Starting A Bookkeeping Business

Are you interested in starting your own bookkeeping business? If so, you’re not alone. Bookkeeping is a great career choice for many reasons. But before you can start up your business, there are a few things you need to know. 

This blog post will outline the basics of starting a bookkeeping business. We’ll also provide some tips to help get your business off the ground. So if you’re ready to become your boss, keep reading!

If you’re thinking about starting your own bookkeeping business, you’re on the right track! Bookkeeping is a great business to start because it has low overhead costs, there’s a growing demand for services, and it’s relatively easy to learn.

This post will outline the steps you need to take to get your business off the ground. We’ll also provide some helpful tips on your business’s market and find clients.

What should you do if you want to start a bookkeeping business? This is a common question for people interested in starting their own business. Fortunately, there are some simple steps that you can take to get started. This blog post will provide an overview of the basics steps that you need to take to get your bookkeeping business up and running.

Let’s get started!

Getting Started as a Bookkeeper

Step 1: Spend money on your work tools

If you want to learn how to become a bookkeeper, you should also be willing to put some effort and money into pursuing this line of work.

You are, in effect, getting trained to become a virtual bookkeeper, which indicates that you will be working remotely, most likely as a third-party service provider to companies.

It is only appropriate that the first investments you make are in a dependable Internet connection and a high-quality computer. Because these are the two work tools that you will use the most, it is imperative that they are enough for the job.

It is also a good idea to invest in a mobile or landline phone service because these are the means through which you may get in touch with consumers and coworkers.

You are free to use both your cell phone and your landline while you are in the process of setting up your business; however, at some point you will need to divide your personal and professional conversations.

Step 2: Attend a basic bookkeeping course

The decision to pursue a profession in virtual bookkeeping is a fantastic one to consider. Accounting services and tax preparation services were deemed to be the “most profitable” small businesses by Entrepreneur magazine.

This is a road that can lead to many accomplishments, and you can obtain the skills necessary to become a bookkeeper by enrolling in training classes. Even relevant prior work experience is not required in order to be eligible for bookkeeping training.

If you do not have any prior expertise in the accounting business, it is imperative that you select your bookkeeping classes with care. They should teach you all you need to know to become an effective bookkeeper, including the fundamentals.

You will not only acquire the knowledge necessary to do the technical aspects of bookkeeping, but you will also receive instruction on how to launch your own bookkeeping company.

Real-world skills are just as crucial as theoretical knowledge when it comes to getting a job in today’s competitive employment market. For instance, you will need to educate yourself on how to set up your company, deal with customers on a regular basis, and build an effective bookkeeping system.

In order for you to be successful in this line of work, the course will provide you with extensive bookkeeping and business skills.

Step 3: Study the ins and outs of accounting programs

You will need to familiarise yourself with accounting software in addition to gaining an understanding of the fundamental principles and procedures involved in bookkeeping.

You have the option of getting hands-on instruction from expert bookkeepers or studying the fundamentals through online lectures.

The ability to use various accounting software packages might make you an even more valuable asset to your clients. You’ll be able to get more done in less time thanks to the software solutions that simplify and streamline the bookkeeping process.

Small Business Accounting software like QuickBooks also contributes to the reduction of initial capital expenditures.

When choosing an online accounting application, you should take into consideration the financial management of both your business and your clientele. Keep in mind that you’ll also use it to manage your funds when you get the hang of it.

Because software and programmes are typically not provided without charge, it is up to you to select an option that provides good value for the money you spend. The following is a list of some of the factors that you ought to think about while selecting an accounting software or programme:

• Cost
• What kinds of record-keeping tools you’ll require
• Usability
• Storage
• Mobile options
• Collaboration options

When you are just getting started, you do not require the most sophisticated accounting software. Instead, what you need is reasonably priced software that includes all you require for effective financial management.

Step 4: Start your own bookkeeping company

After acquiring the knowledge necessary to become a bookkeeper and preparing yourself with experience in running a business, it is time to start your own bookkeeping company. The following is a list of the steps that need to be taken by you:

• Obtain a number used for tax identification purposes.
• Put in your application for the necessary licences and permits for your company.
• Make a choice regarding the organisational form of your company (sole proprietorship, LLC, etc.)

