary by state. For instance, California requires workers’ compensation for all employers, regardless of the number of employees. In Alabama, on the other hand, businesses are not required to purchase workers’ compensation insurance if they have fewer than five employees.

Some states may impose steep penalties against businesses that fail to obtain workers’ compensation insurance.

Starting a bookkeeping business requires an understanding of accounting and bookkeeping practices. You may need to first complete a training program before you can launch.

For example, you might pursue any of the following:

• Bookkeeping certification
• Tax certification
• Accounting software certification

Unlike the requirements to become an accountant, the training required to become a bookkeeper is less strenuous. It’s possible to find and complete an online training program from home.

As you compare online bookkeeping courses , consider the range of topics covered, the course format, and the cost. Whether it makes sense to obtain just one bookkeeping certification or additional tax and accounting software certificates can depend on your niche and the types of services you plan to offer. 

While a degree in accounting may be helpful for starting a bookkeeping business, it’s not an absolute requirement.

A business plan is a detailed overview of how you plan to launch and grow your business. There are several key elements that are typically included in a comprehensive business plan. Here’s what yours might look like as you draft a plan for your bookkeeping business.

• Executive summary : The executive summary should offer a brief overview of what your business is about, your mission, and how you’ll be successful. Your mission statement can also include information about your employees (if you plan to hire any) and your plans for growth.
• Company description : Your company description is an opportunity to provide additional details about your business, including who you plan to serve and what problems you’ll solve for your clients.
• Market analysis : Market analysis allows you to look at your competitors and identify their strengths and weaknesses. Completing this section can help you better understand what makes your bookkeeping business unique.
• Organization and management : This section should describe how your business is legally structured and who’s responsible for running it. If you’re operating as a one-person business, this part of your plan will likely be brief.
• Services : In the services section, you can expand on what types of services you plan to offer as a bookkeeper and who you expect your customers to be.
• Marketing : How you market your bookkeeping business can depend on your niche or target audience and what resources you have to invest in advertising. You’ll use this section to sketch out your marketing plans for attracting clients to your business.
• Financial projections : This section is where you’ll outline how much revenue and profit you expect to make from the business.

Having a business plan to start a bookkeeping business isn’t a requirement, but creating one can help you get some clarity on what your goals are and how you plan to proceed with growing the business. Even if you’re just planning to offer bookkeeping services remotely as a sole proprietor , it can still be helpful to flesh out the exact steps you’ll need to take to succeed.

A business plan may be required if you plan to apply for business financing from banks or investors.

When you start any new business, you can’t expect customers or clients to magically find you. Instead, you’ll have to invest some time (and perhaps, money) in marketing your business.

If you’re specifically interested in working as a bookkeeper remotely, establishing a website and social media profiles may be a starting point for your marketing plan. Both can make it easier for potential clients to find you in online searches. You can also leverage social media to build your brand and increase your visibility.

Aside from a website and social media, there are some other options you might consider for marketing your services. They can include:

• Using LinkedIn to build out your professional network and establish credibility
• Joining a local meetup group of bookkeepers in your area
• Joining a professional business association in your area
• Participating in local small business events
• Seeking out opportunities to be a guest on podcasts in the finance niche
• Offering a seminar or workshop, either online or in person

When planning your marketing strategy , it’s important to think about the message you want to send to prospective clients. That message should be consistent across all of the channels you use to market your business, whether that includes YouTube, Facebook, TikTok, or another platform. 

It’s also important to consider who your message is targeting. Your marketing content should speak to the needs and pain points of the types of customers you’re most interested in attracting to your business.

Keeping track of cash flow is essential for running any business. As you prepare to start your bookkeeping business, it’s important to keep track of your expenses, which may include:

• Website hosting
• Accounting software
• Customer relationship management (CRM) software
• Cloud storage fees
• Home office supplies (if you’ll be working remotely)
• Registration fees
• Fees for certification or training
• Marketing costs

Once your business gets under way, you can make a monthly budget to track your cash inflows and outflows. You’ll also need to give some thought to how you plan to invoice your clients for your services. That includes choosing when to send invoices , how quickly you expect them to be paid, and which payment methods you'll accept. 

Running a business also means paying taxes on your earnings. That includes income tax and estimated quarterly taxes . Generally, you’re required to make estimated quarterly tax payments to the Internal Revenue Service (IRS) if:

• You expect to owe at least $1,000 in tax for the year, after subtracting withholding and refundable credits.
• You expect your withholding and refundable credits to be the smaller of 90% of the tax shown on your current year’s return or 100% of the tax shown on your prior year’s return.

If your state imposes an income tax, you’ll also be responsible for making estimated tax payments to your state agency.

Opening a business bank account can make it easier to keep track of what funds go in and out. You can open a business bank account at a traditional bank, credit union, or online bank. You’ll need to provide your personal information, along with your business details, in order to open an account. Comparing fees, features, and accessibility can help you choose the best business bank account for your needs.

You might also consider applying for a business credit card to help cover expenses until you start making money. You can apply for a business credit card using your personal credit score and income ; business credit is not a requirement. If you’re considering a business credit card , you might want to look for one that offers a generous rewards program and/or charges no annual fee. 

Once you’ve covered all the legal aspects of starting your business, it’s time to start finding your first clients. There are a few ways you can go about doing this. These include:

• Looking for remote bookkeeping opportunities on freelance job boards
• Establishing profiles on sites like Fiverr or Upwork, which connect companies with freelance workers
• Reaching out to local businesses to ask if they need bookkeeping services
• Running ads on social media
• Joining local small business directories
• Offering a free consultation to local businesses
• Asking friends, family, or other business owners for referrals

Once you start getting your first clients, it’s important to focus on customer satisfaction. Clients who are happy with your services are more likely to stay loyal and continue to hire you. They also may be willing to refer you to people they know who might need a good bookkeeper.

Bookkeeping has the potential to be a profitable business if you’re able to maintain a solid roster of clients who are willing to pay competitive rates for your services. A typically remote bookkeeper’s salary is just over $63,600 a year, but it’s possible to make much more than that, depending on your clientele and the rates you charge.

It’s possible to start a bookkeeping business from scratch, even if you don’t have a professional or educational background in accounting or bookkeeping. Having a degree or certification in either area could be an advantage, but it’s possible to acquire the skills you need to become a bookkeeper online. Likewise, you don’t need to have experience running a business, but that could also prove helpful.

The amount you should charge your bookkeeping clients can depend on a number of factors, including how much experience you have, which certifications you hold, the types of services you offer, and the types of individuals or businesses you work with. Someone who’s new to the profession, for example, may start their rates at $20 an hour, while someone with several years of experience may charge $35 an hour or more. Researching average bookkeeper salaries for your area can give you an idea of what your competitors may charge.

Starting a bookkeeping business can be a great opportunity to take control of your career. Before diving in, however, it’s important to understand what’s involved to get your new business up and running. The more prepared you are before launching, the greater your chances of succeeding as an expert bookkeeper.

U.S. Small Business Administration. “ Launch Your Business .”

Insureon. “ State Laws for Workers’ Compensation .”

U.S. Small Business Administration. “ Write Your Business Plan .”

Internal Revenue Service. “ Estimated Tax .”

Glassdoor. “ Remote Bookkeeper Salaries .”

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How to start a virtual bookkeeping business

Are you interested in starting a bookkeeping business but need help determining where to begin? With the growing demand for bookkeeping services, now may be the perfect time to dive into the virtual business world. This blog post will show you how to start and optimize a virtual bookkeeping business for longevity.

The demand for bookkeeping services

Starting a virtual bookkeeping business has many benefits, such as low overhead costs, access to a wider talent pool, location flexibility, and the ability to work remotely. With a virtual bookkeeping business, you can take on clients from anywhere worldwide, as long as they have an internet connection.

Small businesses, freelancers, and individuals often seek bookkeeping services to help them manage their finances efficiently and accurately. As such, the bookkeeping service industry has experienced steady growth. The size of the worldwide accounting services market is anticipated to increase by 11.4% from $587.94 billion in 2021 to $1,009.51 billion in 2026.

Getting started

Starting a virtual bookkeeping or tax services for small businesses may seem daunting, but it can be broken down into manageable steps. Here are some key things to consider when getting started.

Types of bookkeeping services

First, it’s important to determine what types of bookkeeping services you will offer. These range from basic data entry to more comprehensive tax advice, payroll services, tax preparation services, financial reports, and analysis. Consider your background and expertise, as well as the needs of your potential clients.

Qualifications and licenses

To operate a bookkeeping business, having the qualifications and licenses is essential. This could include certification as a bookkeeper or accountant and any state or local permits required to operate a business from home.

Website and social media presence

An important aspect of any virtual business is a strong online presence. Create a professional website that showcases your services and expertise. Develop social media profiles to reach potential clients and engage with your community.

Developing a business plan

Before launching your business, it’s important to develop a comprehensive business plan. This should outline your goals, target market, marketing strategy, and financial reports and projections. A well-developed business plan can help you secure funding, attract clients, and focus on your goals.

Setting up the infrastructure of your bookkeeping and accounting services

Once you have identified the types of bookkeeping services you want to offer, the next step is to set up the infrastructure of your virtual bookkeeping business. This includes building your virtual bookkeepers and accountants team, implementing effective communication tools, and establishing data security and privacy protocols.

Building your team of best online bookkeeping and accountants

To start a successful virtual bookkeeping business, you must assemble a team of experienced bookkeepers and a dedicated accountant who can provide high-quality service to your clients. You can find professionals by networking, searching job boards, or partnering with other bookkeeping businesses to outsource some of your workloads. When hiring, vet dedicated bookkeeper candidates thoroughly and assess their qualifications, experience, and soft skills.

Implementing effective communication tools

You must communicate effectively with your team and clients as a virtual bookkeeping business. Consider using video conferencing software, instant messaging apps, and project management tools to facilitate communication and collaboration. Create a clear communication protocol that outlines how you will communicate with your clients and team members.

Establishing protocols for data security and privacy

Data security and privacy are critical concerns for any business, particularly virtual bookkeeping businesses dealing with sensitive financial data. Make sure to have protocols and procedures to safeguard your clients' information. This may include using secure file-sharing tools, encrypting email communications, and regularly backing up your data. Consider obtaining data security and privacy certifications, such as the Certified Information Systems Security Professional (CISSP) certification.

By putting in place a strong infrastructure for your virtual bookkeeping business, you can ensure that your team is organized, efficient, and able to provide high-quality services to your clients. With effective communication tools and robust data security protocols, you can build trust with your clients and establish your business as a reliable partner for their bookkeeping needs.

Marketing your business

Once you have set up your virtual bookkeeping business, the next step is to get the word out there and attract potential clients. This section will discuss how to effectively market your business and make it stand out in the competitive landscape.

Understanding your target audience

Before launching any marketing campaigns, it's essential to identify your target audience. Who are you trying to reach with your services? Are you targeting small businesses or larger companies? With a clear understanding of your target audience, you can tailor your marketing efforts to speak directly to their pain points and offer solutions that meet their needs.

Identifying your unique selling points

What makes your virtual bookkeeping business different from others in the market? Identifying your unique selling points is critical to creating a memorable brand that will resonate with your target audience. It could be your expertise in a particular industry or niche, a streamlined bookkeeping process, or exceptional customer service.

Creating Your brand identity, logo, and tagline

A strong brand identity is vital for any business; online bookkeeping service is no exception. Your brand identity includes your logo, tagline, color scheme, and overall brand voice. These elements should align with your unique selling points and resonate with your target audience. Remember that your brand identity should be consistent across all marketing channels.

Launching your marketing campaigns

With a solid understanding of your target audience, unique selling points, and brand identity, it's time to launch your marketing campaigns. Consider using a mix of marketing channels, such as social media, email marketing , and paid advertising, to reach your potential clients. Track your marketing efforts and adjust your strategies accordingly to maximize your return on investment.

Offering your services

As you launch your virtual bookkeeping business, you must decide on your pricing strategy, draft your service agreements, and provide dependable customer service. Here are a few sub-topics to remember as you offer your services.

Choosing your pricing strategy

Your pricing strategy is one of the essential decisions you will make as a virtual bookkeeper. Will you charge by the hour, project, or a monthly retainer? You need to factor in your experience, the level of expertise required by the client, and the volume of work before deciding on a pricing structure.

