freelance bookkeeper business plan

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The Simple Guide to Establishing Your Freelance Bookkeeping Business

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10 Sites For Finding Freelance Bookkeeping Jobs

What is freelance bookkeeping, what are the duties of a freelance bookkeeper, how to start freelance bookkeeping, how to charge for freelance bookkeeping services, pros and cons to freelance bookkeeping, how to find freelance bookkeeping clients, important freelance bookkeeper statistics, a final note.

Do you love numbers? Did you find yourself right at home during your accounting class in college? If you like working with data, untangling transactions, and presenting clean reports to clients, the freelance bookkeeping world might be calling you.

Working as a freelance professional on the internet has become more than just popular, it has rapidly become the norm.

As we further entangle our lives with the digital space, more people are coming to realize that they can find professional careers from the comfort of their own home. According  to a report  released by Global Workplace Analytics, more than 5 million people worked from home in 2018!

During today’s discussion, you will learn everything there is to know about working in bookkeeping. From starting your business to landing your first client, we are going to introduce you to the wide world of freelance bookkeeping!

Working in the freelance world can be difficult. After all, you are in charge of everything from building your business to finding your clients. With so many hats in rotation, it can be hard to find the perfect job with your limited time.

The internet has made our lives easier in several ways. For freelancers, online job-hiring platforms have become a haven for connecting with clients.

Listed below, you will find ten of the best sites for finding freelance bookkeeping jobs.

One of the leading platforms for connecting bookkeepers with companies in need is Upwork. Established more than a decade ago in the heart of Silicon Valley, Upwork purports to have made more than $1 billion in 2020 for their freelance workers. Upwork operates on a bidding system.

This means that clients will post a casting call/job advertisement and freelancers will submit with their proposal. You can read a comprehensive comparison between Upwork and other platforms  here .

Benefits : Easy sign-up process. Applicants can choose between remote, project-based, and contract jobs. The bidding system at Upwork is efficient, allowing freelancers to submit for a variety of jobs without any downtime.

2. FlexJobs  

($14.95 — $49.95 Annually)

Flexjobs has been serving up freelance bookkeeping opportunities since 2007. Established by Sara Sutton Fell, Flexjobs offers remote, freelance, flex, and part-time job opportunities to its members.

A premium annual price keeps the pool of rival applicants down while a high level of customer satisfaction keeps bringing new businesses to the platform.

Benefits : Affordable membership plans reduce bidding wars while also improving the quality of the client. Flexjobs also focuses on remote and freelance job opportunities above conventional 9 to 5s.

Indeed has quickly turned into one of the largest hiring platforms on the internet. Used for far more than just online bookkeeping services, Indeed accrues more than 200 million visitors for jobs in countries all over the planet. Indeed offers free registration and an easy-to-implement resume uploading service.

Benefits : Indeed will have one of the largest collections of job postings for freelance bookkeeping professionals to sort through. Indeed also offers potential employees the ability to read reviews about their potential clients before signing a contract.

4. Freelancer.com

(Free + Paid Plans)

Freelancer.com alleges to be the largest freelancing and crowdsourcing hub on the internet. With 27 million employers in rotation as well as freelancers from 247 countries around the world, we aren’t going to argue their point.

Freelancer.com offers both free and premium plans depending on the freelancer in question. Fixed price projects will incur a 10% fee while services will require a 20% fee of the total price.

Benefits : While Freelancer.com does take a sizable chunk off the top of your profits, they offer a larger selection of potential jobs. Freelancer.com is likely the ideal starting spot for freelance bookkeepers looking to integrate their business into the market.

5. Glassdoor  

Glassdoor is an innovative service that allows employees to review the companies that they work at. While information is the name of the game at Glassdoor, the prestigious company also offers an entire hiring sector to its members.

While not nearly as active as the other websites on this list, Glassdoor offers reputable jobs to those looking for them.

Benefits : Glassdoor’s employment section is filled with information as well as potential clients. Despite the lack of jobs on the board, bookkeepers will still be able to find steadier long-term work on occasion.

6. Fiverr  

Fiverr exploded onto the scene as a budget platform for freelancers looking to make a quick buck. While Fiverr is brimming with every surface under the sun, a little digging will reveal a wealth of opportunity.

Freelance bookkeepers can sign up for an account, set their rates, and fill out their services page. Searching Fiverr for financial consulting services will reveal the depth of opportunities offered on the platform.

Benefits : Quick and easy registration. You can set your rates, build your brand, and market all in the same place. Fiverr also has protections installed to protect its user base.

(Free Application)

PARO is a freelance accountant platform that specializes in the area of finance. To get on the service, you will have to bypass a rigorous vetting process that weeds out nearly 98% of applicants. Should you make it through the application process, you will find yourself in good company.

Benefits : PARO is exceptionally rigorous when it comes to hiring staff, thus ensuring premium content is always available. PARO is also an ideal place to build your reputation while becoming comfortable within the industry.

8. PeoplePerHour  

PeoplePerHour was established in 2007 as an outsourcing company with a brick-and-mortar location. Since transitioning to a digital interface, PeoplePerHour has reportedly gained more than 1.5 million users along with 1.1 million jobs from 89 different countries.

PeoplePerHour works a lot like Upwork as freelancers will incorporate a bidding system to apply for jobs.

Benefits : A booming marketplace means jobs are always available. PeoplePerHour also utilizes an escrow account to protect both freelancers and clients. Larger projects can be divided into multiple payments that will be paid out once a milestone is reached. PeoplePerHour is one of the better platforms for protecting employees.

9. LinkedIn ProFinder

(10 Free Bids Per Month + Paid Plans)

If you are an entrepreneur or freelancer, you owe it to yourself to create a LinkedIn ProFinder account. Not only is LinkedIn one of the major networking hubs for modern professionals, but its ProFinder tool is also fantastic for applying to jobs.

Clients will post job requests on a hiring board while freelancers will submit detailed proposals. You get 10 free bids every month with an optional monthly fee for unlimited bidding.

Benefits : The ‘free’ account is robust enough that new freelancers can rely on it without concern. LinkedIn’s built-in reputation allows for prestigious clients to utilize the platform. Proposing and tracking bids is easy and efficient.

10. Upward  

Upward offers part-time, full-time, temp, and intern positions through its highly customizable job board. To get in on the action, users must only create an account before uploading their resume.

Established in 2009, Upward offers more than 10 million job listings from around the world. These listings are curated from newspapers, company pages, job sites, and Upward users.

Benefits:  Upward is great for bookkeeping professionals looking for long-term jobs. Upward offers easy registration and profile integration to improve the chances of being selected during the application process.

According to the dictionary, a bookkeeper is simply a professional that records and tracks the financial affairs of a business. While that definition is limited in scope, it offers insight into what a professional freelance bookkeeper can expect to handle during their time at the office.

While tracking financial records makes up a significant portion of the typical workday, a bookkeeper must be ready and willing to wear many hats. Depending on certifications, industry experience, and professional expertise, a bookkeeper might be in charge of processing payroll, tax preparation, and even handling accounts payable.

As you dig deeper into the bookkeeping industry, you will consistently come across several terms. Let’s highlight a few of the most common terms that you will be expected to understand.

Account Reconciliation  — The backbone of any bookkeeping service is reconciling accounts. Comparing transactions with details in your accounting software will give your client accurate information regarding their business.

Accounts Receivable —  Accounts receivable are considered legal claims to a payment owed for goods/services rendered. In short, managing accounts receivable will entail going through invoices and payment details between client and customer.

Accounts Payable  — The money owed by a company to its suppliers of goods and services. Common examples of accounts payable include short-term liabilities, legal services, supplies, and accounting services.

Balance Sheet  — A balance sheet is a financial document that showcases a glimpse in time of the financial composition of your client. This balance sheet will include assets as well as liabilities and equity.

Assets  — All the things that a company owns to run its business. Examples of assets include property, tools, furniture, cars, and even cash.

Liabilities  — The debts that a business has incurred, including unpaid bills, bonds, and loans.

Accounting Period  — Financial reports are tied to periods of time. Some companies opt for monthly reports while others prefer quarter and even annual reports.