In addition to registering your company, you must also advertise your services to potential customers. There are a few different approaches to take here:

• Networking — Participate in small business groups and networking events to increase your chances of making connections with possible coworkers and customers.
• Word of Mouth — Inform your loved ones and close friends about your new venture, and make the most of the connections you already have. Request recommendations from others so that you can expand your client base and professional network.
• Create a Website — Your credibility will increase if you have a website of your own. It makes it easier for other people to locate you and learn about the services that you provide. Eventually, you will also be able to put testimonials from previous customers on your website.
• Create a LinkedIn Profile — You may get a head start on social selling, which is a successful method for marketing your services, by making connections with other individuals using LinkedIn. As you would do with your website, make sure to keep your profile up to date with content that is both current and valuable.
• Hand out Business Cards — Give folks something to help them remember you so that you will be the first person they think of if they ever have a need for a bookkeeper.

A bookkeeper is essential to the success of almost any firm. They might not always be actively looking for one, but at some point they will need someone to manage their finances, and they might not always be actively looking for that person.

Search for possible customers on career websites that are geared towards bookkeeping work that can be done remotely. There are other websites that function as freelance marketplaces where you can look for both short-term and long-term assignments that you can apply for.

You might want to explore specialising in a certain niche that has room for organic expansion. For instance, you could work especially as a bookkeeper for medical practises or new venture businesses.

Step 5: Discuss a price that is acceptable

You have the potential to earn more money working as a service provider or as a freelancer than the typical full-time bookkeeper does. Providing value to your customers is essential if you want to be able to command a higher fee.

This is something that the course can teach you as part of the real-world challenges that you’ll learn to solve, and it’s something that you’ll learn to do. You will get the self-assurance to set your hourly rate goal at a minimum of $60 after completing the course.

Step 6: Spend money on yourself

Purchasing necessary equipment should be the initial step in pursuing a career as a bookkeeper who works from home. Investing in yourself should be the very final step that you take on a consistent basis because we have now completed a full circle.

This denotes actively working to improve your talents by participating in training on a regular basis. In addition, keeping yourself current on the most recent industry standards would be beneficial in order to deliver the highest possible level of service to your customers.

Your desire to learn new things is something you should work on developing because there is always something new to learn and discover. In addition, the field of accounting is continuously undergoing change, and if you want your company to be successful, you will need to adapt to these alterations.

Tips For Beginning Bookkeepers In Small Businesses

1. Maintain a wall of separation between your personal and professional finances

In the bookkeeping of a small business, one of the most common and potentially catastrophic errors is to confuse business expenses with company funds. Even though doing so could seem appealing at first, particularly if you are just getting started, it is likely to cause you problems in the long run.

Many owners of small businesses are unaware of the importance of keeping their personal and corporate finances separate, despite the fact that this may seem like a no-brainer. The fact of the matter is that you need to treat your financial obligations as though they were made of oil and water. That definitively rules out any possibility of a future union between the two.

If you do not already have a business account, you should immediately put this book down and create one. By establishing a business account, you can make certain that all of your business-related costs are organised and easy to access at any time. This can help you create financial trustworthiness over time, which can be beneficial when applying for further lines of credit, loans, or other perks related to finance.

It is not only more challenging to acquire an accurate picture of your income and expenses, but it also increases the likelihood of undesirable outcomes. This is due to the fact that you place limitations on your financial resources and put your company’s revenue at risk over the long term.

2. Set aside a certain amount of time each week to take care of the books

A significant number of proprietors of small businesses consider their bookkeeping responsibilities to be something they can “put off until later” (whenever that is). The key to sustained success in a company is record-keeping that is both accurate and up to date. On the other hand, if you are preoccupied with dealing with customers and performing day-to-day chores, it is simple to forget about these issues and put them on the back burner.

This strategy, as you may have predicted, does not do well when applied over a prolonged period of time. You’ll need to carve out some time in your schedule to concentrate on the reading you have to do. In the event that you do not complete the necessary bookkeeping responsibilities, you will find that your small business is in serious difficulties.

Setting up a certain amount of time each week for the chores related to your books is a simple and effective method that can help you avoid putting off these responsibilities and the accompanying stress. 

For instance, you could set aside the first half of the Monday morning of each week to concentrate on the bookkeeping responsibilities you have. You will never be confused about when you need to accomplish these duties if you designate a specific time each week. Without having to worry about it each week, this will help you keep a high degree of consistency in your records.

3. Keep thorough records

You might be juggling a lot of different priorities because you own a small business. You might, for instance, fail to keep accurate records of your spending or the money that was used to get your activities off the ground.