Drafting your service agreements and contracts

Your service agreement should outline the terms and scope of your bookkeeping services. It should indicate the deliverables, the type of records you will keep, like financial statements, and the frequency of reconciliation. A service agreement should detail the payment terms, timelines, and penalties for missed deadlines.

Providing dependable customer service

Building a trustworthy relationship with your clients is crucial in online bookkeeping services. You need to ensure that you are easily accessible to your clients during their business hours. You should also prioritize the timely delivery of the reconciled records and keep them informed of any changes in the workflow.

Networking with potential clients and partners

Networking is an essential part of growing your virtual bookkeeping business. You can attend small business forums, join local business associations, and volunteer for charitable causes. You can also participate in virtual networking opportunities like webinars, forums, and social media groups.

By considering these sub-topics as you offer your services as a virtual bookkeeper, you are more likely to build a successful, thriving business that meets your client's needs.

Measuring success and looking ahead

To ensure the success of your virtual bookkeeping business, it's important to track and analyze your business performance regularly. In this section, we discuss the different ways you can measure success and what you can do to continue growing your business.

Tracking and analyzing your business performance

One way to measure success is by tracking your revenue, expenses, and profits. You can use accounting software to monitor your finances and generate reports that provide insights into your business performance. Key metrics include client retention, customer satisfaction, and project completion rates. Analyzing these metrics can help you identify areas to improve and growth opportunities.

Addressing feedback and making improvements

Listening to feedback from clients is essential to improving your bookkeeping services. Solicit feedback at the end of each project or engagement and use it to identify areas where you can improve. Additionally, consider conducting surveys or focus groups periodically to gauge customer satisfaction. Make sure to act on any feedback you receive promptly and professionally.

Identifying growth opportunities

As your business grows, it's important to explore new opportunities that can help you expand your client base and increase revenue. Some options include offering additional services like tax preparation or financial planning, partnering with other businesses to cross-promote services, or expanding your existing services to new industries.

Tips for expanding your virtual bookkeeping business

Expanding your virtual bookkeeping business requires careful planning and a willingness to take risks. Some tips to consider include investing in marketing and advertising, developing strategic partnerships, streamlining your workflows, and staying up to date with the latest trends and technologies in the industry.

Scale your bookkeeping business with B12’s AI website builder

Measuring your success and looking ahead is essential to building a thriving virtual bookkeeping business. By tracking your business performance, addressing feedback, identifying growth opportunities, and following best practices for expansion, you can take your virtual bookkeeping services to the next level and achieve long-term success.

Setting up your independent bookkeeping practice online might be difficult, especially for small business owners, but with B12 , you can simplify the procedure and assist you in creating a credible online identity. Invest in a reputable website with client-facing tools like scheduling, contracts, payments, and intake forms.

B12’s team of professionals can help you at every stage, from developing the initial version of your website to publishing it. Thus, making it possible to have the best online bookkeeping services. Join right away !

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BUSINESS STRATEGIES

How to start a bookkeeping business in 8 steps

• Maddy Osman

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.

To set yourself up for success, follow these steps to start your bookkeeping business:

Develop a business plan

Choose a business entity

Obtain necessary skills and certifications

Set up your office and accounting systems

Define your target market

Set pricing and payment terms

Register your business and launch your brand

Market 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 proprietorship

Partnership

Limited liability company (LLC)

Corporation

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:

Visual Bookkeeping

Solutions Bookkeeping 

Zen Bookkeeping Services

The Bookkeeping Collective

Abacus Professionals

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:

How to start a business in Connecticut

How to start a business in Texas

How to start a business in New York

How to start a business in Arizona

How to start a business in Virginia

How to start a business in Illinois

How to start a business in North Carolina

How to start a business in Georgia

Other service business ideas you might be interested in

How to start an online business

How to start a consulting business

How to start a fitness business

How to start a service business

How to start a fitness clothing line

How to start a makeup line

How to start a candle business

How to start a clothing business

How to start an online boutique

How to start a T-shirt business

How to start a jewelry business

How to start a subscription box business

How to start a beauty business

How to sell crafts online

How to start a DJ business

How to start a dropshipping business

How to start a car wash business

How to start a baking business

How to start an eyelash business

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How to start a farming business

How to start a pool cleaning business

How to start an eCommerce business

How to start a laundromat business

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.

Do I need to rent office space?

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Creating your business plan

It’s time to get things down on paper. Your business plan is vital to reality checking all those ideas you have.

What to do on day zero

If you already know what you want to be called, lock down the name and register the URL. Now take some time to see what’s working for other bookkeepers. Find the ones in your area and check out their websites – plus their LinkedIn and Facebook profiles – to see what makes them tick. How do they speak to the market? What services do they offer? How much do they charge? Use this research to help start the plan for your bookkeeping business.

But what if I already know the plan?

It’s great if you already know how you’re going to get started, but it’s still important to write everything down. For one thing, you’ll want to record all your golden ideas before they’re forgotten. Plus the writing process will help you interrogate those ideas.

Putting them on a timeline, costing them out, and fitting them around each other might reveal a thing or two. Perhaps some assumptions will need to be rethought, or some ideas will have to be skipped in favor of others. It’s a great way to organize your thinking.

Start with a working one-pager

The key to a business plan is to start out simple, and build on it as you go. Begin with a few headings and bullet points that map out your vision, goals, milestones and predictions.

Don’t let it get out of hand or bog you down. That’s not what a business plan is for. It’s supposed to help you get started. So set yourself a target of producing a one page plan to start.

Choose your words carefully

Decide how you’re going to talk about your business, and which words you’ll use. It’ll be helpful in settling on a value proposition and relating to clients. You can use your chosen terms in your elevator pitch, on your website, in blurbs about your business – and in your business plan.

Sections for a one-page business plan

1. Value proposition: Explain why clients will be better off with you.

2. The problem you’re solving: Describe the status quo and say why it’s not ideal.

3. Target market and competition: Profile the clients you want, and the bookkeeping solutions they use now.

4. Sales and marketing: Show how you’ll reach your target market, and what you’ll say to them.

5. Budget and sales: Work out your costs and predict how much you can earn over the first couple of years.

6. Milestones: Identify all the things that need to happen and map them against a timeline.

7. The team: Identify the people that will be involved (including consultants) and outline their roles.

8. Funding: Show how you’ll bankroll the business, especially as you wait for fees to start rolling in.

9. Contingency plan: What will you do if your cash flow isn’t what you budgeted?

You may eventually draw up a longer business plan, or you may stick with a short one. It depends on your working style, and the level of risk you’re taking on. Your plan will probably be more detailed if you’re taking on a lot of debt.

You can download a copy of our one-page or multi-page business plan template .

Staying alive

Once you’ve got your plan nailed down, remember you really don’t. You should treat your plan as a living document and keep tweaking it as things evolve. That’s another reason why it’s good to have a short plan, which you’re much more likely to update as you go. Try to be agile and open to change.

The discipline of maintaining your business plan will help you:

• discover and solve problems – putting things in black and white will show up holes in your thinking.
• get feedback from others – you can share your plan to get feedback from trusted advisors.
• go for more finance – an up-to-date business plan (and budget) means you’re always ready to apply for loans.
• guide growth – regular focus on the big picture will help you make strategic decisions rather than instinctive ones.

Have a succession plan

You will also need a succession plan. What will happen when you step away from the business? Will you sell it? Who to? A family member, a staff member, or someone on the open market?

A good succession plan will make sure the business can survive and thrive without you. That it will perform for its clients and its new owners. And it should give you the flexibility to step away from the business at short notice, if required or desired.

Learn more in our guide to succession planning.

Xero does not provide accounting, tax, business or legal advice. This guide has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the content provided.

Starting a bookkeeping business

Work through the big decisions around accreditation, services to offer, fees to charge, and how to find clients.

You’ll need some training and certification to become a professional bookkeeper. Find out where this is available.

With a foundation of knowledge, skills and experience, take the next steps in setting up as a bookkeeper.

You need to nail down what services you’ll offer, who to, and how. Don’t promise more than you’re able to deliver.

Designing your bookkeeping business around a specific type of client or your strengths can be a successful way to go.

How do you walk the line between profitable for you and affordable for your clients? And help clients budget?

You might deliver an awesome service at a great price, but what if no one knows? Let’s look at marketing your services.

Download the bookkeeping business guide

A guide to help you work through the big decisions around starting a bookkeeping business. Fill out the form to receive the guide as a PDF.

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• How to Start a Virtual (Online) Bookkeeping Business

Virtual bookkeeping is the process of recording, storing, and managing financial transactions for other companies from a remote location. Throughout these processes, bookkeeping businesses track income and expenses to help companies improve profitability, decide where to spend money, understand the bigger financial picture, and stay on track with finances.

Starting an online bookkeeping business comes with plenty of advantages – you get to make your own schedule, work with any companies you’d like, and make a living working from home. Also, you don’t need a degree, plenty of experience in the field, or a bunch of money to become a successful bookkeeper.

If you’re already considering a business idea , you’ll be glad to hear that launching a virtual bookkeeping business is easier than it may seem. This detailed guide will outline what to do to start your brand-new online bookkeeping services business.

Write a business plan

Writing a business plan is the first step to launching any business, including a virtual bookkeeping one. Coming up with a detailed business plan is essential for figuring out how you’ll make money as a virtual bookkeeper because it helps you prepare for all the following steps of this process.

Business plans can be more or less detailed, depending on what future virtual bookkeepers decide to disclose in them. 

In its most basic form, a business plan should include the following information:

• Details about the market, such as competitors, target clients, and industry;
• Research information about common client issues and how your business solves them;
• Overview of your strengths, weaknesses, opportunities, and threats;
• Financial details such as available capital, projected cash flow, profits, and expenses;
• Marketing strategy plans; and
• Plans for growing the business.

Of course, you can create a business plan with plenty of other information. The more detailed it is, the better you’ll be prepared for various situations that can occur as a business owner.

Name your business

Once you have a solid business plan for your online bookkeeping company, it’s time to give it a unique name. Naming a business is a different experience for everyone.

Some people do a small amount of brainstorming before they have a eureka moment and come up with the perfect business name. Others struggle for months and even then aren’t sure if they made the right choice.

Whatever the case may be for you, naming a business is something essential. Your business name will appear on all documents, contracts, and paperwork and help clients connect it with the brand you represent.

However, coming up with a name idea isn’t enough, because you must ensure that no other businesses are using the same name . Otherwise, companies could file charges, which no business owner wants to deal with at the beginning of their journey.

If you’re having trouble coming up with the perfect name for your virtual bookkeeping business, many tools can make this process much simpler. For instance, a business name generator can create a potential business name in just a few clicks and save you a lot of time and effort.

How will you fund your business?

The next step is to decide on funding. When launching a virtual bookkeeping business, you can either self-fund or take out a bank loan. Both options have unique advantages and disadvantages, but online bookkeepers should take the self-funding route if possible.

Since starting an online bookkeeping business doesn’t typically include numerous expensive costs and is one of the most profitable options, prospective bookkeepers can launch their business with as little as $1,000.

The capital for starting a virtual bookkeeping business should cover costs like creating a website and a subscription to a bookkeeping software solution . That’s in the case that you already own a desktop computer or a laptop. If not, your costs will be higher because you need a reliable device to offer virtual bookkeeping services.

Whether you decide to self-fund or take out a loan from a bank, don’t forget to create a financial safety net to cover any unplanned costs that are common in the beginning stage of starting a business.

Get permits and licenses

Even though the company you’re starting operates only online, you still need to obtain the necessary permits and licenses to ensure that you follow all legal procedures.

Getting permits and licenses is different for every country, so it’s best to inform yourself about the laws in the country or state where you plan to operate. 

For example, starting an online bookkeeping business in the US requires the following permits and licenses:

• A general business permit or license – most countries require all business owners to obtain a general business permit that allows them to run a business, both online and offline.
• Business name registration – bookkeepers must register a name for their business. This will also prevent other business owners from using the same name for their companies.
• A sales tax permit – many countries and states don’t require a sales tax permit, but if you operate where it’s obligatory, the process equips you with an account number with the Department of Revenue.
• A certificate of occupancy – this permit is about where you plan to do business. You need a certificate of occupancy even when working from home.