General Ledger  — The backbone of your bookkeeping business will rest on your general ledger. The general ledger is where a company’s financial accounts will be summarized.

When we talk about bookkeeping services, what immediately comes to mind? As a freelance bookkeeper, you will be wearing many hats throughout the typical workday. To accommodate the needs of your potential clients, you should expect to handle at least a handful of the following duties.

Monitor Financial Accounts —  First and foremost, the primary job of a freelance bookkeeping professional is to monitor and record financial transactions for summation in a General Ledger.

One of the primary benefits of having a professional bookkeeping service is the ability to quickly look at a snapshot of your company’s financial situation. For that reason, bookkeepers must always be on top of things.

Handle Clerical Work —  While we might associate bookkeeping with high-level accounting, that isn’t always the case. Bookkeeping is ideal for people who specialize in organizational skills as bookkeepers are routinely tasked with handling company clerical work.

Using industry-standard accounting software, bookkeepers will record cash, vouchers, checks and other financial transactions. This work requires a sharp eye and the ability to focus while routinely double-checking work.

Produce Reports For Clients —  Think of reports as the golden egg that a professional bookkeeper can lay. Producing accurate and timely reports, such as balance sheets or income statements ,  is integral to the long term success and vitality of a company.

Bookkeepers will work with the appropriate software to develop these forms as needed.

Organize Financial Records —  Organization is the heart of bookkeeping. Depending on the size or style of business, this organization process can change dramatically. A family-owned antique store will not require the same financial organization as a rapidly growing law firm, for example.

Address Any Inconsistencies —  With a sharp eye and the ability to recognize mistakes, bookkeepers must be able to quickly and accurately address any inconsistencies in their books.

By this point in time, you should know if the freelance bookkeeping world is for you. If you are ready to leap into the industry with both feet first, consider the following tips to start your bookkeeping career.

Decide What Services You Will Offer

A bookkeeping professional can offer a veritable treasure trove of services. Decide early on what kind of services you are going to offer. From accounts payable/receivable to payroll management and tax preparation, there are many services that you can offer your clients.

Create Your Business Plan

Every entrepreneur should craft a professional business plan. Detail start-up costs, services offered, and the daily responsibilities that you must attend to. For instructions on how to craft your business plan, consider the  following information  from Millo.

Consider Voluntary Certification

Certification is not required to work as a freelance bookkeeper. However, certifying your services will lend an air of professionalism and expertise to your name. To learn more about voluntary certification, consult with the  NACPB .

Acquire Industry Standard Bookkeeping and Payroll Software

Unlike accountants, professional bookkeepers must tend to day-to-day matters for their clients. As a result, you need to be familiar with industry-standard software such as  QuickBooks , TurboCASH, Freshbooks , and  Odoo .

Perform Industry Research

There is a wealth of resources for industry research. The Bureau of Labor Statistics is a great place to get a birds-eye view of what your industry has to offer.

Establish Pay Model/Rates

After you have performed extensive industry research, you should be ready to establish a pricing model for your prospective clients. Depending on the client, be prepared to change your model.

Prepare Legally Binding Contract Templates

Every independent contractor should understand that the onus to protect themselves legally is on them. To make things easier, consider customizing your own  legally binding contract template  from ApproveMe.

Register With Top Freelance Job Platforms

Finding success as a freelance bookkeeper in today’s market requires you to stay on top of the game. Signing up for the top freelance job platforms will open you up to job opportunities. Be sure to polish up your resume for the best success at landing a job.

Millo has also produced an invaluable eBook revolving around the  25 Top Freelance Job Sites  and it is worth checking out.

Incorporate Your Business

There is no limit to the benefits that will come from incorporating your business. Register with your Secretary of State as an LLC, corporation, or partnership. You will have to pay a fee, but you will receive tax benefits and legal protection in return.

Market Your Business

You can’t sell a service if nobody knows that you exist. While signing up for job platforms and emailing prospective clients can be a great start, you must do much more. Create a professional website and connect it to your job profiles.

If you’ve never used a bookkeeping service and have no idea how to charge your client, you’ve come to the right place. Bookkeeping service fees are going to be dependent on several different concepts including transaction volume, employee roster size, and industry.

With that being said, most freelance bookkeeping professionals will charge their clients via one of the following three pricing models.

• Hourly —  While no longer the standard practice, hourly billing is still incredibly common in the freelance bookkeeping world. Hourly payment models revolve around a set rate, typically decided before a contract is taken. The  average hourly rate  for qualified general bookkeeping services will range from $19 to $50+ depending on the services required. Consider setting your price based on your experience to get the most accurate model.
• Flat Fee —  Flat fee pricing has become more popular in recent years thanks to the flexibility that it offers to both parties. Flat fee pricing revolves around an advanced up-front monthly charge. This charge is based on a client’s specific needs. Larger and more voluminous clients will require a larger flat-fee for your services.
• Fixed Price Agreement —  The best payment model for freelance bookkeepers is the fixed price agreement model. This payment model involves a bookkeeper analyzing a business as well as the challenges that the bookkeeper will face. A fixed price agreement will typically include an interview/meeting between client and bookkeeper to establish a perfect price.

We are living in a data-driven world. More than ever, establishing a business is about analyzing both the pros and cons of the effort. With so much information available, you should know what you are getting into before pursuing a career in freelance bookkeeping.

Pros of Freelance Bookkeeping

• Minimal Expenses  — Startup costs for a bookkeeping company are almost nonexistent, at least compared to other freelancing endeavors. Outside of certification, training, and software costs, freelance bookkeepers need only pay for bidding-based job sites.
• Financial Freedom  — Working from home opens doors to an entirely new level of freedom. With the ability to set your schedule and pick your clients, you can work as much or as little as your life requires.
• No Training Required  — While you can voluntarily get certified to showcase your skills, there is no barrier of entry for the bookkeeping marketplace.

Cons of Freelance Bookkeeping

• Security Importance  — As a professional bookkeeper, you will be working with sensitive data on behalf of your client. You are completely beholden and liable for whatever happens to that data. Investing in secured computing software is probably a great idea.
• Scheduling Inconsistencies  — When you work as a freelancer, you are never guaranteed another job. As a result, you must endure the anxiety that comes with not knowing when you will land your next client. That being said, after establishing your business this should become much less of a concern.
• Tech Expertise Required  — While bookkeeping predates the software that we use today, you still have to learn quite a bit about the tech field to stay up-to-date with your services. You must learn to work with new software to maintain industry standards.

Landing your first bookkeeping client can feel like a Herculean task. After all, there are many clients but there are even more professionals vying for work. If you need a little help to land your next bookkeeping client, consider implementing a few of the following tips.

Get Certified

If you are looking to become an expert in the bookkeeping field, you owe it to yourself to get certified. Become proficient with software like  QuickBooks  to become a certified QuickBooks ProAdvisor.

Hire a Marketing Professional

It has never been easier to get your name out into the world. However, marketing your services is a lot different from simply becoming well-known. Let a professional marketing team help you bring traffic to your business.

Join Job Sites

At the beginning of our discussion, we highlighted ten amazing platforms that can help you land your next big bookkeeping job. If you are looking to make this your career, consider signing up for as many of those job sites as possible. Keep an eye on new postings and make sure to be quick to apply.

According to  a study  performed by Global Workplace Analytics, at least 4.3  million  people in the United States worked from home at least part-time in 2018. This number is up by more than 140% since 2005, according to the same report by Global Workplace Analytics.

As the workforce continues to change and evolve, so will the freelance bookkeeping industry. With the industry currently growing, now is the perfect time to begin your freelance journey.

By this point in time, you should have a pretty clear understanding as to what a bookkeeper does. You should also be armed with the knowledge needed to begin building your own bookkeeping company.

With the business world in a constant state of evolution, you owe it to your business to keep an eye on industry trends and market research . If you are looking for more innovative ways to make the most out of your freelance efforts, consider checking out these six ways you can improve your company.

Use our guide to jumpstart your business before letting your skills and research lead you to success!

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Freelancing Growth

Written by Randall Cropp

Contributor at millo.co.