In the long run, this could develop into a more significant issue, particularly when you’re compiling reports or determining which of your expenses qualify for reimbursement.

The encouraging news is that there are strategies to make this process easier to manage.

You may, for instance, scan and digitise your receipts so that there is always a detailed record of the money that is coming in and going out of your business. You can also get a corporate debit or credit card, which will allow you to record all of your spending, or at least a significant portion of them, in a single location.

Using automation can make keeping the books for a small firm easier.

Do you remember when we discussed the fact that there are a lot of products available that make life easier?

When it comes to bookkeeping and even accounting in general, the software may significantly reduce the amount of time and work you spend on maintaining your records. This can be especially helpful if you maintain a large number of records. You can simplify the process of recording your transactions and analysing your income and expenses by using software applications such as Xero and QuickBooks, for example.

Small business bookkeeping is something that can easily become one of your strong suits; all it takes is a little bit of preparation in the form of research and the acquisition of an appropriate tool.

4. Make a system for storing receipts

The Australian Taxation Office asserts that maintaining accurate records for your company’s receipts is a mandatory requirement. When it comes to the costs of running your company, their office reports that the law mandates that you take into account all of the following factors:

• You Are Capable of Providing a Satisfactory Explanation for Every Business Transaction
• Your Receipts Will Be Presented to You in Written Form (Paper or Digital)
• Your Invoices Are Written in English, or They Are Easily Translatable Into Another Language
• Your Invoices Will Be Stored for a Minimum of Five Years After Payment.

Because of the significance of this kind of storage, you must have a receipt storage system that is uncomplicated and straightforward for your documents. This incorporates both electronic and physical formats for the preservation of receipts.

Even though there is no one solution that is certain to work for this problem, there are a few different approaches that can be taken to simplify the process of filing and storing receipts. The following are some examples of these:

• A Folder-Based System of Organization for Each Year and Each Subject
• Combining the Scanning Process with an Analogous Filing Process
• Method of Digital Filing for Computer-Generated Receipts

This integration procedure can be greatly simplified with the assistance of an integrated accounting/financial management software package in many different circumstances. It will save you time and effort while guaranteeing that all of your records are kept in a spot that is simple to get them from.

5. Keep an organised timetable for bookkeeping

Even though you are well aware of how essential bookkeeping is to the success of your business, you may still fail to keep your records updated if you are working under a time crunch.

Because of this, the data do not take into account bills that have been paid late or payments that have been cancelled. If you put off taking care of the bookkeeping needs, it is going to be much more difficult, stressful, and time-consuming when you do get around to doing it.

While some businesses complete their bookkeeping once every three months, you are free to choose a schedule that is most convenient for you.

6. Utilise a comprehensive financial software solution

When it comes to financing a small business, the technological choices available today provide an impressively large number of options. For instance, many small business accounting and finance solutions that are hosted in the cloud may consolidate all of your business processes into a single, straightforward interface.

All of the following are potential components of these software solutions:

• Normal Course of Business
• Payroll Management
• Tasks Associated with Staffing and Other Employees
• The Production of Financial Reports
• Data Analysis and Future Projection
• Invoicing
• Receivables from Accounts
• Direct Incorporation with Your Financial Institution

The proprietor of a small business is the target audience for a number of these software applications. This indicates that you will be able to incorporate these solutions into the operations of your company at a cost that is reasonable, and you will frequently be able to grow them according to the precise requirements of your company.

This kind of solution gives many owners of small businesses an incredible edge by streamlining bookkeeping procedures and cutting costs, resulting in an even more efficient process overall. And as the owner of a small business, you are well aware, this kind of savings can contribute to the success of your company even more.

7. Don’t only record transactions; reconcile them all

Making sure that your records match up with the money that is currently in your bank account is the most important step in the process of reconciling your income and expenses. If you find that your calculations do not add up, you need to look into the reasons why this might not be the case.

Again, create a timetable for yourself to complete this task. Determine how often you should review your company’s records based on the number of transactions that are processed by your company on a weekly, monthly, or quarterly basis.

The process of submitting your tax returns is also something that is very vital to do. If you are not familiar with this topic, you should begin by learning more about tax planning for small businesses.