Register the company

After receiving all of the necessary permits and licenses, it’s time to formally register your company. In most countries, online bookkeepers can choose from four common business structures:

• Sole proprietorship;
• Partnership;
• Limited Liability Company (LLC); or
• Corporation.

If you’re unsure which structure suits your business needs best, getting professional advice from an attorney can help you to make the right decision. A sole proprietorship is a popular choice for online bookkeepers because it’s perfect for people who are just starting out and have limited funds.

Another option is to go with an LLC. While an LLC company comes with more responsibility, you can also use LLC services to help you form an LLC company more efficiently. Starting with a sole proprietorship and transitioning into an LLC as your business grows is also a possibility.

Open a business account

Even if your business is a one-man show, you can’t use a personal bank account for business transactions. Dividing personal from professional costs is essential to maintain a healthy balance between life and work.

The market is filled with companies and banks that offer outstanding business banking account deals. You should take some time to review the available offers and select the bank that you think will provide you with all of the necessary services.

We recommend choosing a bank that offers free, online business accounts because they’ll work perfectly for your virtual bookkeeping business. With these accounts, you can open an account in minutes and easily make payments, deposit checks, and schedule money transfers.

However, going with a traditional bank and building a relationship with a local banker have advantages. Having a financial expert by your side is helpful in many ways if you’re starting a new business.

Find the tools you need to do your work

Finally, virtual bookkeepers need to invest in high-quality tools to offer bookkeeping services to other companies. As a virtual bookkeeper, you should spend more money on work tools because they’ll equip you with more flexibility and offer a competitive advantage.

Considering that bookkeepers rely on the power of technology daily, they should invest in quality hardware and software.

Regarding hardware tools, you should decide whether you want to work on a desktop computer or a laptop. A bigger screen will help reduce eye fatigue, but a laptop is a better choice if you plan to travel the world while offering bookkeeping services.

As for software, most programs will run on a PC or a Mac, so it’s a matter of personal preference.

You need to purchase a reliable bookkeeping business software solution to stay on top of your client’s bookkeeping and manage workflow. Also, a quality video conferencing platform is a perfect way to conduct meetings and interviews.

Finally, a business financial monitoring software tool can help you offer the best bookkeeping services by taking care of your own finances.

Starting a virtual bookkeeping business doesn’t have to be challenging, and it certainly isn’t an impossible task.

If you’d like to become an online bookkeeper, this handy step-by-step guide is all you need to learn about the entire process. It provides an excellent starting point, helping you determine what you need to do to become an owner of a successful online bookkeeping business.

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• Sample Business Plans

Bookkeeping Business Plan

Numerous skilled tasks are required for bookkeeping are management of costs, earnings, tax returns, and payroll. Careful planning is required for each of these services as well as others for a bookkeeping business to operate successfully.

How to Write a Bookkeeping Business Plan?

Writing a bookkeeping business plan is a crucial step toward the success of your business. Here are the key steps to consider when writing a business plan:

Free Business Plan Template

Download our free bookkeeping business plan template now and pave the way to success. Let’s turn your vision into an actionable strategy!

• Fill in the blanks – Outline
• Financial Tables

1. Executive Summary

An executive summary is the first section of the business plan intended to provide an overview of the whole business plan. Generally, it is written after the entire business plan is ready. Here are some components to add to your summary:

• Start with a brief introduction: Start your executive summary by introducing your idea behind starting a bookkeeping business and explaining what it does. Give a brief overview of the idea of how your bookkeeping business will be different.
• Market opportunity: Describe the target market in brief, and explain the demographics, geographic location, and psychographic attributes of your customer. Explain how your accounting business meets its needs. Clearly describe the market that your business will serve.
• Mention your services: Describe in detail what all services your bookkeeping firm will provide as tax returns, payroll services, audit preparation, or others.
• Management team: Name all the key members of your management team with their duties, responsibilities, and qualifications.
• Financial highlights: Provide a summary of your financial projections for the company’s initial years of operation. Include any capital or investment requirements, startup costs, projected revenues, and profits.
• Call to action: After giving a brief about your business plan, end your summary with a call to action, for example; inviting potential investors or readers to the next meeting if they are interested in your business.

Ensure you keep your executive summary concise and clear, use simple language, and avoid jargon.

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2. Business Overview

Depending on what details of your business are important, you’ll need different elements in your business overview, Still, there are some foundational elements like business name, legal structure, location, history, and mission statement that every business overview should include:

• The name of your bookkeeping firm and what type of firm it is: a simple bookkeeping firm, audit firm, virtual bookkeeping firm, tax firm, forensic accounting firm, or some other.
• Company structure of your accounting firm whether it is LLC, partnership firm, or some other.
• Location of your business and the reason why you selected that place.
• Mission statement: Add a mission statement that sums up the objectives and core principles of your firm. This statement needs to be memorable, clear, and brief.
• Business history: Include an outline of the accounting firm’s history and how it came to be in its current position. If you can, add some personality and intriguing details, especially if you got any achievements or recognitions till now for your incredible services.
• Future goals: It’s crucial to convey your aspirations and your vision. Include the vision of where you see your business in the near future and if you have any plans of opening a new franchise of your business in the same city in the future.

This section should provide an in-depth understanding of your accounting business. Also, the business overview section should be engaging and precise.

3. Market Analysis

Market analysis provides a clear understanding of the market in which your bookkeeping business will run along with the target market, competitors, and growth opportunities. Your market analysis should contain the following essential components:

• Target market: Identify your target market and define your ideal customer. Know more about your customers and which services they prefer: bookkeeping, auditing, accounting, tax calculation, payroll, or something else.
• Market size and growth potential: Provide an overview of the bookkeeping industry. It will include market size, trends, growth potential, and regulatory considerations. Highlight the competitive edge and how your business is different from the rest of the businesses.
• Competitive analysis: Identify and analyze all other bookkeeping businesses in the local market, including direct and indirect competitors. Evaluate their strengths and weaknesses, and explain how your business can offer qualitative services.
• Market trends: Analyze current and emerging trends in your industry, such as changes in customer preference or tax regime. Explain how your business will cope with all the changes.
• Regulatory environment: Describe any regulations or licensing requirements that affect the bookkeeping business, such as storing data for 5 years, privacy policy for clients’ data, and others.

Some additional tips for writing the market analysis section of your business plan:

• Use a variety of sources to gather data, including industry reports, market research studies, and surveys.
• Be specific and provide detailed information wherever possible.
• Include charts and graphs to help illustrate your key points.
• Keep your target audience in mind while writing the business plan

4. Products And Services

The product and services section of a virtual bookkeeping business plan should describe the specific services and products that will be offered to customers. To write this section should include the following:

• Create a list of the services: the primary services you provide, such as accounting, payroll, tax preparation, and financial statement production, should be briefly described here.
• Describe each service: For each service, provide a detailed description of what it entails, the time required, and the qualifications of the professionals who will provide the service. For example, the firm needs to hire a chartered accountant.
• Additional services: Make sure to list these in your product and services section if you provide any services beyond basic bookkeeping, such as tax planning or business advising.

Overall, the product and services section of a business plan should be detailed, informative, and customer-focused. By providing a clear and compelling description of your offerings, you can help potential investors and readers understand the value of your business.

5. Sales And Marketing Strategies

Writing the sales and marketing strategies section means a list of strategies you will use to attract and retain your clients. Here are some key elements to include in your sales & marketing plan:

• Develop your unique selling proposition (USP): Determine what makes your bookkeeping services stand out from the crowd – competitive pricing, expert knowledge, or customized service.
• Determine your pricing strategy: Develop a pricing strategy that is competitive and affordable, yet profitable. Consider offering promotions, discounts, or packages for your bookkeeping services to attract new customers.
• Marketing strategies: Develop a marketing strategy that includes a mix of online and offline marketing tactics. Consider social media, email marketing, content marketing, brochures, print marketing, and events.
• Sales strategies: Create a sales plan that explains how you’ll turn leads into paying customers. Offering free consultations, providing references, or creating unique proposals are a few examples of what this could include.
• Customer retention: Describe how your business will retain customers and build loyalty, such as through loyalty programs, special events, or personalized service.

Overall, the sales and marketing strategies section of your business plan should outline your plans to attract and retain customers and generate revenue. Be specific, realistic, and data-driven in your approach, and be prepared to adjust your strategies based on feedback and results.

6. Operations Plan

When writing the operations plan section, it’s important to consider the various aspects of your business processes and procedures involved in operating a business. Here are the components to include in an operations plan:

• Workplace: Make a list of the equipment and physical space you’ll need for your bookkeeping firm. A dedicated workstation, accounting software, and communication tools are a few examples of what this may entail.

By including these key elements in your operations plan section, you can create a comprehensive plan that outlines how you will run your bookkeeping business.

7. Management Team

The management team section provides an overview of the individuals responsible for running the virtual accounting firm. This section should provide a detailed description of the experience and qualifications of each manager, as well as their responsibilities and roles.

• Key managers: Describe the key members of your management team, their roles, and their responsibilities. It should include the owners, senior management, and any other accountants who will be involved in the operation of the business, including their education, professional background, and any relevant experience in the industry.
• Organizational structure: Describe the organizational structure of the management team, including reporting lines and how decisions will be made.
• Compensation plan: Describe your compensation plan for the management team and staff, including salaries, bonuses, and other benefits.
• Board of advisors: If you have a board of advisors for your business, then mention them along with their roles and experience.

Describe the key personnel of your company and highlight why your business has the fittest team.

8. Financial Plan

When writing the financial plan section of a business plan, it’s important to provide a comprehensive overview of your financial projections for the first few years of your business.

• Profit & loss statement: Create a projected profit & loss statement that describes the expected revenue, cost of products sold, and operational costs. Your firm’s anticipated net profit or loss should be computed and included.
• Cash flow statement: Estimate your cash inflows and outflows for the first few years of operation. It should include cash receipts from clients, payments to vendors, loan payments, and any other cash inflows and outflows.
• Balance sheet: Prepare a projected balance sheet, which shows the accounting firm’s assets, liabilities, and equity.
• Break-even point: Determine the point at which your bookkeeping company will break even, or generate enough revenue to cover its operating costs. This will help you understand how much revenue you need to generate to make a profit.
• Financing needs: Estimate how much financing you will need to start and operate your bookkeeping business. It should include both short-term and long-term financing needs, such as loans or investment capital.

Remember to be realistic with your financial projections, and to provide supporting evidence for all of your estimates.

9. Appendix

When writing the appendix section, you should include any additional information that supports the main content of your plan. This may include financial statements, market research data, legal documents, and other relevant information.

• Include a table of contents for the appendix section to make it easy for readers to find specific information.
• Include financial statements such as income statements, balance sheets, and cash flow statements. These should be up-to-date and show your financial projections for at least the first three years of your business.
• Provide market research data, such as statistics on the size of the bookkeeping industry, consumer demographics, and trends in the industry.
• Include any legal documents such as permits, licenses, and contracts.
• Provide any additional documentation related to your business plans, such as marketing materials, product brochures, and operational procedures.
• Use clear headings and labels for each section of the appendix so that readers can easily find the information they need.

Remember, the appendix section of your accounting business should only include relevant and important information that supports the main content of your plan.

The Quickest Way to turn a Business Idea into a Business Plan

Fill-in-the-blanks and automatic financials make it easy.

This bookkeeping business plan sample will provide an idea for writing a successful virtual bookkeeping business plan, including all the essential components of your business.

After this, if you are still confused about how to write an investment-ready business plan to impress your audience, then download our bookkeeping business plan pdf .

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Frequently asked questions, why do you need a bookkeeping business plan.

A business plan is an essential tool for anyone looking to start or run a successful accounting firm. It helps to get clarity in your business, secures funding, and identifies potential challenges while starting and growing your business.

Overall, a well-written plan can help you make informed decisions, which can contribute to the long-term success of your bookkeeping success.

How to get funding for your bookkeeping business?

There are several ways to get funding for your business, but one of the most efficient and speedy funding options is self-funding. Other options for funding are!

• Bank loan – You may apply for a loan in government or private banks.
• Small Business Administration (SBA) loan – SBA loans and schemes are available at affordable interest rates, so check the eligibility criteria before applying for it.
• Crowdfunding – The process of supporting a project or business by getting a lot of people to invest in your bookkeeping firm, usually online.
• Angel investors – Getting funds from angel investors is one of the most sought options for startups.
• Venture capital – Venture capitalists will invest in your business in exchange for a percentage of shares, so this funding option is also viable.