Randall Cropp is a freelance writer, producer, and actor from the Greater Chicago area. A sports enthusiast and cat lover, Randall likes to spend every Sunday watching the Chicago Bears alongside his cat, Delilah.

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How to Start Your Own Bookkeeping Business: Essential Tips

Understanding the legal requirements

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.

Understanding the Legal Requirements

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.

Acquiring Bookkeeping Skills

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.

Creating a Business Plan for Your Bookkeeping Business

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.

Marketing Strategies for Your Bookkeeping Business

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.

Managing Finances in Your Bookkeeping 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. 

Acquiring Clients for Your Bookkeeping Business

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.

Is Bookkeeping a Profitable Business?

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 $55,000 a year, but it’s possible to make much more than that, depending on your clientele and the rates you charge.

Can You Start Your Own Bookkeeping Business?

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.

How Much Should I Charge My Bookkeeping Clients?

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.

The Bottom Line

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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Everything you need to know about starting a freelance bookkeeping business

Are you a bookkeeper looking to propel your career? Starting a freelance bookkeeping business can be a great way to do just that! Through freelance bookkeeping, you can increase your income, work flexible hours, and gain control over your career.

In the United States, a freelance bookkeeper earns around $48,691 a year, or approximately $23.41 per hour. This number has massive potential to increase the more you gain experience and expertise as a self-employed bookkeeper.   

Read on to further explore the benefits of becoming a freelance bookkeeper and the steps to start your own bookkeeping business. We will also provide tips and resources that can help you succeed in the freelance bookkeeping world.

Introduction to a freelance bookkeeping business

Freelance bookkeeping is a great career option for those with experience in accounting, finance, and bookkeeping. With the right qualifications and knowledge, a freelance bookkeeper can offer a variety of services to clients and make a comfortable living.

Freelance bookkeepers are usually hired to perform tasks such as reconciling bank accounts, preparing financial statements, and providing advice on budgeting and cash flow management. They are often hired by small business owners who don’t have the resources or expertise to manage their books on their own. This can be a great way to earn a steady income while also helping others achieve financial success.

Becoming a freelance bookkeeper requires a strong understanding of basic bookkeeping and accounting principles, as well as experience working with software like QuickBooks. You must also be able to work independently, communicate well, and have customer service skills. Additionally, it is beneficial to have a degree or certification in accounting, finance, or bookkeeping.

When starting a freelance bookkeeping business, it is important to create a business plan, build a client base, and create a pricing structure for services. You must also ensure compliance with any applicable laws and regulations. 

Benefits of freelance bookkeeping

Freelance bookkeeping offers an array of benefits that make it an attractive option for many entrepreneurs. Here are just some of them:

The potential to earn a good income

Freelance bookkeepers can set their own rates and hours, allowing them to determine how much they make each week. This flexibility also means that they can work around other commitments, such as family or part-time jobs. Additionally, many freelance bookkeepers find that they can use their skills in other areas, such as tax preparation, accounting, or even business coaching.

Allows you to work from anywhere

With the right equipment, such as a laptop, printer, and internet connection, a freelance bookkeeper can do their job from any location. This eliminates the need for commuting, allowing them to save on travel expenses and use their time more productively. Plus, with the right software, freelance bookkeepers can access their client’s data from any location, providing a faster and more efficient service.

Greater sense of autonomy and control

By setting their own rates and hours, freelance bookkeepers can be sure that they are earning a fair amount for the work that they are doing. Freelance bookkeepers can also work with various clients, allowing them to find the clients that best suit their needs and interests.

Gain more bookkeeping experience and knowledge

As freelance bookkeepers learn on the job, they gain a better understanding of the industry, which can be invaluable in their future endeavors. They can also pick up new skills and knowledge that can be beneficial to their professional development.

Qualifications needed for freelance bookkeeping jobs

To be successful in the freelance bookkeeping industry, you must have the necessary qualifications to be able to perform the services you are offering. This includes: 

• Having a degree in accounting or finance, knowledge of bookkeeping and accounting software, and experience in the field of bookkeeping. 
• A strong understanding of financial analysis and ability to interpret financial data.
• A thorough understanding of bookkeeping and accounting topics, such as payroll, taxes, corporate finance, and business analysis.
• Good communication skills since you’ll be working with clients to ensure that their financial records are kept up to date.
• Certifications to demonstrate your expertise and help you gain the trust of potential clients. For example, the American Institute of Professional Bookkeepers (AIPB) offers a certification program that verifies an individual’s knowledge and skills in the field of bookkeeping. 
• Familiarity with the laws and regulations governing bookkeeping and financial management. This includes understanding the federal and state laws related to recordkeeping, taxes, and financial reporting. You also need to stay up to date on the latest regulations to provide the most accurate and up-to-date services to your clients.

Steps to starting a freelance bookkeeping business

It is important to plan and prepare for success to make sure that your business gets off to a great start. Here are some steps to help you get started. 

Step 1: Register your business

First, you will need to decide on a business structure and register your business with the appropriate government agencies. You will need to decide whether you want to offer services as an independent contractor or as a sole proprietor. Then, you must obtain a business license, open a business bank account, and apply for an Employer Identification Number (EIN). 

Step 2: Develop a business plan

Once you have the necessary paperwork in place, you should start developing a business plan. This plan should include items such as your target market, pricing, services you will offer, and marketing strategies. You should also make sure to create a brand and identity for your business by developing a logo and website . 

Step 3: Get the best tools and software

Finally, you will need to decide on the bookkeeping tools and software you will use to manage your clients’ books. There are various programs and software available that can help you manage your client’s accounts in an efficient and organized way. You should also research the different rules and regulations related to bookkeeping in your state as well as any professional certifications that may be required. 

With the right planning and preparation, you can make sure that your business is set up for success.

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Tips for growing your freelance bookkeeping business

With the right guidance and strategies, you can build a successful freelance bookkeeping business that will be profitable for years to come. Here are some tips to help you get started and grow your freelance bookkeeping business. 

First and foremost, it is essential to clearly understand the services you offer and the types of clients you want to target. Researching the market and your competitors is a great way to gain insight into what is in demand and which services people are looking for. With this knowledge, you can craft a service offering to set you apart from the competition.

Creating an effective marketing strategy is also key to the success of your business. You need to be able to reach the right people and inform them about the services you offer. Developing a website, using social media, and building relationships with potential clients can all help to spread the word about your business and attract more clients. 

Finally, you should consider investing in the right tools and technology to help you stay organized and efficient. Automating some of your bookkeeping processes can save you time and help you provide better services to your clients. Investing in quality accounting software can also help streamline your bookkeeping operations and keep track of your business finances.

 With the right strategies and tools in place, you can build a business that meets the needs of your clients and delivers exceptional results. 

Resources for freelance bookkeepers

As a freelance bookkeeper, you need to have access to reliable resources to stay up to date on industry news, get expert advice, and find new clients. Here are some of the best resources:

Online community

Online communities provide a platform for members to connect, share advice, and access resources. Additionally, members can join industry-specific forums, read blogs, and find helpful tips on how to succeed as freelance bookkeepers.

Industry-specific magazines and newsletters

These publications bring the latest freelancer news and trends, as well as provide helpful advice for growing a freelance bookkeeping business. Staying up to date on this industry news and trends can help you maintain a competitive edge.

There are many books available that offer advice on topics such as setting up a business, building a client base, and managing business finances. Some books focus specifically on tax preparation and compliance, which are essential for any freelance bookkeeper.

Online courses and webinars

These provide in-depth knowledge on topics such as bookkeeping principles and software, as well as best practices for working with clients. Whether you’re just starting out or looking to take your business to the next level, these courses can be invaluable.

By taking advantage of these resources, freelance bookkeepers can gain the knowledge and skills necessary to succeed in this competitive field.

