Is It Difficult To Start A Bookkeeping Company?

By Author: Damien Alcock
Total Articles: 143
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As with any other business venture, starting a bookkeeping company can be challenging, mainly because several unknowns and uncertainties are in place. But ultimately, the answer depends on several factors like your qualifications, experience, target market, business model, and software.


Bookkeeping is something that many small business owners often don’t like doing, so they’ll rather outsource it to bookkeeping service providers. Because of this, starting a bookkeeping company can be a rewarding and profitable venture. But it also requires planning, research, and hard work.


If you want to start your bookkeeping company, this article is for you. Stick to the end as we dive into the world of bookkeeping, exploring the challenges and opportunities of launching your own bookkeeping company, along with some tips to help you succeed.


Understanding the Bookkeeping Industry


Bookkeeping is an essential component of any business, large or small. Bookkeeping involves recording, analysing, and organising financial transactions to create ...
... financial records. These records are used to produce financial statements such as sales and purchase ledgers, balance sheets, and cash books that help entrepreneurs monitor the financial performance of their businesses.


With bookkeeping, businesses can track income, expenses, and cash flow, meet tax obligations, and gain insights into their financial health to make informed financial decisions. Bookkeeping forms the backbone of any successful business. And with more businesses being established, more entrepreneurs need bookkeepers to help them manage their financial records.


Challenges You May Face When Starting Your Bookkeeping Company


While starting a bookkeeping company can be lucrative and rewarding, it’s not without its challenges. Some factors can make it difficult to start a bookkeeping company, including:

Competition from Established Companies 

The demand for bookkeeping services is high, meaning numerous providers are in the market. As a result, competition from larger firms is one of the biggest hurdles you’ll face as a new company in the bookkeeping industry. 


These firms have years of experience in the field, established client bases, a trusted reputation with clients, and an extensive network of resources and relationships that startups often lack. Entering the bookkeeping industry as a new player can be challenging, and you may struggle to attract and retain customers.


However, there are several strategies that you can employ to compete with the larger firms:

Target a specific niche 

Instead of being a generalist in bookkeeping, specialize in underserved market niches or service areas that other bookkeeping companies have overlooked. This will help you become an expert in that field and attract clients interested in your specialized expertise.

Provide personalised customer service 

You should focus on offering personalized customer service, listening to your client’s needs, and tailoring your services to meet those needs. Show them how your bookkeeping services can add value to their businesses and make their lives easier. This can differentiate you from established companies with an impersonal approach to customer service.

Take advantage of partnerships and alliances

Collaborating with other organisations can help you leverage their resources, networks, and expertise. You can partner with complementary businesses that offer related services, such as accounting firms, tax consultants, and financial advisors. Forming partnerships and alliances with other firms allows you to offer your clients a broader range of services and gain market exposure and credibility.

Regulations and Licenses 

Bookkeeping involves handling financial transactions, so there are strict regulations that bookkeeping companies must comply with. So before you start your bookkeeping company, you must thoroughly understand the regulations and licenses that apply to the industry. For example, bookkeepers in the United States must hold a Certified Public Accountant (CPA) license.


It’s no doubt that these requirements can be complicated, time-consuming, and expensive, but without proper licensing and certifications, it’s not only difficult to gain clients but also to establish a reputation in the industry. Also, these requirements vary from state to state, so consult with a legal professional to ensure that your business complies with all regulations in your jurisdiction to avoid penalties, lawsuits, and reputational damage to your business.

Finding Clients 

As mentioned earlier, established bookkeeping firms have already built an extensive client base, and therefore, winning new clients for your new bookkeeping company can be challenging. You may have the skills and expertise to provide high-quality bookkeeping services, but what’s a bookkeeping company without clients?


For you to stand out and attract new clients, you must be creative in your approach to marketing your business. Your marketing plan should include a combination of online and offline marketing strategies. This involves promoting your business through email marketing, social media platforms like Facebook, Instagram, and Twitter, blog posts, word-of-mouth referrals, or attending networking events. Offering introductory discounts or special promotions to clients can also help you attract first-time customers.


Steps to Starting Your Own Bookkeeping Company


Step 1: Do Your Research and Create A Simple Business Plan


When starting a bookkeeping business, ask yourself who your ideal client would be and their needs. Every business is different, so don’t assume you know what bookkeeping services are looking for. Talk with business owners in the area to understand their needs. The more you understand their needs, the better you’ll be able to serve them. 


In addition to researching your potential customers, dig into your competitors. This can help you identify what you can do to stand out from your competitors.


Use the information you gathered to create a business plan. A business plan will help you make informed decisions about your business, and your plan doesn’t have to be complicated or all that formal. It can be as simple as a sheet of paper to help you organise your ideas and put them into writing.


It should outline who your ideal clients are (Are you serving a particular industry or business size, for example.), what services you will offer (financial reporting, budgeting, or payroll management?), how you will charge for your services (hourly, monthly, or package rates) and how you will deliver your services (remotely or in person?)


Step 2: Obtain the Necessary Training and Certifications


If you don’t have them already, you’ll need to undergo some training to gain relevant industry knowledge. Obtaining a bookkeeping certification is important in differentiating yourself in such a competitive industry.


You can earn your certification by enrolling in a bookkeeping program at a reputable institution or through professional organisations such as the American Institute of Professional Bookkeepers (AIPB) and the National Association of Certified Public Bookkeepers (NACPB). Being certified as a public bookkeeper will demonstrate to your potential clients that you have the skills and knowledge to handle their books professionally and accurately.


Step 3: Register Your Business & Business Name


To operate as a legitimate bookkeeping business, you must register your state and obtain the necessary licenses and permits. Your business name is the identity of your business and how you will market yourself to your clients, so ensure you choose a name that’s unique, memorable, and relevant to your services.


Before registering your business name, check its availability with your state and local authorities. You may need a business license, depending on your business’s location. Check your state, county, and city websites to see what the requirements are in your area. You may need an Employer Identification Number (EIN) to hire any employees for your bookkeeping business.


Step 4: Open a Business Bank Account


From the get-go, keeping your business money separate from your personal money is essential. Do this by opening a separate account for your business and depositing some money to pay all business-related expenses. The main reason for doing this is to prove to the IRS that you take your business seriously. A business bank account also makes it easier to track your business’ income and expenses, file your tax returns, and manage your cash flow. Plus, it just looks more professional.


Remember to connect your account information to a cloud-based accounting software so you can access your books anywhere and anytime with an internet connection.


Step 5: Create Your Marketing Plan and Build Your Online Presence


Being the best bookkeeper in the world doesn’t matter if no one knows you or how to find you. Having a solid marketing plan is just as important as setting up your business in the first place. It’s what makes the difference in attracting and retaining your ideal clients.


Social media platforms are essential for promoting your business to attract potential clients. Leverage the power of social media by running advertisements in online communities. You can also network with potential clients by attending industry events and conferences and volunteering in your community. Networking allows you to collaborate with other businesses in your niche and build relationships with other professionals like accountants, lawyers, bankers, or consultants who serve similar clients as you do.


Conclusion


Many business owners don’t enjoy bookkeeping, so they’ll instead hire a bookkeeper to help them handle it. If you’re good with numbers and enjoy organising financial information, starting a bookkeeping company can be the right move for you to make. And while starting a bookkeeping company may be challenging, it’s not impossible. Follow the steps outlined in this article closely, and you’ll get your bookkeeping company up and running in no time, with ease.