Apart from all these options, there are small business grants available, check for the same in your location and you can apply for it.

Where to find business plan writers for your bookkeeping business?

There are many business plan writers available, but no one knows your business and idea better than you, so we recommend you write your virtual accounting business plan and outline your vision as you have in your mind.

What is the easiest way to write your bookkeeping business plan?

A lot of research is necessary for writing a business plan, but you can write your plan most efficiently with the help of any bookkeeping business plan example and edit it as per your need. You can also quickly finish your plan in just a few hours or less with the help of our business plan software.

About the Author

Upmetrics Team

Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more

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Bookkeeping Business Plan Template

Written by Dave Lavinsky

Bookkeeping Business Plan

You’ve come to the right place to create your Bookkeeping business plan.

We have helped over 1,000 entrepreneurs and business owners create business plans and many have used them to start or grow their Bookkeeping companies.

Below is a template to help you create each section of your Bookkeeping business plan.

Executive Summary

Business overview.

Pacific Bookkeeping is a new bookkeeping firm located in Seattle, Washington. The firm will focus on providing expert bookkeeping services and exceptional customer service. We will help both small businesses and individuals and provide them with tax preparation, forecasting, budgeting, and other bookkeeping/accounting services.

Pacific Bookkeeping is led by Rebecca Stone, an experienced accountant who has been managing a large bookkeeping firm in Seattle, Washington for the past ten years. She graduated from Washington State University with an accounting degree and has been working at a large payroll firm since then, starting at an entry-level position and working her way up to a management-level role. Her experience and education have fully equipped her to run her own local bookkeeping firm.

Product Offering

Pacific Bookkeeping will provide a full range of bookkeeping services for individuals and small businesses. Some of these services include:

• Recording invoices
• Tax filing and preparation
• Financial reporting
• Payroll processing
• Monitoring accounts receivable
• Documenting receipts
• Forecasting
• Customer analysis

Customer Focus

Pacific Bookkeeping will primarily serve individuals and small businesses in the Seattle, Washington area. The city is home to over four million residents and around 100,000 businesses and many of them have a need for professional bookkeeping services. We will offer a wide variety of bookkeeping services in order to serve as many customers as we can in this target market.

Management Team

Pacific Bookkeeping is led by Rebecca Stone, an experienced accountant who has been working at a large bookkeeping firm in Seattle, Washington for the past ten years. She graduated from Washington State University with an accounting degree and then began working at the firm, starting at an entry-level position and working her way up to a management-level role. Though she has never run an accounting firm of her own, her experience has given her an in-depth knowledge of the bookkeeping industry, including the operations side (e.g., running day-to-day operations) and the business management side (e.g., staffing, marketing, etc.).

Success Factors

Pacific Bookkeeping will be able to achieve success by offering the following competitive advantages:

• Location: Pacific Bookkeeping is centrally located in the community, which provides ease of access for clients. The firm’s office will be located between the retail and business districts, making it accessible to a larger customer base.
• Competitive pricing: Pacific Bookkeeping’s pricing is more affordable than its closest competitors.
• Management: The management team has years of accounting experience that allows the company to market to and serve clients in a much more sophisticated manner than competitors.
• Relationships: Having lived in the community for over 20 years, Rebecca Stone knows all of the local leaders, newspapers, and other influencers. As such, it will be relatively easy for Pacific Bookkeeping to build brand awareness and an initial customer base.

Financial Highlights

Pacific Bookkeeping is seeking a total funding of $200,000 of debt capital to open its bookkeeping firm. Funding will also be dedicated towards three months of overhead costs including the payroll of the staff, rent, and marketing costs. The breakout of the funding is below:

• Office space build-out: $20,000
• Office equipment, supplies, and materials: $10,000
• Three months of overhead expenses (payroll, rent, utilities): $150,000
• Marketing costs: $10,000
• Working capital: $10,000

Company Overview

Who is pacific bookkeeping, pacific bookkeeping’s history.

Once her market analysis was complete, Rebecca Stone began surveying local office spaces for lease and identified an ideal location for the bookkeeping firm. Rebecca Stone incorporated Pacific Bookkeeping as a Limited Liability Corporation in January 2023.

Once the lease is finalized on the office space, interior design work can begin to make the office an appealing place to meet with clients.

Since incorporation, the company has achieved the following milestones:

• Located available office space for rent that is ideal for the bookkeeping firm
• Developed the company’s name, logo, and website
• Hired an interior decorating company to design and furnish the office
• Determined equipment and necessary supplies
• Began recruiting key employees

Pacific Bookkeeping’s Services

Industry analysis.

The United States Bookkeeping Industry is forecast to generate more than $66B this year. According to research reports, the largest bookkeeping firm in America generates approximately $9.5B annually. There are currently over 1.5M bookkeepers employed throughout the United States.

The top bookkeeping firms industry-wide are Automatic Data Processing (ADP) ($9.5B in annual revenue), Intuit ($7.8B in annual revenue), and Paychex ($4.0 in annual revenue). All other bookkeeping firms in the United States combined generate approximately $43.5B in annual revenue. An estimated 42% of industry revenue is generated through payroll services. Additional services such as billing, general accounting, tax preparation, and bookkeeping make up the remainder.

One of the biggest challenges for bookkeeping firms is the ability to keep up with changes in regulations. Additional hurdles include recruiting and retaining high-quality employees, keeping up with evolving technology, and acquiring new clients.

However, despite the challenges, the bookkeeping industry is expected to grow significantly throughout the rest of the decade. According to Data Intelo, the industry is expected to grow at a compound annual growth rate of 9.5% from now until 2030. This large growth shows that bookkeeping services are still in high demand, meaning that Pacific Bookkeeping has a solid chance of succeeding and maintaining a profit.

Customer Analysis

Demographic profile of target market.

Pacific Bookkeeping will serve individuals and small businesses in the community of Seattle, Washington, and its surrounding areas. Seattle has thousands of individuals and small businesses that would benefit from affordable bookkeeping services.

The precise demographics for Seattle, Washington are:

Customer Segmentation

Pacific Bookkeeping will primarily target the following customer profiles:

• Individuals
• Small businesses and nonprofits
• Government organizations

Competitive Analysis

Direct and indirect competitors.

Pacific Bookkeeping will face competition from other companies with similar business profiles. A description of each competitor company is below.  

Young & Mitchell

Founded in the 1930s, Young & Mitchell has intentionally remained a small business so that the core group of professionals within the company could get to intimately know each one of their clients. The company is one of the leading tax firms in the Four State Region and offers financial guides and tax tools for individuals for free. Listed below is an outline of the services that the company offers according to its website:

• Tax Preparation and Planning Services
• Assurance and Advisory Services
• Estate and Trust Planning and Tax Preparation
• Bookkeeping/Write-up
• IRS Representation
• Accounting Services
• Audits, Reviews, and Compilation
• QuickBooks Accounting Help and Assistance
• Entity Selection and Restructuring
• Payroll Services

A Plus General Bookkeeping Services

A Plus General Bookkeeping Services is a bookkeeping firm that specializes in financial strategy and consulting for businesses of all sizes. The firm has been in business for over a decade and has acquired a loyal client base.

Clients may work with accountants in person, over the phone, through email, on video conferencing software, or completely through a new digital application. Although this firm has an excellent track record for service, it is also the most expensive bookkeeping company on the market.

Smith Brothers Accounting

Established in 1974, Smith Brothers Accounting is a privately held accountant practice that offers a wide variety of financial services including tax planning and preparation, payroll processing, financial planning, and small business accounting. Smith Brothers Accounting serves individuals and businesses.

Smith Brothers Accounting Services:

• Business Services
• Tax Services
• Individual Services
• Notary Services

Competitive Advantage

Pacific Bookkeeping will be able to offer the following advantages over the competition:

Marketing Plan

Brand & value proposition.

Pacific Bookkeeping will offer a unique value proposition to its clientele:

• Client-focused bookkeeping services
• Service built on long-term relationships
• Thorough knowledge of the latest regulations
• Big-firm expertise in a small-firm environment

Promotions Strategy

The promotions strategy for Pacific Bookkeeping is as follows:

Pacific Bookkeeping understands that the best promotion comes from satisfied customers. The company will encourage its clients to refer others by providing economic or financial incentives for every new client produced. This strategy will increase in effectiveness after the business has already been established.

Website/SEO

Pacific Bookkeeping will invest heavily in developing a professional website that displays all of the features and benefits of the bookkeeping company. It will also invest heavily in SEO so that the brand’s website will appear at the top of search engine results.

Social Media Marketing

Social media is one of the most cost-effective and practical marketing methods for improving brand visibility. The company will use social media to develop engaging content and post customer reviews that will increase audience awareness and loyalty.

Special Offers

Offers and incentives are an excellent approach to assisting businesses in replenishing the churn in their customer base that they lose each year. The company will introduce special offers to attract new clients and encourage repeat business.

Pacific Bookkeeping’s pricing will be moderate so consumers feel they receive great value when purchasing the bookkeeping services. The client can expect to receive quality bookkeeping services at a more affordable price than what they pay at other accounting firms.

Operations Plan

The following will be the operations plan for Pacific Bookkeeping.

Operation Functions:

• Rebecca Stone is the Owner and CEO of Pacific Bookkeeping. She will be in charge of the executive and operations aspects of the business. She will also provide bookkeeping services for her initial clients until she hires a full staff of accountants, bookkeepers, and tax preparation professionals.
• Rebecca is joined by Rhonda Wolfe who will be the company’s Administrative Assistant. She will help Rebecca with the administrative functions of the business.
• Rebecca is also joined by Samual Wright. He will act as the Marketing Manager and manage all the marketing and advertising functions for Pacific Bookkeeping.
• As the firm grows and takes on more clients, Rebecca will hire a team of experienced accountants, bookkeepers, and tax preparation professionals to help with the company’s service functions.

Milestones:

Pacific Bookkeeping will have the following milestones completed in the next six months.

• 3/202X Finalize lease agreement
• 4/202X Design and build out Pacific Bookkeeping
• 5/202X Hire and train initial staff
• 6/202X Kickoff of promotional campaign
• 7/202X Launch Pacific Bookkeeping
• 8/202X Reach break-even

Financial Plan

Key revenue & costs.

Pacific Bookkeeping’s revenues will come primarily from its bookkeeping services. The major costs for the company will include the salaries of the staff, marketing spending, and the rent for a prime location in Seattle.

Funding Requirements and Use of Funds

Key assumptions.

The following outlines the key assumptions required in order to achieve the revenue and cost numbers in the financials and pay off the startup business loan.

• Annual rent: $50,000
• Year 3: 100
• Year 4: 125
• Year 5: 150

Financial Projections

Income statement.

Balance Sheet

Cash Flow Statement

Bookkeeping Business Plan FAQs

What is a bookkeeping business plan.

A bookkeeping business plan is a plan to start and/or grow your bookkeeping business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections.

You can easily complete your Bookkeeping business plan using our Bookkeeping Business Plan Template here .

What are the Main Types of Bookkeeping Businesses?

There are a number of different kinds of bookkeeping businesses , some examples include: Traditional Bookkeeping and Accounting Business, Tax Preparation Services, Payroll Services, and Billing Services.

How Do You Get Funding for Your Bookkeeping Business Plan?

Bookkeeping businesses are often funded through small business loans. Personal savings, credit card financing and angel investors are also popular forms of funding.

What are the Steps To Start a Bookkeeping Business?

Starting a bookkeeping business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.

1. Develop A Bookkeeping Business Plan - The first step in starting a business is to create a detailed bookkeeping business plan that outlines all aspects of the venture. This should include potential market size and target customers, the services or products you will offer, pricing strategies and a detailed financial forecast.  

2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your bookkeeping business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your bookkeeping business is in compliance with local laws.

3. Register Your Bookkeeping Business - Once you have chosen a legal structure, the next step is to register your bookkeeping business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws. 

4. Identify Financing Options - It’s likely that you’ll need some capital to start your bookkeeping business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms. 

5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations. 

6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events. 

7. Acquire Necessary Bookkeeping Equipment & Supplies - In order to start your bookkeeping business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation. 