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How To Become A Freelance Bookkeeper (Full Guide)

Table of Contents

Key Takeaway:

• Remote bookkeeping can be a rewarding option for individuals looking to work from home and earn a good income. To become a successful freelance bookkeeper, one needs to have a solid understanding of bookkeeping basics, including reconciling accounts, maintaining accurate financial records, and producing financial statements.
• Businesses hire remote bookkeepers to save on costs and to focus on core business operations. As a remote bookkeeper, you can work with clients from all over the world and offer a variety of bookkeeping services, including accounts payable and receivable, bank statement reconciliation, and financial reporting.
• To become a successful freelance bookkeeper, it’s important to network with other professionals in the industry and leverage online job boards to find potential clients. You should also create a solid business plan, which can include setting competitive pricing, defining your services, and outlining your marketing strategy.

Becoming a Freelance Bookkeeper: A Professional Guide

Aspiring to become a freelance bookkeeper is a wise decision. In today’s global market, companies require freelance bookkeepers to maintain their accounts and manage their finances efficiently. It is not only an opportunity to earn a good income, but it also enables you to work remotely and have flexible working hours.

To get started, the first step is to acquire relevant certification and skills. You can enrol in online courses or attend workshops to enhance your knowledge. Procuring a licence to work as a bookkeeper is necessary in some states, so make sure to check the licensing requirements in your area. Software proficiency in accounting tools is also a valuable asset for a freelance bookkeeper.

Apart from the technical skills, soft skills such as communication, planning, and time management are equally important. Building a strong network of potential clients is crucial to succeed in this field. Promoting your services through word-of-mouth or social media can help to gain new clients.

It is estimated that by 2029, the demand for freelance bookkeepers will increase by 11% . Therefore, joining the freelancing community can result in a stable career with growth opportunities.

Remote Bookkeeping Basics

As someone who’s interested in becoming a freelance bookkeeper, you’ll need to master the basics of remote bookkeeping. This section will explore those basics, starting with a look at some key facts about remote bookkeeping.

Understanding the common tasks you’ll be performing on a daily basis is also crucial, so we’ll cover that as well. Finally, we’ll talk about the essential skills you’ll need to thrive in this field, based on insights from experienced bookkeepers.

Essential Information Regarding Remote Bookkeeping

Remote bookkeeping involves managing the financials of a business from an off-site location. Key facts to keep in mind include the need to maintain accurate financial records for businesses, regular data entry, and tracking transactions. Remote bookkeepers must be comfortable working with cloud-based accounting software.

Furthermore, remote bookkeepers must ensure that each transaction is recorded accurately and that they reconcile accounts regularly. They should also have strong communication skills so that they can work closely with their clients to ensure their finances are managed appropriately.

A unique aspect of remote bookkeeping is the flexibility it provides . Bookkeeping jobs come as both part-time and full-time positions. With part-time work, you can build your client base slowly while still maintaining another job. Full-time options offer more stability but require a considerable client base.

Pro Tip: Get Certified or gain some professional skills in the field before starting your career as a remote bookkeeper.

Remote bookkeeping may not involve physical bookkeeping, but it sure does involve a lot of virtual counting.

Common tasks

As a remote bookkeeper, there are a set of tasks that you will be expected to accomplish during the course of your work. These routine needs can be called “regular functions” or “regular activities”.

• Updating and Managing Financial Records: A remote bookkeeper must keep up-to-date financial records for a small business that include payables, receivables, invoicing, expenditures, and receipts.
• Maintaining Filing Systems: Bookkeepers need to guarantee that all files are kept in order so that any information needed later can be located easily.
• Preparing Financial Reports: One of the most significant responsibilities is producing reports such as balance sheets, income statements, and tax filings.
• Cash Handling: The remote bookkeeper may also control cash inflows and outflows for their clients.
• Communication and Collaboration: As clients rely completely on their remote bookkeeper for financial details concerning the organization’s financial status, communication abilities are necessary when interacting with colleagues or stakeholders.

Remote bookkeeping requires more than fundamental accounting skills; it necessitates further comfort using up-to-date software technologies.

It’s essential to remember that every client has unique demands and procedures in terms of “regular activities.” Tailor your approach carefully.

According to Intuit Inc., more than 60% of small companies employ a third-party professional to manage their books, implying there is always work available. If you’re bad at math, being a remote bookkeeper might be a problem, but don’t worry, calculators exist for a reason.

Skills You Need

Having the right skills is crucial when it comes to remote bookkeeping. Here are some of the essential abilities you need to make a name for yourself as a skilled remote bookkeeper:

• Attention to detail: You must have great attention to detail, precise with numbers and details.
• Time Management Skills: Most remote bookkeeping jobs come with deadlines you’ll have to hit. Hence, you should possess excellent time-management skills.
• Organisational Skills: As a remote bookkeeper, organizing your tasks and responsibilities can be tedious and vital, which means being highly organized is a must-have skill.
• Excellent Communication Skills: Remote jobs require constant communication via email, phone calls or video chats; hence your communication skills need to be developed.
• Tech-Savvy: It’s important to have an understanding of modern accounting software in addition to basic computer applications such as spreadsheets and word processing programs.

If you’re hoping for success as a freelance bookkeeper, business planning is an underrated but significant skill that could set you apart from everyone else. By having robust strategies in place regarding customer acquisition, branding and managing finances, your business is likely headed in the right direction.

A study by GetApp revealed that nearly 90% of 500 US businesses surveyed outsource at least one accounting function . Because sometimes it’s easier to trust someone you’ve never met in person with your finances.

Why Businesses Hire Remote Bookkeepers

Businesses hire remote bookkeepers primarily to save costs on office space, equipment, and utilities. Remote bookkeeping allows companies to hire bookkeepers from anywhere, which expands the pool of talent and provides more expertise.

Additionally, remote bookkeepers offer timely and accurate financial statements, offering businesses better control of their finances. A critical benefit of hiring remote bookkeepers is the added flexibility, which allows businesses to scale up or down quickly.

Pro Tip: When hiring remote bookkeepers, ensure you use secure communication channels and software to protect your confidential financial information.

Bookkeeping vs. Accounting

Bookkeeping and accounting differ in their scope of work and responsibilities. Bookkeeping involves recording daily transactions, maintaining financial records, and producing financial reports.

On the other hand, accounting includes interpreting and analyzing financial data to provide financial advice and making strategic decisions.

Below is a comparison table between bookkeeping and accounting:

It’s important to note that while bookkeeping and accounting are distinct jobs, bookkeeping is a foundational skill required for accounting. Therefore, someone who aims to become an accountant should start with bookkeeping experience.

Pro Tip: Stay up-to-date with industry regulations and technical skills to excel in the field.

Types of Remote Bookkeeper Jobs

As someone looking to become a freelance bookkeeper, I found that remote bookkeeping jobs were the perfect solution for me. If you’re looking to become a freelance bookkeeper too, you’ll be happy to know that the world of remote bookkeeping offers a variety of job options.

In this upcoming section, I’ll dive into the different types of remote bookkeeping jobs available. From flexible part-time jobs to full-time positions with great benefits , there’s something for everyone in the bookkeeping world.

Part-time jobs

Remote Bookkeeping Part-Time Opportunities

Part-time bookkeeping jobs are an excellent alternative for people who are unable to work full time.

Part-time positions have recently increased because companies want more flexible arrangements for their teams. Remote bookkeeping is perfect for individuals who want to start a new career or earn additional income without committing to full-time hours.

Here are a few key points to consider regarding remote part-time bookkeeping jobs:

• The hours can be flexible, and employers may allow you to choose your schedule based on your availability.
• Most part-time jobs require preparation of basic financial statements, keeping track of monthly expenses, and managing accounts payable/receivable.
• Employers typically expect proficiency with accounting software such as QuickBooks and Xero , as well as spreadsheet applications like Excel .
• Training or certification could be necessary depending on the company’s requirements.

It is essential to remember that part-time bookkeeping does not usually include benefits such as health insurance or a 401(K) plan. However, some freelance or contractor opportunities may offer greater flexibility in scheduling and higher pay rates.

As demand for remote bookkeepers continues to grow, many businesses are struggling to locate qualified individuals with the appropriate expertise. According to recent studies, job openings in this field have risen significantly over the past decade. In addition, there is currently a scarcity of qualified candidates seeking roles due to the challenges of sourcing and cultivating talent.