8. Hire a seasoned bookkeeper to assist you

You are the proprietor of a small firm, and you are deeply committed to the work that you do. Therefore, you devote your time and effort to chasing that passion in order to demonstrate to your clients what it is that you do. You put in a lot of effort to position yourself as the option of choice for each of your clients.

People select your company because you are skilled in the work you do and because you take an approach that is centred on the needs of the consumer. If that is the case, there is no reason why you shouldn’t apply the same logic to your accounting practises.

Why not let a professional take care of your books if your company is expanding and you don’t have the time or resources to focus on keeping accurate records?

All of these wonderful benefits are yours to enjoy when you outsource your bookkeeping to an experienced professional:

• You’ll Have Considerably More Time to Concentrate on Your Business
• Potential Cost Reductions Achievable Through Outsourcing
• Improved Accuracy Across All Records and Financial Matters Related Thereto

Hiring a professional bookkeeper will assist in ensuring that your books are managed, which means that you will no longer need to worry about this aspect of your business. When you deal with a professional, you will not only have more time on your hands, but you will also have the peace of mind that comes with knowing that the job is being done correctly. If you hire an experienced professional to handle this critical component of your company, you will, in many instances, be able to reduce your expenses and save money.

How to Proceed If Your Business Is Losing Money

1. What it means to operate at a loss

When a business is said to be operating at a loss, it means that its outgoing expenditures are greater than its income.

When just beginning or going through a phase of expansion, businesses may incur temporary operating losses. This is not a problem for you as long as you have sufficient funds saved up to pay the expenses of operating your company till your income improves.

But if poor sales are consistently causing your company to run at a loss, you will need to make adjustments to the way your company is currently managed in order to be successful. Consider seeking the assistance of a consultant in order to assist you in turning things around.

2. How to determine if you’re losing money

• You are unable to pay your payments since you do not have sufficient funds.
• You have a negative balance in your bank account, and you are unsure how to turn it back into the positive.
• If your company strategy is dependent on selling ten cups of coffee each day but you’re only selling three, then you’re not selling the amount that you need to in order to meet your projections.

This is a problem with your cash flow even if you are aware that you will get money in the future — for example, the payment of a large invoice — that will cover your loss.

In order to meet the costs until the payment is made, you would need to raise money or borrow money.

3. What to do if you’re losing money

Follow the steps here:

1. You should spend less

• Is there anything you can remove from your budget to save some money?
• Is it possible for you to cut back on the amount of money you withdraw from the company each month?
• Make an effort to improve the terms of your transactions with your suppliers.
• Sell any assets that you aren’t currently making use of.

2. Boost your sales

• Is it possible for you to increase the price of the product or service you provide?
• How can you increase the number of sales that you make of your product or service?
• Can you gain more customers?

3. Consult with a professional; they could be able to assist you turn things around

The assistance of an small business accountant or other business expert can be of great assistance to you in getting your company back on track and avoiding future difficulties.

4. Claiming losses during tax season

If you file a tax return and realise a loss, you may be able to carry that loss forwards to the next year to reduce your taxable income and consequently your tax liability.

Sole traders and partnerships

Include the loss in the individual income tax return that you file (external link) (IR3). After that, you will receive information regarding the amount that can be carried forward to the subsequent tax year.

If the loss is more than your income, you may be able to apply the difference to reduce the amount of income that is subject to taxation in subsequent years.

Companies

In the majority of instances, businesses that operate at a loss are exempt from paying income tax.

It’s possible for a business to either sell its loss to another company or “carry it forwards” to use it against profits in later years.

To be able to carry the tax loss forwards, you will need to do the following:

• Include it in the income tax return that your company files (external link) (IR4)
• Meet the requirements of the shareholder continuity test, which stipulates that a certain group of shareholders must have maintained a combined voting interest of at least 49% from the beginning of the year in which the loss was incurred until the end of the year in which it was offset.

The calculation of voting interest is required to be done in a particular manner by companies. And for groupings of companies who are attempting to move forwards losses, being in a “market value scenario” may prevent this from happening.

If moving forwards losses for tax purposes is something you’re considering doing, you should talk to a tax professional first. Put out a call for suggestions among the folks you already know.

5. Common errors

Try to avoid falling into these typical traps:

• Ignoring the red flags that indicate you may be in a losing situation in the game.
• Without having a strategy in place to get out of it in the first place.
• If you go to a supplier while you are aware that you will not be able to pay the invoice, you are operating in an insolvent situation and you run the risk of being made bankrupt.