8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your bookkeeping business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising. 

Learn more about how to start a successful bookkeeping business:

• How to Start a Bookkeeping Business

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Even as the nature of business changes, one job that is always in demand is bookkeeping. Bookkeepers are essential for other businesses to thrive, making sure that they’re keeping track of their financials correctly and on the right track to grow.

In this guide, we’ll review how to start a bookkeeping business, including what you need to do to get set up, how to price your services, how to find your customers and how to fund your business if need be.

What does a bookkeeper do?

A bookkeeper is an instrumental part of any business operation. A company hires a bookkeeper to manage and organize its finances, including detailing and categorizing all transactions. They help small-business owners get a handle on their cash flow — one of the most important barometers for a healthy business. They will also often help businesses produce crucial financial statements such as the profit and loss statement and balance sheet.

Keep in mind, though, bookkeepers differ from accountants as they cannot file taxes or perform audits like certified public accountants. Bookkeepers also aren’t required to have an accounting degree. While they can receive certifications through training programs, they can also simply acquire on-the-job experience to establish their bookkeeping business.

Typical bookkeeping services include:

Managing a business’s finances through business accounting software.

Manage accounts payable and receivable.

Help businesses with an overview of their finances to help them understand their habits.

Generate financial statements.

How to start a bookkeeping business in 8 steps

The good news is that learning how to start a bookkeeping business isn’t hard. Follow these steps to launch your bookkeeping business in no time.

1. Pick your market and niche

A bookkeeper’s work is applicable across many different types of industries — after all, every business needs to track and optimize its finances. However, to help market your business and set it apart amongst the competition, you may decide to specialize in a specific industry.

This could help you build credibility inside that segment, as well as help you hone your skills. Additionally, determining your target audience will be simple if you have a specialty. To help determine your niche, you should also research the market to determine what bookkeeping businesses are already established and which industries they serve.

2. Write a business plan

Regardless of the type of business you run, all business owners should write a business plan . That, of course, includes bookkeepers.

A business plan involves outlining your plans for your company in detail. It is a comprehensive document that explains not only your services but also your market and the competitive advantage you’ll have in your business. You’ll create projections and make plans for your growth. This document does tend to be lengthy, but it’s important to do. It’ll help you focus your business and run efficiently out of the gate.

There are two pieces of the business plan that deserve a little extra consideration.

Choose a business name

Your business name will be the first impression for potential clients, so you’ll want to consider this very carefully. What do you hope to communicate with your name? Is it your expertise, your specialty, your personality?

Before you choose your business name , make sure someone else isn’t already using it, lest clients get confused. Also, run the name by a few people to see the impression they get of it. Once you have your finalists, run the names through your secretary of state’s business name database to make sure it’s available.

Consider certification

As we mentioned above, you don’t technically need to be certified to run a bookkeeping business. You might, however, want to consider becoming a certified public bookkeeper , or CPB, which signals to clients that you have professional-level skills and might be an important part of how you differentiate yourself in a competitive market.

Certification is also available within certain software products, too — for instance, you can get certified in QuickBooks.

How much do you need?

with Fundera by NerdWallet

We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

3. Register your business and get insured

Once you’ve picked a business name, the next step is to register your business and make things official. 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.

Choose a business entity

A major part of registering your business and opening up shop is choosing a business entity. This will govern how you pay taxes as a small-business owner, but also what kind of liability protection you have in case something goes wrong and how you’ll structure your business.

If you’re just starting a bookkeeping business, it’s likely that you’ll just be working solo, at least for the beginning. Consider starting your search into business entities for bookkeepers by looking into sole proprietors and LLCs. The latter could be a great option if you might bring in some help down the line.

Obtain insurance

It’s not compulsory, but you might want to look into insurance for your bookkeeping business. This can help protect you from costly liability in case you make a mistake on your customers’ books — which can be a huge hit to your business and, in some cases, your personal finances — if you aren’t insured. Common business insurance policies for bookkeepers include things such as professional liability and general liability.

4. Choose your bookkeeping software

This one is a no-brainer: Your bookkeeping software will be the foundation of your business. You have lots of options for the best bookkeeping software, so look into them carefully.

If you are overwhelmed, however, or simply want to use the overwhelming favorite, you should consider using QuickBooks Online—this is one of the most popular accounting software providers on the market and is used by many small and large businesses alike. Another popular option is Xero, but there are plenty of bookkeeping apps to choose from. You can get certified in each of these programs, which can not only help you become a power user but can also help you market yourself as an expert.

5. Set up your business infrastructure

When you’re learning how to start a bookkeeping business, you’ll find that there are a few key pieces of infrastructure you’ll need to kick off. Carefully think about setting up the following:

Many clients will look for your website to find out about you and your experience. If you’re specifically running a totally virtual business, a website is extra important since it can demonstrate to clients your skills. And luckily, there are plenty of website builders to make creating your website a breeze.

Client database management

As you grow your client roster, you’ll want to make sure you're tracking them effectively and completely. You can use a CRM and project management tool in which you can set up your own workflow. You can also look into specific accounting practice management software, some of which integrate directly into software such as QuickBooks Online.

File-sharing

If your clients will be sending you things such as receipts or statements, you might want to consider the tool that you’ll use to share files. A popular option is Dropbox, in which you can create a shared folder that both you and your clients have access to.

Business bank account

You’ll also want to make sure that you set up a business bank account to keep your business finances separate from your personal finances. This is crucial for taxes as well as personal liability protection.

Start with a business checking account and, as your business grows, you may also opt for a business savings account to let your excess funds earn interest. Both traditional, brick-and-mortar banks and online institutions offer attractive banking options, so shop around before deciding where you want to park your hard-earned money.

6. Price your services

Figuring out what to charge is any small-business owner’s greatest challenge. Too little and you aren’t fairly compensated for your work; too much and you’ll have a tough time competing with other bookkeeping businesses.

PayScale, a site that tracks salaries and rates, puts the average hourly rate for a bookkeeper around $17 per hour ($10 on the low end and $24 on the high end). You might also want to look into freelance and for-hire contractor sites, such as UpWork or Fiverr, where people list their rates. Find bookkeepers that are similar in your skill set and experience to help gauge what you should be charging.

Remember that the amount that you charge should be contingent on your years of experience, specialization in industries, certifications you carry and your area. And, of course, your rate isn’t fixed — you can always change it if you feel like you’re not priced correctly.

7. Find your customers

Marketing is so important, no matter the type of business you own. The savviest small-business marketers are the ones who figure out exactly who their customers are and advertise directly to them.

You’ll want to think up a unique selling proposition for your business: For instance, are you touting your experience? Your industry specialization? Your focus on local business? This will all help you come up with the most creative ways to market yourself, which may include direct mail or radio ads, social media ads, email campaigns, or any number of other strategies.

Look into our comprehensive guide to small-business marketing, which will cover how to reach people through SEO, search ads, social media and more.

And never forget the power of word-of-mouth referrals — and don’t be too shy to ask for them.

8. Understand your funding options

If you’re starting out small, it’s likely you won’t need a large amount of business funding — you can always explore options down the line if, say, you open a brick-and-mortar office and hire multiple employees.

For now, though, you’ll likely want to get a business credit card to fund your bookkeeping business. This will give you the spending power to set up your company and put all of your business expenses in one place. That’s not only important for separating your business and personal finances, but can help you with your own bookkeeping come tax season.

There are lots of different types of business credit cards to look into, including options with 0% introductory APR periods, so if you have a few startup costs you can’t cover with savings, you can treat this type of card like an interest-free loan. Just make sure you have a plan to pay off the balance before the introductory offer ends and a variable APR sets in.

LLC Formation

The bottom line

One final thought on how to set up a bookkeeping business: Make sure that you grow as the businesses around you do, too. That doesn’t mean you have to take on more clients, but rather grow your knowledge and network.

Keep your skills up to date, evolve the depth in which you know your preferred platforms and stay apprised as their features change, as well. You can always attend professional events, too, such as conferences and networking events. Don’t forget that investing in your business means investing in yourself.

This article originally appeared on JustBusiness, a subsidiary of NerdWallet.

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7 best online bookkeeping services for small businesses.

Tired of feeling disorganized around tax time? Or feel like you might be spending too much time on finance -related tasks?

Scrambling at the last second to gather documents for tax season is stressful, and rushing bookkeeping-related tasks can make you vulnerable to compliance issues and missed growth opportunities. Thankfully, online bookkeeping services have lowered the financial barrier to getting bookkeeping and tax-related help.

So, if you’re looking for bookkeeping help, this guide will introduce you to what exactly online bookkeeping services offer, the best seven solutions for small businesses, and what to consider when choosing the best virtual bookkeeping services for you.

Key Takeaways

• Online bookkeeping services can be a useful, affordable option for businesses, acting as a middle ground between hiring an bookkeeper and doing it yourself
• There are many options out there for online bookkeeping services, but not all may offer the features you might need
• Using online bookkeeping can free you up to spend more time on your own business—provided you choose the right one for your business

Here’s What We’ll Cover:

What Are Online Bookkeeping Services?

What to expect from online bookkeeping services, best online bookkeeping services for small businesses, spend more time on your main business .

How to Choose Your Online Bookkeeping Service

Frequently Asked Questions

Online bookkeeping services typically give you a dedicated bookkeeper or team of financial experts to help you with basic bookkeeping tasks. A bookkeeper’s main responsibility is maintaining accurate financial records.

Bookkeeping is an unavoidable part of having a business because the IRS has certain rules around financial recordkeeping. Aside from staying compliant, having organized books helps you monitor the health of your business, prepare for tax time, and prepare key financial statements.

Save Money With Online Bookkeeping Services 

Online bookkeeping services, also called virtual bookkeeping services, are a very affordable alternative to the traditional employee bookkeeper. To put this in perspective, a bookkeeper’s average salary is $44,527. On the other hand, most online bookkeeping services start at the $200-$400 per month range, with more advanced solutions in the $600-$800 range still being significantly cheaper than hiring a bookkeeping employee.

Every online bookkeeping service will offer a mixture of different features ranging from basic to advanced. As a result, a suite of features from one service will appeal more to very small businesses, while an entirely other set of features from another service might appeal to larger small businesses. That’s why there’s no standard one-size-fits-all solution.

Some of the common features to expect from an online bookkeeping service include:

• Payroll services
• Uses popular accounting software such as FreshBooks
• Dedicated virtual bookkeepers
• Monthly reconciliation of bank statements
• Accounts receivable and accounts payable
• Keeping your books balanced
• Quarterly and monthly reporting
• Tax services
• Billing and invoicing support
• Financial tracking
• Software training

The solutions on our list start as low as $190 a month for basic bookkeeping help to around $350+ for more comprehensive solutions. Let’s review all six online services:

Merritt Bookkeeping

FreshBooks’ online bookkeeping services help you protect your profits, save you time, and grow your business. In collaboration with Bench (more on them later), we offer expert virtual bookkeeping systems and tax services support. The two platforms work together seamlessly, allowing you to effortlessly bill and invoice with FreshBooks, and automatically see that income reflected in your bookkeeping.

In addition to being one of the best online bookkeeping services around, FreshBooks offers 100% compliant tax preparation, taking the stress out of this important but time-consuming process. 

Other features of FreshBooks’ online bookkeeping services include:

• Seamless, efficient workflows between various features
• Clear, on-demand reporting on your business financial health
• The FreshBooks Accounting Partner Program , allows accountants, bookkeepers, and tax experts to work more efficiently with clients
• Monthly organized transaction reports
• Monthly financial statements
• Catch-up bookkeeping services to help you get your finances up-to-date
• Retro bookkeeping services, allow you to access 2+ years of historical bookkeeping, IRS correspondence, unfiled back taxes, and more
• Year-round tax services, including advisory and filing
• Seamless integration with more than 100 apps and add-on services

Because every client and their needs vary so widely, we provide flexible, unique pricing for every client. Get in touch with one of our specialists today to get your quote or click here to get started.

Bench is a popular small business choice because it’s an affordable bookkeeping service with an intuitive, easy-to-use platform. Bench gives you at-a-glance visual reports, which provide you with actionable insight that’ll help grow your small business. Another bonus is that you get to communicate with your bookkeeping service team via chat easily. In addition, Bench has raving online reviews and many integration options.