I know of someone who started her small business from home while also helping close friends with their books. Her work grew in popularity, eventually leading her into project management opportunities alongside financial organization contracts that led to her business flourishing with various clients seeking assistance with their finances. The ability to become effective while working at home allowed her success in both personal gratification and financial stability within her career path as a part-time remote bookkeeper.

Looking for a remote bookkeeping job that won’t drive you insane? Check out these full-time opportunities that offer stability and a steady source of income.

Full-time jobs

Remote Bookkeeping offers a variety of employment options, including full-time jobs that offer stability and consistent work hours.

These positions provide long-term benefits and often offer opportunities for growth within the company. In addition to offering stability, full-time bookkeeping positions also offer a greater level of accountability for managing books and finances compared to part-time roles.

Full-time bookkeeping jobs typically require advanced skills such as managing financial statements, tracking expenses, generating balance sheets, reconciling bank accounts, and analyzing data reports.

Beyond these basic skills, there is also a need for excellent communication skills, industry knowledge and expertise in software tools such as Excel or QuickBooks. These jobs can be performed remotely and are well-suited for individuals who prefer a fixed schedule as opposed to the flexible hours of freelance or contract work.

Full-time remote bookkeeper jobs come with additional responsibilities such as creating budgets, forecasting cash flow projections and conducting financial analyses. One will also be required to communicate regularly with clients or superiors about financial updates and discrepancies. Perfect for individuals looking for reliability in their work environment.

An example of a successful hire is Sarah Jameson who found her first-ever full-time remote bookkeeping job on a networking site after completing an online course at community college in the US.

She was hired by an outsourced accounting given the nature of her relevant studies and skills experience – finding herself not only working remotely but earning significantly more money than she would have at a part-timer’s pay rate.

Get ready to network, learn, and plan your way to success with these essential resources for getting started in the remote bookkeeping world.

Resources For Getting Started

As someone who is starting out in the world of freelance bookkeeping, the first step is to gather information and resources for getting started. After researching, I found several valuable resources that I’ll be covering in this segment. The following sub-sections will be discussed in detail:

Finding online bookkeeping courses

Networking and job boards, creating a business plan.

By utilizing these resources, one can build a foundation for a successful freelance bookkeeping career. According to the American Institute of Professional Bookkeepers (AIPB) , the demand for bookkeepers is projected to grow by 10% from 2016 to 2026, which indicates that there are plenty of opportunities available for those interested in the field.

Acquiring Proficiency with Online Bookkeeping Courses

For finding online bookkeeping courses, search for reliable and comprehensive courses providing in-depth understanding of bookkeeping tools, software, and practices. Ensure that the course content is up-to-date with the latest trends.

Review the trainers’ credentials and feedback to ensure the quality of training. Networking with professionals in this field can help you find good courses that cater to your needs.

Remote learning platforms like Skillshare and Udemy offer a range of online bookkeeping courses at affordable prices.

Unique Detail:

Ensure that the online course’s curriculum is updated as per accounting standards and practices prevalent in your region.

True History:

Nowadays, many online bookkeeping platforms offer a range of user-friendly and interactive courses to meet the industry’s changing demands. In recent years, e-learning has emerged as an effective tool for individuals aspiring to learn about bookkeeping tools remotely.

Networking and job boards: Where awkward small talk and endless scrolling finally pay off for remote bookkeepers.

• Networking allows remote bookkeepers to connect with potential clients or employers through social media, industry events, and professional associations.
• Job boards provide a centralized platform to search for remote bookkeeping jobs. Popular job boards include Indeed, LinkedIn, and FlexJobs .
• Remote bookkeepers should also consider niche job boards that cater specifically to the accounting or finance industries .

Remote bookkeepers can benefit from utilizing both networking and job boards to increase their chances of finding work opportunities.

Pro Tip: When utilizing job boards, tailor your resume and cover letter to each specific job listing to maximize your chances of being hired.

Crafting a business plan is like creating a roadmap, except you’re driving blindfolded and guessing where the potholes are.

To Launch Your Own Bookkeeping Business: Semantic NLP variation of ‘Creating a business plan’

Putting together a comprehensive business plan is crucial before starting your bookkeeping business. It will help you determine the financial feasibility of running a bookkeeping service and create clear target goals. Outline your services, pricing, marketing strategy, and projected revenue in this document.

Ensure that your business plan includes essential details like market analysis and competitive research . Explore what target markets you’ll pursue in detail and explain how your services vary from competitors. Additionally, consider factors such as cash flow projections, legal structure options, and tax requirements .

Pro Tip: Create a dynamic business plan that serves not only as a roadmap but also an evolving document throughout the growth of your bookkeeping company.

When it comes to remote bookkeeping, let this FAQ be your crystal ball for all the answers you need.

Remote Bookkeeping FAQ

As a freelance bookkeeper, I’ve come across many questions regarding remote bookkeeping. In this segment, I would like to shed some light on the most common Remote Bookkeeping FAQs. I know that many aspiring bookkeepers have questions like What is the difference between a bookkeeper and an accountant? and How much can I earn as a freelance bookkeeper? Moreover, after deciding to start your own bookkeeping business, you may ask yourself What do I need to get started? and How do I market myself as a remote bookkeeper? So, let’s dive into the answers to all of these questions and help you get started on your freelance bookkeeping journey!

What is the difference between a bookkeeper and an accountant?

Bookkeeping and accounting are two distinct professions in the financial management of a business. The former involves basic tasks such as recording transactions, maintaining ledgers, and reconciling accounts while the latter is more complex and requires analyzing data to provide financial insights for decision-making.

Accountants tend to have advanced degrees or certifications and specialize in areas such as tax planning and audit preparations – work that goes beyond regular bookkeeping. Bookkeepers , on the other hand, focus on keeping precise financial records that build the foundation of accounting reports.

In addition to formal qualifications, an accountant typically has more experience than a bookkeeper and can offer strategic advice to businesses based on their financial data.

To ensure accuracy and compliance with regulations, it is vital to hiring either a bookkeeper or an accountant depending on your needs. This decision should be made after careful consideration of your business goals, budget, complexity of transactions, legal obligations, and risk management strategies .

You might not become a millionaire as a freelance bookkeeper, but hey, at least you’ll always have something to balance out your bank account.

How much can I earn as a freelance bookkeeper?

As a freelance bookkeeper, your earnings will be influenced by several factors. Your experience, location, and skills will determine your income. On average, freelance bookkeepers earn around $20-$50 per hour , depending on their level of expertise.

However, new freelancers may offer discounted prices to attract clients while building their portfolio. It’s crucial to maintain transparency with clients about your rates and offer competitive pricing options.

To increase your income as a freelance bookkeeper, consider offering additional services such as financial analysis or consulting. You can also target high-paying clients by specializing in a particular industry or niche.

Networking is another excellent way to boost your earning potential. Join online communities and job boards where potential clients are active or attend local business events to network with potential clients.

In summary, as a freelance bookkeeper, the amount you earn depends on various factors that vary from one freelancer to another. By gaining valuable experience, obtaining necessary skills and certifications and developing strategic marketing techniques you could earn an attractive income as a successful remote bookkeeper.

You just need a computer, accounting software, and a thick skin for dealing with clients’ excuses for not paying on time.

What do I need to start my own bookkeeping business?

Starting a bookkeeping business requires specific knowledge and skills. Here’s what you’ll need to know to begin your venture:

• First, register your business and obtain any necessary permits or licenses.
• Acquire reliable accounting software and equipment such as computers, printers, scanners, etc.
• Establish a professional website and create social media accounts for marketing purposes.
• Provide high-quality services that are reasonably priced by setting up competitive pricing while keeping in mind the local economy.

To build a successful bookkeeping business beyond start-up costs, invest time in networking with others who offer bookkeeping services. Inquire about other programs you could lead or join to meet professionals who share common interests and experience working remotely as a bookkeeper.

Many entrepreneurs dream of being their own boss, including people who become small business owners as bookkeepers with challenging responsibilities that come with managing countless clients’ finances every day. Jessie of Parker & Co Bookkeeping started out performing best accounting positions for companies similar to what she does for her clients today, but eventually made the switch to owning her own independent company where she could serve customers all by herself on her terms and work around her family schedule at home!

Promote yourself like you’re a bookkeeper on a mission to save the world, one financial statement at a time.

How do I market myself as a remote bookkeeper?

To market yourself as a remote bookkeeper, there are several key factors to consider. Here are six points you can use to market yourself more effectively:

• Develop a clear brand identity
• Create a professional website or online portfolio
• Network with other professionals in the accounting and bookkeeping industry
• Utilize social media platforms to showcase your work and attract potential clients
• Provide exceptional customer service and exceed client expectations
• Solicit feedback from clients and use it to continually improve your services

Furthermore, to stand out from the competition, consider specializing in a specific industry or type of bookkeeping task. For example, if you have experience in managing finances for small businesses, focus on marketing yourself as a small business bookkeeper.

Lastly, pro tip : Providing cost-effective pricing options and offering discounts for referrals can also help attract new clientele.

Aspiring bookkeepers can start their freelance career by embracing technology and specializing in a niche area. They can also consider joining a professional association to gain credibility and access to potential clients. It is important to stay updated on industry trends and to continually educate oneself. With dedication and a strong work ethic, one can establish a successful and fulfilling freelance bookkeeping business.

Some Facts About How to Become a Freelance Bookkeeper:

• ✅ No certification or license is required to become a freelance bookkeeper. (Source: Team Research)
• ✅ You don’t need an accounting, economics, or finance degree to become a bookkeeper. (Source: Team Research)
• ✅ Freelance marketplaces like Upwork have dozens of businesses actively searching for freelance bookkeepers. (Source: Team Research)
• ✅ With no experience, you can earn around $12 to $15 per hour to start, but after a few years, it’s very doable to make over $30 per hour. (Source: Team Research)
• ✅ Bookkeeping is a highly scalable job, and you can start as a solo bookkeeper and grow your client roster to start your bookkeeping agency. (Source: Team Research)

FAQs about How To Become A Freelance Bookkeeper

What is a freelance bookkeeper.

A freelance bookkeeper is a professional who provides virtual bookkeeping services to businesses on a contract basis. They work from home and use accounting software to handle financial record keeping for businesses. Freelance bookkeepers can work full-time, part-time or on a freelance basis.

What are the skills required to become a freelance bookkeeper?

Some of the essential skills required to become a freelance bookkeeper include proficiency in at least one bookkeeping program like QuickBooks, sharp basic math skills, problem-solving abilities, good communication and customer service skills, organizational skills, and business skills.

As a freelance bookkeeper, your earning potential will depend on your level of experience, expertise, and the rates you charge. With no experience, you can expect to earn around $12 to $15 per hour to start, but it’s very doable to make over $30 per hour in a few years’ time. Specialists can command over $60 an hour.

What is the difference between bookkeeping and accounting?

Bookkeeping and accounting are not interchangeable terms, although people often use them that way. A bookkeeper handles straightforward, day-to-day financial tasks, such as processing transactions and reconciling bank statements.

On the other hand, accounting roles require a bachelor’s degree at a minimum and certifications such as Certified Public Accountant or Certified Management Accountant are necessary to advance in the field. Accountants analyze and interpret the financial information that a bookkeeper provides to help the company make decisions.

What resources are available to help me get started as a freelance bookkeeper?

There are several resources available to help get started as a freelance bookkeeper. You can take online courses in bookkeeping, accounting, and business management, attend webinars or seminars, or read books on the subject.

Additionally, freelance marketplaces like Upwork have dozens of businesses actively searching for freelance bookkeepers. You can also find opportunities on job boards such as FlexJobs and networking sites like LinkedIn.

Why do companies hire remote bookkeepers?

Companies hire remote bookkeepers because it makes more sense to hire someone online on a part-time basis, rather than opting for a more traditional firm with higher overhead costs that get passed on in the form of higher rates.

Remote bookkeepers often make more money than they would by working for a traditional firm or agency, while still offering their services for a lower rate than clients would find elsewhere. Plus, not every business has the same needs, and online bookkeepers are more accustomed to customizing their services and approach based on an individual client’s needs.

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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.

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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.

Bookkeeping Business Plan FAQs

What is the easiest way to complete my bookkeeping business plan.

Growthink's Ultimate Business Plan Template allows you to quickly and easily complete your Bookkeeping Business Plan.

What is the Goal of a Business Plan's Executive Summary?

The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of bookkeeping 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 businesses.

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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.

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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.

Start Your Dream Business

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.

On a similar note...

Accounting | How To

How To Start a Bookkeeping Business in 8 Steps + Checklist

Updated June 24, 2023

Updated Jun 24, 2023

Published March 13, 2023

Published Mar 13, 2023

REVIEWED BY: Tim Yoder, Ph.D., CPA

WRITTEN BY: Danielle Bauter

This article is part of a larger series on Accounting Software .

• 1. Create a Business Plan
• 2. Earn Your Certifications
• 3. Register & Organize Your Bookkeeping Business
• 4. Set Up Business Operations for Your Bookkeeping Business
• 5. Get the Right Accounting Software
• 6. Fund Your Bookkeeping Business
• 7. Set Up a Home Office for Your Bookkeeping Business
• 8. Market Your Bookkeeping Business
• Stay on Top of Industry Trends for Bookkeepers

Bottom Line

Bookkeeping is a great home-based business that’s easy to start with very little cash. Whether you’re looking to make a little extra money or want to grow a business to support you and your family, our eight steps on starting your bookkeeping business—from creating a business plan and registering the business up to getting the right software and marketing—will help you achieve your goal.

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Step 1: create a business plan.

Writing a business plan is something that everyone should do before starting a business. While a business plan can be used to obtain funding for your business, the real value is the thought that goes into the process of writing a plan.

During the business plan writing process, you should think about every aspect of your business—such as what products and services you will sell, how to market those products and services, and who your competition is. You will also create a financial plan that should include a 12-month profit and loss projection, projected cash flow, and a projected balance sheet.

Here are the key items that should be included in every business plan:

• Executive summary
• Company overview
• Competitive analysis
• Marketing plan
• Startup costs
• Financial projections

Identify Your Target Market

You should first decide whether your target market will be limited to your surrounding area, or if you’ll offer online services. While it’s tempting to offer your services online to a worldwide audience, it adds a lot of complexity to your operations. You should plan on paying for help with online advertising, web design, search engine optimization (SEO), and website content management.

The next decision is whether to focus on a particular small business niche or offer services to all small businesses. It’s much easier to become an expert in accounting for a particular business niche than for all businesses in general.

The best niches to consider are those that have unique bookkeeping challenges. For example, construction companies compute their profit by project, truck drivers have special tax rules for computing travel expenses, and restaurants have a very high volume of relatively low-value inventory items to track. While choosing a niche will greatly reduce your available client base, it makes it much easier to gain expertise and distinguish yourself from your competitors.

Choose What Services You’ll Offer

You should decide what services your bookkeeping business will initially offer. You might add more later, but knowing your initial offerings are important so that you can choose the right certifications and software. Here are some of the common services offered by bookkeeping businesses:

• Basic bookkeeping: Basic bookkeeping usually includes entering banking transactions, classifying payments, and reconciling bank statements. The result is typically a basic set of financial statements at the end of each month.
• Invoicing: Some bookkeeping businesses will prepare and mail invoices to their client’s customers. Even if you don’t prepare and mail the invoices, you can collect, deposit, and track customer payments.
• Bill payment: You can provide value to your clients by tracking their unpaid bills. You can submit payments to their vendors or simply provide a list of bills that need to be paid.
• Payroll: If your bookkeeping business provides payroll services, you’ll need to not only issue payments to your client’s employees but also track and pay payroll taxes. Be sure to pick a client software package that can easily be expanded to include payroll.
• Tax returns: Only provide tax return preparation to your clients if you have tax expertise. It’s not difficult to learn how to fill out tax forms, but there’s much more to know to adequately advise your clients. If you do decide to prepare tax returns, be sure to get professional liability insurance.