A downside of Bench is that it specializes in cash-basis accounting, although there is a custom accrual accounting plan on the Pro plan.

• Powerful financial reporting
• Tax filings and tax preparation if you’re a sole proprietor. Tax filing services are available as add-on services if you’re not a sole proprietor
• One-on-one support with an assigned professional bookkeeper and tax expert
• Bookkeeper organizes business transactions.
• Connect with most payroll platforms on the Flex and Pro plan. If you’re on the Core plan, you can only connect to Gusto.
• Connects with most major payment processors on the Flex and Pro plan. If you’re on the Core plan, you can still connect with FreshBooks, PayPal, Stripe, and a few others. 
• Backed up on your books? Get historical bookkeeping as an optional add-on. You can use this feature even if you’re years behind. 
• Real-time accounting when you use LendingClub.
• Connect to non-LendingClub bank accounts, credit cards, and debit cards with the Flex and Pro plan.
• Year-End Financial Package which includes a Profit & Loss Statement, Balance Sheet, Trial Balance, Journal Entry Summary, and General Ledger
• Mobile app on the go
• Pay As You Go – Essential Plan: $349/month billed monthly
• Essential Plan: $299 monthly or  $249/month if you commit to a year
• Premium: $499 monthly or $399/month if you commit to a year

Bench offers a free trial for each plan that includes one prior month of bookkeeping, and whether you choose to continue using Bench or not, you get to keep the income statement and balance sheet for that month.

Bookkeeper is one of the pricier business bookkeeping services on our list, but it comes with many possible add-on services. If you’re looking for a bookkeeping solution you can stick with for the long run, Bookkeeper has most bookkeeping features you could possibly want as an add-on. Possible add-ons include payroll services, individual and business tax returns, and financial performance reporting with key performance indicators. 

Features: 

• Dedicated bookkeeper and dedicated account manager
• Monthly bank reconciliation
• Monthly statements, including the statement of cash flows
• Cash and accrual accounting
• Unlimited support on the Small Business Plus plan and above. Limited support on the Small Business plan.
• 30-minute-monthly scheduled meeting on the Small Business Plus plan and 45 minutes on the Small Business Advanced Plan. Custom on the Custom Plan.
• Lite Virtual Chief Financial Officer services on the Small Business Plus plan and above. 
• Historical bookkeeping add-on
• Small Business: $449/month up to 100 transactions per month
• Small Business Plus: $649/month up to 200 transactions per month
• Small Business Advanced: $849/month up to 300 transactions per month
• Custom pricing

Sunrise, by Lendio, used to be called Billy until it was acquired. It’s known for its easy-to-use interface and its simplification of accounting jargon. Sunrise is a good bookkeeping services solution for sole proprietors and freelancers without employees, and it’s good for invoicing customers, income and expense tracking, and basic reporting capabilities. 

However, if you want more advanced reporting and a more robust mobile experience, you’re better off looking at other solutions on this list. Billy/Sunrise also got some bad reps for its choices regarding customer loyalty when it was acquired. 

• Monthly financial reporting
• Personal bookkeeper
• One-on-one support
• Expense tracking
• Bank reconciliation
• Access to tools to simplify tax preparation for your annual filing 
• Early plan: $149 up to 120 monthly transactions
• Growing plan: $299/month up to 200 monthly transactions
• Corporate plan: $499/month up to 500 monthly transactions

Pilot offers a large set of basic bookkeeping and accounting services and features, including access to a chart of accounts and financial statements, but many services and features are only available as add-on services or only through the custom plan. For businesses with over $200,000 of monthly expenses, this might offer the type of customization you’d need. Some additional services you may have access to include inventory tracking, BillPay, CFO services, and tax services. 

A downside of Pilot is that the main way to communicate with finance experts is via email, which can make it harder to get quick replies. They are available through the phone in most circumstances, though. You also can’t pay on a month-to-month basis, unlike a few others on our list.

• Dedicated finance expert on all plans
• Accrual basis bookkeeping
• Financial statements
• Automatic transactions import
• Payroll and balance sheet reconciliation 
• Burn rate calculations

On the Core plan and above, you get:

• Expedited books delivery
• Monthly phone reviews
• Priority support

Pricing: 

• Core: $599-$899 per month with annual billing
• Select: $849-$1149 per month with annual billing
• Plus: Custom pricing

For the core and select plan, prices increase gradually as a business’s monthly expenses increase. Businesses with over $200,000 in monthly expenses will need a custom plan. The following transactions are included in total expenses: payroll, COGS, and distributions.

Merritt Bookkeeping has the most competitive pricing on our list and is the only one to offer a flat rate for all types of businesses. Unfortunately, if flexibility is what you’re looking for, Merritt Bookkeeping may not be for you since you can only import data from QuickBooks Online. If you’re looking for something very cheap and simple and your business is in its very early stages, the affordability of Merritt Bookkeeping makes it a good choice.

• Historical/catch-up bookkeeping add-on to make your books current
• Issues 1099s
• Automatic statement retrieval from your bank accounts
• Easy-to-use interface
• Monthly financial report
• Connects with your QuickBooks Online account
• Flat rate of $190/month
• 90-day money-back guarantee

InDinero is known for being a scalable bookkeeping solution for small business owners, so if the ability to stay with one service as you grow is important for you, then InDinero would be one of the best online bookkeeping services to consider along with Bench. 

Although InDinero offers scalable plans, they’re not very transparent about what exactly they include in each plan until you talk to a salesperson. Unfortunately, InDinero doesn’t have many integration options, but if you already use the software they integrate with, it’s a very robust solution. 

• Dedicated bookkeeping team 
• On the Essential plan, you have access to cash-basis accounting software
• On the Growth plan, controllers manage accrual accounting for you

The following features are customized to your needs after talking to a salesperson:

• Payroll services 
• Monthly financial reports
• Accounts receivable / Accounts payable processing and reporting
• Employee reimbursements
• Cash flow statement and forecast
• Revenue recognition
• Some inventory management services
• Essential: Starting at $300/month
• Growth: Starting at $900/month
• Executive: Custom pricing

InDinero offers monthly, quarterly, and annual pricing but differs from the rest on our list because you have to talk to a salesperson to get an actual price.

When your business is still growing, bookkeeping isn’t such a cumbersome task. But as the business gets larger, it can start to become a very time-consuming job. When deciding whether to use online bookkeeping services, it’s best to consider the amount of time (and therefore, the amount of money) that you’ll save with accounting software and a dedicated bookkeeper.

Virtual bookkeeping services can also save you money through tax preparation services and tax filing, providing peace of mind that you’re 100% compliant with all tax rules.

Maximize ROI

How often are you looking at your total current income and total current expenses? If it’s only once a year, you’re not alone. Leveraging bookkeeping services allows you to look at your income and expenses in real-time frequently. Having access to robust reports and financial statements allows you to make better decisions for your business leading to an increased ROI from investing in online bookkeeping services . Bookkeeping services can also help small business owners save more through tax preparation and tax filing.

How to Choose Your Online Bookkeeping Services

Here are some questions to ask yourself as you decide on the best accounting software and bookkeeping service solution for your small business: 

Features : What features and services do you value most in an online bookkeeping service? 

Budget : What’s your budget for bookkeeping services?

Scale : Do you want a scalable solution, or are you just happy choosing the best solution for this specific stage of your business?

Services : Are you looking for tax preparation, payroll services, a dedicated finance expert, or all of the above in one online accounting service?

Support : Are you willing to pay for more support but fewer features and services? Or more features and services but less support?

Transactions : How many monthly transactions does your business have? Will that increase significantly by the end of the week?

Catch-up : Do you need to do any catch-up bookkeeping? Are you months or years behind on your books?

Expenses : What are the totals of your monthly expenses?

It’s common for owners of small businesses to attempt bookkeeping on their own, but it’s easy for bookkeeping to become an afterthought until tax time approaches. Leaving taxes to the last second causes businesses to lose out on opportunities that come with frequent expense and revenue tracking, accurate balance sheets, accrual accounting, financial reports, and much more. Choosing the right bookkeeping services for your small business will also free up time for you to focus on your company, easing a lot of stress.

FAQs On Online Bookkeeping Services

More questions about accounting software, online tax and payroll services, or anything else to do with bookkeeping services? Here are a few frequently asked questions. 

Is it worth paying a bookkeeper?

While there are certain scenarios where it makes sense to have a dedicated bookkeeper (or several) on your staff, this is typically reserved for very large companies. For the vast majority of businesses, the job of bookkeeping is too small for a department but too much for the owner. 

How do I start virtual bookkeeping?

The first thing to do when beginning with bookkeeping services is to thoroughly research the many available options. There are countless features, price ranges, and functions for every service out there. Click here to see what FreshBooks’ free trial has to offer and get started today!

What are common bookkeeping mistakes?

The most common mistakes are mixing personal and business finances, leaving taxes to the last minute, missing out on deductions, and not retaining records for long enough.

For a full breakdown of the most common bookkeeping mistakes, read our article on the subject .

Can a bookkeeper do tax returns?

Typically, bookkeepers cannot file tax returns on behalf of other companies on their own. Bookkeepers will usually prepare relevant records and tax documents, and then forward this information to an accountant, who will then prepare the actual tax return. 

What is the golden rule of bookkeeping?

There are several key rules of bookkeeping to keep in mind, but one of the most important is regarding debits and credits. The rule goes ‘debit the receiver, credit the giver’. In other words, debit is all incoming money, while credit is all outgoing money. This is often called the golden rule of bookkeeping.

Is a CPA the same as a bookkeeper?

No. A bookkeeper is not required to have any special certifications or education, while a Chartered Professional Accountant (CPA) is required to have completed a relevant certification in order to offer CPA services. 

More Resources on Small Business Accounting

• How Long Does it Take to Learn Bookkeeping
• How to Choose the Best Accounting Software for Your Small Business?
• How to Organize a Business in 5 Steps

Jason Ding, CPA

About the author

Jason Ding is a seasoned accountant with over 15 years of progressive experience in senior finance and accounting across multiple industries. Jason holds a BBA from Simon Fraser University and is a designated CPA. Jason’s firm, Notion CPA, is an accounting firm with a business-first focus. The firm specializes in preparing personal and corporate taxation while providing fractional CFO work and leading the accounting and finance function for several small-to-medium-sized businesses. In his free time, you’ll find Jason on the basketball court, travelling, and spending quality time with family.

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Best Online Bookkeeping Services

9 best online bookkeeping services (2024).

Updated: Aug 27, 2024, 1:02pm

Online bookkeeping services can save business owners both time and money. However, with hundreds of options, it can be daunting to sort through them all and find the best service for your business. We’ve analyzed the best bookkeeping services to help you find the right solution quickly and easily. Forbes Advisor selected these services based on their service options, pricing, customer service, reputation and more.

• Best Accounting Software for Small Business
• Best Quickbooks Alternatives
• Best Accounting Software for Mac
• Best Construction Accounting Software
• Best Free Accounting Software

Why You Can Trust Forbes Advisor Small Business

Quickbooks live, ignite spot accounting, 1-800accountant, bookkeeper360, bookkeeper.com, forbes advisor rating, how to choose an online bookkeeping service, methodology, frequently asked questions (faqs), next up in business.

Featured Partners

Starting at $49 per month

On Bookkeeper360's Website

Starting from $179 per month

Dedicated bookkeeper, tax preparation, tax advisory, payroll

On 1-800Accountant's Website

Brainy Advisors

All Accountants are Licensed CPAs!

Discounted Expedited Catch-up, Led by Big 4 Veterans, Dedicated Bookkeeper, Unlimited Client Calls

On Brainy Advisor's Website

Merritt Bookkeeping

$250/month (90 Day Guarantee)

Highly Rated, Insightful Reporting, Easy to Use

Income Statement, Balance Sheet, Forecasting, Margins, Cash Flow, Runway, Etc.

On Merritt Bookkeeping's Website

• QuickBooks Live: Best for cleanup bookkeeping
• Botkeeper: Best for accounting firms
• Ignite Spot Accounting: Best for hiring certified bookkeepers
• 1-800Accountant: Best for full-service bookkeeping
• Bookkeeper 360: Best for bookkeeping services by the hour
• FinancePal: Best for small businesses
• Bookkeeper.com: Best for unlimited support
• Decimal: Best for on-demand reports
• Pilot: Best for startups

The Forbes Advisor Small Business team is committed to bringing you unbiased rankings and information with full editorial independence. We use product data, strategic methodologies and expert insights to inform all of our content and guide you in making the best decisions for your business journey.