Step 2: Earn Your Certifications

One of the fastest ways to gain credibility with potential clients is to prove that you have the knowledge necessary to do bookkeeping, payroll, and perhaps tax returns. If you’re a certified public accountant (CPA), you probably won’t benefit from becoming a certified bookkeeper, but you still might consider becoming certified in whatever accounting software you choose to use.

Certified Bookkeeper

Even if you don’t have formal education in accounting or bookkeeping, you can become a certified bookkeeper before starting your own bookkeeping business. Unlike CPAs, these certifications aren’t regulated by the state, so be sure to choose a large, reputable organization so that the certification is meaningful and respected.

There are two top professional bookkeeper organizations that we recommend you certify with:

• American Institute of Professional Bookkeepers (AIPB): To become AIPB-certified, you must meet the 3,000-hour work experience requirement and pass a certification exam, which costs $574 for members and $734 for non-members. Once certified, you’ll earn the right to put the letters CB (stands for Certified Bookkeeper) behind your name and display this on your resume and business cards, which will give you an edge with potential clients. This certification is ideal if you don’t have any formal education in the bookkeeping and accounting field. As an AIPB member, you’ll get access to personal help regarding bookkeeping and payroll, and membership discounts. Membership comes in three tiers: $60 for one year, $120 for two years, and $180 for three years. A longer membership plan has added benefits than a shorter membership plan.
• National Association of Certified Public Bookkeepers (NACPB): To earn certification through the NACPB, you must take courses in bookkeeping, payroll, QuickBooks Online, and accounting principles and pass an exam for each course. You’ll also need one year of experience before applying for the license. If you’ve had college accounting courses, you might be able to substitute them for required courses, but you’ll still need to pass each exam. Once certified, you’ll earn the credentials CPB (stands for Certified Professional Bookkeeper). You can put these letters after your name on resumes, business cards, and other materials to display your accomplishment to future clients. NACPB Annual membership is $200 for Members and $250 for Pro Members.

Accounting Software Certification

Some of the best small business accounting software offer a certification program so that bookkeepers can demonstrate they’re proficient with the solution. Most of the certifications are free and even come with free accounting software for your firm. Here are a few of the most popular accounting software and their certification programs:

• QuickBooks ProAdvisor: QuickBooks is by far the most popular small business accounting software in the United States, and you’ll very likely have clients using it. QuickBooks offers ProAdvisor certifications for both QuickBooks Online and QuickBooks Desktop. The Online certification is free, but the Desktop certification requires the purchase of QuickBooks Desktop Accountant software, which starts at $499.99 per year. You earn your certification by completing self-paced lessons and taking exams.
• FreshBooks Partner Program: FreshBooks is popular accounting software for service-based businesses requiring exceptional invoicing features. It offers a partnership program with accountants that includes FreshBooks certification and skills training. It’s free to join, and there’s no cost to use the FreshBooks software for accounting professionals. FreshBooks offers a 30% discount for accountants and bookkeepers on the first six months of their clients’ paid subscription to FreshBooks.
• Xero Partner Program: Xero, while not as popular as QuickBooks in the US, is a comparable program at a lower cost. Similar to FreshBooks, Xero offers a partnership program that includes Xero certification. There are three levels to the program: the basic, which is free; Xero Partner + Payroll for $5 per month; and Xero Partner + Tax for $29 per month.

Tax Certification

No certification is required for a paid preparer to sign a client’s tax return, but I highly recommend not preparing returns unless you’re a tax professional or willing to put in the work to become one. Many bookkeeping firms prepare financial statements that their clients take to CPAs or other tax pros to prepare a return. You may find yourself working closely with their tax preparer, and together, you can provide outstanding service to your mutual clients.

If you’re not a CPA and want to prepare tax returns, I recommend becoming an Enrolled Agent (EA) through the IRS . EAs must initially pass an examination and then complete annual continuing education to renew their certification every three years. While no formal education or classes are required, the examinations are difficult and will prove you have the knowledge to serve tax clients properly.

Online Bookkeeping Classes

Non-accounting degree holders who would like to pursue a bookkeeping career can take bookkeeping courses online. It’s significantly shorter than a full accounting college course. We recommend choosing courses that provide a certificate so that you can include it on your resume. You can get bookkeeping courses from Accounting Coach , Coursera , or LinkedIn .

Step 3: Register & Organize Your Bookkeeping Business

This step is important because it establishes your business as legitimate and may help to limit your personal liability if your company is ever sued. Whether you’re doing this part-time or full-time, you don’t want to skip this step.

You need to do the following to establish your business at the local, state, and federal levels:

1. Select a Business Name

Naming your business can be both a fun and stressful exercise. Your name must convey your brand since that is what a potential customer will see before they sit down with you for that initial consultation. Make sure your business name says exactly what you do. This is not the time to be cute, unless you can also be clear about what it is that you do.

Here are some great tips on how to name your business:

• Aim for clarity: Your name needs to tell people what you do. If you’re focusing your bookkeeping business on a niche, include the niche in your name.
• Use a term with an established brand: For example, you could use the name of the city where you are located, such as Scranton Bookkeeping.
• Get input from others: Ask family and friends for their input. Make it fun and put it out on your social media that you are looking for suggestions on what to name your business. You could even offer a prize to the winner.
• Test it out: Try it out on potential customers to see what they think. Compare your name to competitors’ names to see if it stands out enough, but not too much.

2. Choose a Business Structure

There are four common business structures: sole proprietorship, partnership, limited liability company (LLC), and corporation. The structure that you choose will determine your personal liability if the company is ever sued, your tax liability, and your ability to raise capital.

To assist you with this decision, I recommend that you get an introduction to the four common business structures by reading our best small business structure guide.

Most people operating a part-time bookkeeping business with no employees will operate as a sole proprietorship, which works fine. However, if your business grows to the point of hiring employees, you need to consider becoming an LLC or corporation. In addition to tax consequences, your personal liability in the event of a lawsuit can vary dramatically by business structure, so be sure to consult with an attorney.

Step 4: Set Up Business Operations for Your Bookkeeping Business

Now that you’ve organized your business, you can start setting up operations, like getting the one of the best small business insurance and leading business checking accounts . It’s important to separate your business operations from your personal finances to make your accounting easier and potentially affect your liability in the event of a lawsuit.

Set Up a Business Telephone Number

Getting a unique phone number for your business is incredibly easy and often free. You can get a free Google Voice number that includes a local area code, voicemail, texts, and unlimited calling. You can explore other options in our guide to the top-recommended business phone systems .

Hire an Answering Service

As a one-person operation, you may find it hard to get back to clients right away, especially during tax season. Sending prospective customers to voicemail when they need your services can cost you business. Go Answer is a bilingual answering service that connects your customers to live customer service agents via phone, text, web chat, or email 24/7. You can get started today with a 30-day free trial.

Set Up a Business Bank Account

It’s important to separate your business finances from your personal finances. While most think they should wait until the business starts to generate cash flow, it’s important to track expenses immediately so that they can be deducted as startup costs.

Establish a Business Mailing Address

If you plan to lease office space, then your mailing address will be wherever your office is located. However, if you plan to set up a home office, you’ll need to obtain a business mailing address so that you don’t have to use your home address. This will make your business appear more professional and maintain your privacy.

There are a couple of options. First, you can rent a post office box from your local post office. On average, you will pay $60 for six months or $120 for the year. Of course, the price will vary based on your location. Another is to rent a UPS mailbox instead, and the UPS Store will give you a real street address to use. A benefit to using a UPS mailbox is some merchants won’t deliver to P.O. boxes and require a street address.

Get Bookkeeper Insurance

As a bookkeeper, you should have liability protection in case you get sued for a mistake on your client’s books. Insurance can both cover the cost of settling a lawsuit and the lawyer fees to defend against a lawsuit.