We reviewed multiple accounting software options using a detailed methodology to help you find the 9 best online bookkeeping services for small businesses. Our ratings considered everything from pricing and customer reviews to the number and quality of features available and what our panel of experts thought about the services available. All ratings are determined solely by our editorial team.

Best for Cleanup Bookkeeping

Starting Price

$17.50 per month

(for the first three months, then $35 per month)

QuickBooks Live is our top pick for online bookkeeping services because it offers cleanup bookkeeping services that vary based on your company’s needs for your first month. Subsequent months are for upkeep and costs $200 per month. This service is ideal for business owners who want to get their bookkeeping in order but don’t have the time or resources to do it themselves.

Who should use it:

QuickBooks Live is best for business owners who want to get their bookkeeping in order but don’t have the time or resources to do it.

Read our full QuickBooks Live review .

• Will update profit and loss (P&L) and balance sheets
• Offers full-service bookkeeping
• Includes an accuracy guarantee
• It’s expensive
• Doesn’t include tax filing services—you’ll need to book this separately

Best for Accounting Firms

$69 per license, per month

Botkeeper is our top pick for bookkeeping services for accounting firms because it’s built specifically for accounting firms. It automates bookkeeping tasks so that your staff can focus on providing value to your clients. Features include white-glove support, a resource library, workflow tools and omnichannel communication. For prices, you’ll need to complete a lead form about your business to receive a custom quote.

Botkeeper is best for accounting firms that want to scale by automating bookkeeping tasks.

• Unlimited email and phone support
• Offers white-glove service
• Automates your manual entry tasks
• Pricing isn’t transparent

Best for Hiring Certified Bookkeepers

Custom quote

When you work with Ignite Spot Accounting, you’ll get bookkeepers certified in a variety of popular programs, such as QuickBooks and TSheets. If you choose its chief financial officer (CFO) services, your CFO will be a certified public accountant (CPA) at a minimum. Its features include automation of tasks, Gusto payroll processing, balance sheet production, income statements, accuracy checks and transaction databases.

Ignite Spot Accounting is best for businesses that want bookkeepers who are certified in popular bookkeeping programs.

• An affordable alternative to hiring an in-house bookkeeper
• No contract required
• Flexible payment options
• Can record invoices, bills, expenses and deposits
• Its minimum fee is $1,750 per month
• Limited support hours

Best for Full-service Bookkeeping

Free; $179 per month

(billed annually)

1-800Accountant is our top pick for full-service bookkeeping because it offers a wide range of bookkeeping services, including standard bookkeeping, cleanup bookkeeping, advisory services, financial reporting, entity formation and tax and payroll services. Its bookkeeping service comes with its Enterprise plan, which costs $399 per month when billed annually. You’ll get a dedicated accountant, year-round tax advice, tax prep, bookkeeping and financial reports.

1-800Accountant is best for businesses that want full-service bookkeeping, including advisory services, financial reporting and tax and payroll services.

• Dedicated accountant
• Can provide tax advice year-round
• Automation saves you time
• Some users complain about billing issues
• Service quality varies

Best for Bookkeeping Services By the Hour

$49 per month plus $125 per hour for support

or $399 per month

Bookkeeper360 integrates with third-party tools, such as Bill, Gusto, Stripe, Shopify, Xero, Brex, Square, Divvy and ADP. These integrations make it easy to track your bookkeeping and accounting data in one place. It also offers full-service bookkeeping, meaning that its team will do the bookkeeping for you. If you only need periodic help, pay as you go for $49 per month plus $125 per hour for support. Otherwise, monthly pricing starts at $399 and weekly pricing starts at $549 per month.

Bookkeeper360 is best for businesses that occasionally need bookkeeping services as well as those that want integrations with third-party tools.

• Offers a pay-as-you-go hourly option
• Weekly and monthly plans available
• Integrates with tons of leading providers
• Provides a la carte options for more extensive CFO and advisory services
• Doesn’t work with FreshBooks
• Your price may be higher than what’s advertised based on business needs

Best for Small Businesses

Not disclosed

FinancePal provides an all-in-one bookkeeping solution that includes features, such as transaction reconciliation, bill pay, business projections, guidance, catch-up bookkeeping, financial statements and tax filing. It’s also ideal for brand-new businesses because FinancePal can help with entity formation. If you’ve fallen behind, it’ll help you get caught up.

FinancePal is best for small businesses that need bookkeeping assistance, including catch-up bookkeeping, entity formation and tax filing.

• Dedicated, U.S.-based team
• Customizable services
• Great for ecommerce companies
• Available via mobile app
• A la carte services add up

Best for Unlimited Support

$399 per month

When you have a Small Business Plus plan or higher, you get unlimited online support. With its base plan, support is limited. All plans come with onboarding, a dedicated bookkeeper and account manager, reconciliation at month-end, balance sheet, P&L, statement of cash flows and a portal with document storage. Higher-tiered plans unlock more transactions and a more frequent service level.

Bookkeeper.com is best for businesses that want unlimited support from their bookkeeping service.

• Dedicated bookkeeper and account manager
• Transparent pricing with plans starting at $399 per month
• Offers a la carte options to make it a full-service bookkeeping and accounting solution
• No bill pay with Small Business plan
• Onboarding can take a while

Best for On-demand Reports

Starting price

$995 per month (plus onboarding fees)

Decimal’s bookkeeping service offers automatic transaction categorization, bank reconciliation and bookkeeping journal entries. You also get on-demand reports, so you can see how your business is doing at any time. Its monthly price starts at $295 per month, plus an onboarding fee and it doesn’t require a long-term commitment.

Decimal is best for businesses that want on-demand reports and don’t mind paying a higher monthly price.

• Includes receipt storage
• Offers mileage tracking
• Transparent pricing
• Not as intuitive as some of its competition
• Onboarding costs extra

Best for Startups

$349 per month

If you’re a startup, Pilot is a good bookkeeping solution. That’s because it offers a prerevenue discount of $200 per month. Otherwise, plans start at $499 per month, paid annually. Each plan comes with a finance expert, automated transaction imports, P&L, balance sheet and cash flow statements. You’ll also get burn rate calculations, which is helpful for startups that need to closely track their spending.

Pilot is best for startups that need bookkeeping assistance and burn rate calculations.

• Prerevenue discount of $200/month
• Burn rate calculations
• Provides a dedicated finance expert with each plan
• Custom reporting isn’t a standard feature
• Inventory tracking costs extra

There are many considerations to take into account when choosing an online bookkeeping service. These include:

• Pricing: How much can you afford to spend on bookkeeping services
• Features: What features do you need?
• Support: How much support do you need from your bookkeeping service?
• Ease of use: How easy is the bookkeeping service to use?
• Service level: How often do you need bookkeeping services?
• Integrations: What integrations does the bookkeeping service offer?

Forbes Advisor analyzed 13 online bookkeeping services and considered 15 metrics such as price, features, customer service, ease of use, integrations and service level. We also looked at real customer experiences to determine if their expectations were met based on what each company promised. After assigning a weighted score to each category, we formulated rankings for each company.

For pricing, we considered whether a service offers a free trial or a free version of its software as well as the affordability of its lowest and highest price tiers. Those that had pricing that we considered to be in the affordable or moderate range fared better in our rankings while companies that offer upfront pricing received higher ratings than those that did not disclose it immediately. Pricing accounted for 10% of our weighted scoring.

We broke features down into two separate categories: general features and additional features. For general features, we considered these to be elements that the software should offer and we weighted them by whether they were part of the paid plan or were available as an add-on. These general features include providing a dedicated bookkeeper, offering bank reconciliation and offering tools, such as invoicing, payroll, bill pay and financial statements.

For additional features, these were elements that fell into the “nice-to-have” category that not all software providers offered, either as part of their regular plan or as a paid add-on. These included offering mobile apps and software integrations. Both kinds of features combined to account for 60% of our total score.

Expert Analysis

Based on our market research and customer reviews on popular third-party review sites, we also ranked additional criteria, such as ease of use, detailed or standout features, popularity and value for the price, ranking these on a graded scale from excellent to terrible. Together, these criteria make up 30% of the total score.

Do I need a bookkeeping service?

If you want your business to save time and money, then you should consider hiring a bookkeeping service. A bookkeeping service can help you stay organized and on top of your finances.

Can I do my own bookkeeping for my business?

A small business can likely do all its own bookkeeping using accounting software. Many of the operations are automated in the software, making it easy to get accurate debits and credits entered.

How much does a bookkeeping service cost?

The cost of bookkeeping services can vary depending on the size of your business and the features you need. Some bookkeeping services charge a monthly fee while others charge by the hour. You can find services for as little as $20 per month while others run thousands per month.

Do small businesses need bookkeeping?

Bookkeeping is an essential part of running a small business. Even if you aren’t planning on growing any time soon, you need to have a sense of how much money is coming in vs. what is going out. On top of that, you need the data used in bookkeeping to file your taxes accurately.

What kind of services do bookkeeping services provide?

Some bookkeeping services can provide a full suite of bookkeeping, accounting and tax services. Others may only offer bookkeeping services. Examples include bookkeeping journal entries, bookkeeping ledger, bookkeeping reconciliation and bookkeeping trial balance.

What is the difference between bookkeeping and accounting?

The main difference between bookkeeping and accounting is that bookkeeping focuses on recording financial transactions while accounting focuses on interpreting, classifying and reporting those transactions.

• Best Accounting Software For Small Business
• Best QuickBooks Alternatives
• FreshBooks Review
• Xero Review: Features, Pricing & More
• QuickBooks Online Invoicing Review
• Kareo Review: Features, Pricing & More

Katherine Haan is a small business owner with nearly two decades of experience helping other business owners increase their incomes.

Kelly Main is a Marketing Editor and Writer specializing in digital marketing, online advertising and web design and development. Before joining the team, she was a Content Producer at Fit Small Business where she served as an editor and strategist covering small business marketing content. She is a former Google Tech Entrepreneur and she holds an MSc in International Marketing from Edinburgh Napier University. Additionally, she is a Columnist at Inc. Magazine.

Small business bookkeeping for beginners

Master small business bookkeeping with this comprehensive guide. Learn the essential steps with Capsule CRM to streamline your financial management.

Go to section

Accurate bookkeeping ensures that all financial transactions are recorded properly, helping you make informed decisions, meet tax obligations and plan for future growth.

Choosing the right accounting method, whether cash-based or accrual, is crucial for effective financial tracking and managing transactions, as it impacts how you record income and expenses.

In this comprehensive guide, we’ll walk you through the fundamentals of small business bookkeeping. Whether you’re just starting or looking to refine your current process, this guide will equip you with the tools and knowledge you need to keep your financial records in order.

We’ll cover a variety of topics including what bookkeeping involves, choosing the right bookkeeping software and setting up a streamlined process.

Bookkeeping might seem complex at first, but with the right approach and tools, it can become a manageable and even rewarding part of running your business. So, let’s take a look at the essentials of small business bookkeeping and set you on the path to financial clarity and success.

What is small business bookkeeping?

Bookkeeping is the process of systematically recording and organizing all financial transactions made by a business. It’s the foundation of your company’s financial records and involves tracking every dollar that comes in and goes out.

Bookkeeping focuses on the daily recording of financial data, ensuring that every transaction is accounted for in the business’s ledgers.

The key objective of bookkeeping is to maintain a precise record of your business’s financial activities, which serves as the groundwork for the more complex tasks of accounting.

For small businesses , bookkeeping is essential because it provides a clear and accurate snapshot of the company’s financial health. Regular bookkeeping helps business owners make informed decisions, such as when to invest in new equipment, hire more staff or expand operations. Maintaining accurate financial records is also critical for complying with tax regulations, avoiding legal issues and preparing for audits. Proper bookkeeping ensures that you can produce the necessary financial documents to report your income. It also enables you to report expenses and profits to tax authorities, helping you avoid penalties and fines.

Key components

The key components of bookkeeping include recording transactions, maintaining a general ledger and preparing financial reports. Below, we’ve listed the key components of bookkeeping.

• Recording transactions: This involves documenting every financial transaction, such as sales, purchases, payments and receipts. Each transaction is recorded in the appropriate account, ensuring that all financial activities are tracked. Choosing the right accounting methods, such as single-entry or double-entry bookkeeping, is crucial for accurate financial tracking.
• Maintaining a general ledger: The general ledger is the central repository of all your business’s financial transactions. It provides a complete record of your financial data and is used to prepare important financial reports.
• Preparing financial reports: Bookkeepers prepare essential financial reports, such as the balance sheet, income statement and cash flow statement. These reports provide insights into your business’s financial health and are crucial for making informed decisions and strategic planning.

How does bookkeeping differ from accounting?

Bookkeeping and accounting, though closely related, serve different purposes within a business. Bookkeeping is the process of recording and organizing financial transactions in a systematic manner. It is focused on the daily details of financial activity, ensuring that every transaction is accurately captured in the company’s ledgers.

Accounting, on the other hand, takes this recorded data and uses it to analyze, interpret and report on the financial condition of the business. Accounting involves preparing financial statements, conducting audits and developing budgets based on the financial information gathered through bookkeeping.

The roles of bookkeepers and accountants

Bookkeepers and accountants play complementary roles within a business. A bookkeeper is responsible for maintaining accurate and up-to-date financial records, ensuring that all transactions are recorded correctly. Their work lays the foundation for accountants, who then use this data to perform more complex tasks such as financial analysis, tax preparation and strategic financial planning.

While bookkeepers manage the day-to-day financial activities, accountants focus on providing a broader financial perspective that can help guide business decisions and ensure long-term financial stability. Together, they ensure that a business’s finances are well-managed and compliant with legal requirements.

Setting up your bookkeeping system

Establishing a robust bookkeeping system is essential for maintaining the financial health of your small business. A well-organized system allows you to keep track of every financial transaction, manage cash flow effectively and generate accurate financial reports. Setting up business bank accounts to separate personal and business expenses is crucial for effective financial management. Here’s how to set up an efficient system in three simple steps.

Step 1: Choose the right bookkeeping software

The software you choose should be tailored to the specific needs of your business, considering factors such as the size of your company, the volume of transactions and your budget.

Good bookkeeping software simplifies the process of recording financial transactions, categorizing expenses and generating financial reports. It also helps automate repetitive tasks, reducing the chances of human error and saving you valuable time.

When choosing bookkeeping software, look for features such as ease of use, cloud-based access, scalability, and integration with other business tools like CRM systems and accounting software. Popular options for small businesses include QuickBooks , Xero and FreshBooks .

These tools offer various features that can help you streamline your bookkeeping process, from automating invoicing to tracking expenses and generating balance sheets.

Additionally, consider how the software integrates with other tools you use. For instance, integrating your bookkeeping software with your Capsule CRM can help you manage customer relationships and financial data in one place, making your overall business management more efficient.

Step 2: Set up your chart of accounts

After selecting your bookkeeping software, the next step is to set up your chart of accounts. A chart of accounts is a comprehensive list of all the financial accounts in your business’s general ledger. It categorizes all the money flowing in and out of your business, organizing it into different accounts such as assets, liabilities, equity, income and expenses.

Setting up a well-organized chart of accounts is essential because it serves as the foundation of your bookkeeping system. By categorizing financial transactions correctly, you can generate accurate financial reports and gain a clear understanding of your business’s financial health.

For example, you might have separate accounts for different types of income, such as product sales and service revenue, or various expenses, like office supplies and small business marketing costs.

Step 3: Establish a bookkeeping process

With your bookkeeping software and chart of accounts in place, it’s time to establish a consistent bookkeeping process. Small business owners can manage their own bookkeeping effectively by establishing a consistent process. A regular process ensures that your financial records are always up-to-date and accurate, allowing you to make informed business decisions.

Start by setting aside dedicated time for daily transaction recording, where you enter all financial transactions into the system. Then, schedule weekly reconciliations to compare your records with bank statements, ensuring that everything matches up.

Finally, at the end of each month, generate and review financial reports, such as the balance sheet and income statement, to assess your business’s performance.

By following these steps, you can create a reliable bookkeeping system that supports your business’s growth and ensures financial stability.

Recording financial transactions

For small businesses, staying on top of financial transactions is crucial for maintaining an accurate picture of financial health, ensuring compliance, and making informed business decisions. This section will walk you through the different types of financial transactions and the importance of timely data entry.

Types of financial transactions

Small businesses engage in various financial transactions every day, each of which needs to be recorded accurately to maintain clear financial records. The most common types of financial transactions include:

• Sales : This represents the revenue generated from selling goods or services. For instance, if you run an online store, every sale made through your website should be recorded as a sales transaction. The amount received, the date of the sale, and the method of payment (credit card or PayPal , for example) should all be documented.
• Purchases : These are expenses incurred to acquire goods or services necessary for the operation of the business. An example could be buying office supplies or inventory. Each purchase should be recorded with details such as the date, amount spent, the vendor’s name, and the purpose of the purchase.
• Payments : Payments refer to the disbursement of funds, whether for operational expenses, loan repayments or payroll. For example, when you pay your employees, the total payroll amount should be recorded as a payment transaction.
• Receipts : Receipts are the money received from various sources, including customer payments, loans or investments. For example, if you receive payment from a client for a completed project, this transaction should be recorded as a receipt.

Recording these transactions accurately helps ensure that your financial records are up to date, providing a clear picture of your business’s financial activities.

Importance of timely data entry

Timely and consistent data entry is vital for maintaining accurate financial records and ensuring that your business's financial health is accurately reflected in your reports.

Delayed or inconsistent entry of transactions can lead to discrepancies in your records, making it difficult to assess your financial status accurately.

• Consistency : Regularly updating your records ensures that your financial data is always current. For instance, if you delay entering transactions, you might overlook important expenses or income, leading to inaccurate financial reports. Consistent data entry helps you stay on top of your finances and make informed decisions.
• Best practices : To ensure timely data entry, set aside a specific time each day or week dedicated to recording transactions. Automating certain processes, like invoicing or payments, can also reduce the burden of manual entry and minimize errors. As mentioned above, another best practice is to reconcile your accounts regularly, comparing your records with bank statements to catch any discrepancies early.

Understanding financial reports

Financial reports are crucial tools that provide insight into the financial health and performance of your small business. They help you understand where your money is coming from, how it's being spent and how much profit you're making. In this section, we'll cover the three key financial reports. This includes the balance sheet, the income statement and the cash flow statement.

The balance sheet

The balance sheet is a financial statement that provides a snapshot of your business’s financial health at a specific point in time. It summarizes what your business owns (assets), what it owes (liabilities), and the owner’s equity at a particular moment.

• Assets : These are resources owned by your business that have economic value, such as cash, inventory, equipment and property. Assets are typically categorized as either current assets, which can be converted to cash within a year, or non-current assets, which are long-term investments.
• Liabilities : These are the obligations your business owes to others, such as loans, accounts payable or mortgages. Like assets, liabilities are divided into current liabilities, which are due within a year, and long-term liabilities, which are due after one year.
• Equity : This represents the owner’s interest in the business after all liabilities have been deducted from assets. It’s essentially the net worth of the business.

The balance sheet is crucial because it provides a clear picture of your business's financial position, helping you make informed decisions about managing assets, liabilities and equity.

The income statement

The income statement, also known as the profit and loss statement, shows your business's profitability over a certain period, such as a month, quarter or year. It summarizes the revenue earned and the expenses incurred to generate that revenue.

• Revenue : This is the total amount of money your business earns from selling goods or services. Revenue is typically categorized into operating revenue and non-operating revenue. The former comes from your core business activities, and the latter comes from secondary activities like interest income.
• Expenses : These are the costs incurred to run your business. Expenses include costs like salaries, rent, utilities and materials. They are usually categorized into cost of goods sold (COGS), which directly relates to producing your products, and operating expenses, which are the day-to-day costs of running your business.
• Net income : This is the profit or loss your business experiences during the period. It’s calculated by subtracting total expenses from total revenue. A positive net income indicates profitability, while a negative net income indicates a loss.

The income statement is vital for assessing your business's financial performance and making decisions about pricing, cost management and growth strategies.

The cash flow statement

The cash flow statement tracks the inflow and outflow of cash within your business over a specific period. It’s divided into three main sections, outlined below.

• Operating activities : This section shows the cash generated or used by the core business operations, such as sales revenue and operating expenses.
• Investing activities : This section includes cash flows related to the purchase or sale of assets, such as equipment or property. It also covers investments in other businesses or long-term assets.
• Financing activities : This section covers cash flows related to borrowing and repaying loans, issuing or buying back shares, and paying dividends to shareholders.

The cash flow statement is crucial because it shows how well your business is managing its cash. Positive cash flow indicates that your business is generating more cash than its spending, which is essential for maintaining solvency and supporting growth. Negative cash flow, on the other hand, can indicate financial challenges that need to be addressed.

Understanding these financial reports is key to maintaining your business's financial well-being. By regularly reviewing your balance sheet, income statement and cash flow statement, you can make informed decisions that support the growth and sustainability of your small business.

Best practices for small business bookkeeping

Bookkeeping is more than just keeping track of your business's financial transactions. It's about maintaining a system that supports your overall financial health. To ensure your bookkeeping process is as efficient and effective as possible, here are some best practices to follow.

Regular reconciliation

One of the most critical bookkeeping practices is regularly reconciling your bank statements with your bookkeeping records. Reconciliation involves comparing the transactions recorded in your bookkeeping system with your bank statements to ensure they match. This process helps you catch any discrepancies, such as missing transactions, double entries or unauthorized charges, early on.

Staying organized

Staying organized involves keeping your financial records well-maintained and easily accessible. One way to achieve this is by digitizing your receipts and other financial documents. This not only saves physical space but also makes it easier to retrieve documents when needed. Using bookkeeping software to categorize your expenses is another excellent organizational practice. This allows you to quickly sort and analyze your spending, making it easier to track where your money is going and identify areas for potential cost savings.

Hiring a professional when needed

As your business grows, so do the complexities of managing its finances. While many small business owners start by handling their bookkeeping themselves, there comes a point when it might be wise to hire a professional bookkeeper or accountant.

A professional can bring expertise and experience that can save you time and prevent costly mistakes. They can also help you stay compliant with tax laws, which can be particularly challenging as your business expands and your financial transactions become more complex. A professional bookkeeper can ensure that your financial records are accurate and that your business is prepared for audits or tax filings.

By following these best practices, you can maintain a robust and effective bookkeeping system that supports your small business's growth. Whether it's through regular reconciliation, staying organized, or knowing when to bring in a professional, these steps will help ensure your bookkeeping is always up-to-date and accurate.

Wrapping up bookkeeping for beginners

Whether you're just starting with bookkeeping or looking to improve your current system, our blog can help you maintain accurate financial records. In turn, this will help you make informed decisions and ensure compliance with tax laws.

By staying organized, regularly reconciling your accounts and considering professional help when needed, you can keep your business on a strong financial footing.

To further streamline your bookkeeping processes, consider integrating tools like Capsule CRM with your chosen bookkeeping software.

Capsule CRM can help you manage customer relationships and track your financial transactions more efficiently, ensuring that all aspects of your business operations work seamlessly together. Sign up for a free Capsule CRM trial today to see how it can support the long-term growth and success of your business.

Frequently Asked Questions

What are some common bookkeeping mistakes that small business owners should avoid.

Common bookkeeping mistakes include failing to regularly reconcile bank statements, mixing personal and business finances, not keeping receipts or proper documentation, misclassifying expenses, and neglecting to back up financial data. These errors can lead to inaccurate financial reports, missed tax deductions, and potential cash flow issues. To avoid these mistakes, it's essential to maintain organized records, use reliable bookkeeping software, and consistently monitor your financial transactions.

How do I handle bookkeeping if I have multiple revenue streams or locations?

Managing bookkeeping for multiple revenue streams or locations requires setting up separate accounts or categories in your bookkeeping software for each source of income and location. This allows you to track and analyze the financial performance of each stream or location individually. Regularly reconcile these accounts and generate reports to monitor profitability, identify trends, and ensure accurate financial reporting. Centralizing your bookkeeping system can also streamline data entry and improve overall efficiency.

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