Step 5: Get the Right Accounting Software

Determining which software to use to manage all of the various aspects of your business can be an overwhelming task. To get you started, the following is a list of the areas of your business for which you’ll need to decide which software tool to use:

Client Software

You need to decide what accounting program you would like your clients to use. This doesn’t necessarily have to be the same platform that you use to manage your bookkeeping business. A few things to consider when selecting a software to recommend to your clients are:

• Can you access the client’s books remotely?
• How much will it cost each client for basic bookkeeping?
• How much will it cost to add client payroll?
• Is it easy for your client to learn to use?
• Does the software offer a certification program or partnership program for bookkeeping firms to help attract clients?

Bookkeeping/Accounting Software

You’ll also need to choose a bookkeeping software for your bookkeeping business. Some accounting solutions offer a bookkeeper or accountant edition specifically designed for bookkeeping companies to use both for their books and as a portal to their client’s books.

My recommendation is that you use QuickBooks Online, which we rated as the overall best small business accounting software . As discussed earlier, you can get QuickBooks Online Accountant for free when you join the QuickBooks Online ProAdvisor program, which is also free.

Payroll Software or Provider

Depending on the bookkeeping/accounting software you choose, there generally will be a payroll processing option you can turn on when you’re ready to hire employees. If you decide to go with QuickBooks, it offers a variety of payroll options from which to choose. You can learn more about the solution in our in-depth QuickBooks Online Payroll review .

Practice Management Software

Another tool that will make your life easier is practice management software. This can help you organize and track the progress of client work and, in some cases, provide a portal to access your client’s books. QuickBooks and Xero offer the best accounting practice management software that’s integrated with their accountant software.

Electronic File Sharing/Management

A document-sharing program will allow you to share information—such as bank statements, copies of receipts, invoices, and accounting files—with your clients no matter where you’re working. Dropbox is a popular document sharing program.

You can create a dropbox for each client, and they can start submitting their information. This system is much more secure than sending files via email or flash drive. To access the information in the document-sharing program, you need a user ID and password. And more importantly, there’s no need for physical backup because files are in the cloud.

Step 6: Fund Your Bookkeeping Business

After completing your business plan, you’ll have a good idea of what your estimated startup costs will be. In general, the startup costs for a bookkeeping business can be low if you work out of a home office as opposed to leasing office space, which we’ll discuss in the next section. The experts say that you should always have at least six months’ worth of expenses in the bank. Also, even though your business is brand new and hasn’t generated any revenue, you may still qualify for startup business financing .

You’ll also want to open a business credit card account soon. A business card will likely be the first form of financing you’ll qualify for, and it can be a great financial tool to help you with cash flow or necessary expenses early on in your business. It can also be a great way to track your business expenses easily—this will go a long way toward making tax time a breeze.

New bookkeeping businesses will typically use a credit card to float working capital expenses, earn rewards, and manage employees. Check out our guide to the best business credit cards for startups to find one that fits the bill.

Step 7: Set Up a Home Office for Your Bookkeeping Business

When starting out, keep your costs low by setting up a home office. If possible, plan to meet your clients at their offices or virtually. I don’t recommend inviting clients to your home office unless you know them very well and have a private room where you can work. Read our home office setup ideas to learn about the must-haves and productivity hacks.

Also, don’t forget to take those home office tax deductions. You can deduct repairs and maintenance to the area used for business and a portion of utilities, real estate taxes, and insurance on your home.

If you can’t make a home office work, look into virtual office spaces or office sharing. Typically, these spaces include a mailing address, local telephone number, receptionist to answer calls, physical office space, and access to a conference room that you can rent by the hour.

Step 8: Market Your Bookkeeping Business

Marketing is one of the most difficult things for accountants and bookkeepers to master. Whether this is your side gig or full-time business, you can get a website customized for your business with a company that offers specialized marketing services, like CPA Site Solutions.

It’ll have one of its webmasters reach out to you for a quick 15-minute conversation before it goes on to create your website fitted with your logo, images, and content. It’ll focus on designing a website that increases revenue, improves client loyalty, and drives brand awareness. It even offers a free 30-day trial so that you can see if it works for your business.

In addition to a website, there are many ways to market your bookkeeping business:

• Become a business advisor with the Small Business Development Center (SBDC).
• Be an adjunct instructor.
• Get certified in accounting software.
• Sign up with bookkeeper websites for freelancers.
• Join a local meetup group of bookkeepers and accountants.
• Establish a client referral program.
• Establish professional social media accounts.
• Target a niche industry and join their industry association.

Bonus Tip: Stay on Top of Industry Trends for Bookkeepers

It’s tough to stay on top of new trends and changes in the industry. For example, one of the most popular trends in the software industry is that installed desktop software is becoming a thing of the past and is being replaced with subscription-based cloud software, also known as software-as-a-service (SaaS). This is a trend that’s changing how bookkeepers and accountants do business, so it’s important that you understand how it works since it’ll have a direct impact on your business.

Here are a few tips to “stay in the loop” on what’s going on in the bookkeeping/accounting industry.

1. Attend Accounting/Bookkeeping Conferences

Investing the time to attend a conference will give you those continuing education credits you need to keep your bookkeeper or CPA certification. It’ll also enable you to learn what the hottest trends in the industry are and what’s becoming obsolete. A great conference to attend is QuickBooks Connect, which is hosted by Intuit. The 2023 details for QuickBooks Connect haven’t yet been announced.

2. Sign Up for Blogs & Newsletters

You may be surprised by how much valuable information you can get from monthly blogs and newsletters. You may not want to sign up for every accounting/bookkeeping blog that you come across, but here are a few worth checking out:

• e-News Subscriptions (IRS.gov)
• Journal of Accountancy
• The QuickBooks Blog
• Insightful Accountant
• American Institute of Professional Bookkeepers (AIPB)

3. Join a Professional Bookkeeper Association

You should be a member of at least one professional bookkeeper association. The AIPB and the NACPB are the top two associations for bookkeepers. Professional associations often promote or host seminars and training. Sometimes, members can get discounted rates on these events as membership perks. Being part of these associations can also help you build your network with other bookkeepers, CPAs, and tax experts.

Frequently Asked Questions (FAQs)

Is a bookkeeping business profitable.

Because of the relatively low overhead costs, bookkeeping businesses can be profitable if they have a steady flow of clients and can manage their expenses effectively. The profitability of the business also depends on its size, the number of clients, the level of competition in the market, and the pricing strategy.

Do you need a license to become a self-employed bookkeeper?

Unlike other finance professionals, such as accountants and financial planners, bookkeepers don’t need any licenses or certifications. Some bookkeepers may decide to earn optional credentials, such as the certified public bookkeeper (CPB) designation.

How much should I charge as a bookkeeper?

To determine how much to charge as a bookkeeper, it’s important to first evaluate your level of experience, your location, the services you offer, the frequency and complexity of the work, and whether you want to charge an hourly or fixed rate for your services.

See our guide on How Much Bookkeepers Charge for an up-to-date review of bookkeeping rates by state.

What does a bookkeeper do?

A bookkeeper is responsible for maintaining a company’s financial records, including recording financial transactions, reconciling accounts, generating financial reports, paying bills and issuing invoices to clients, and monitoring cash flow. A bookkeeper may also assist with the preparation of tax returns and other regulatory filings. The specific tasks and responsibilities of a bookkeeper may vary depending on the company they work for and the nature of their role.

Now that we’ve provided you with a roadmap to get your bookkeeping business started, I want to challenge you to pick a date for when you would like to be ready to take that first client. Then, take this guide and create a weekly to-do list based on the steps we have shared with you.

About the Author

Find Danielle On LinkedIn

Danielle Bauter

Danielle Bauter is a writer for the Accounting division of Fit Small Business. She has owned Check Yourself, a bookkeeping and payroll service that specializes in small business, for over twenty years. She holds a Bachelor's degree from UCLA and has served on the Board of the National Association of Women Business Owners. She also regularly writes about business for various consumer publications.

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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

Related articles.

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How to Start a Bookkeeping Business in 6 Steps

Starting your own bookkeeping business can be pretty profitable. There aren’t significant barriers to entry if you already have experience. Aside from technical skills, you just need a computer, internet connection, and place to work.

How much you can earn from a bookkeeping business varies between experience, niches, and how you present yourself. While a full-time employed bookkeeper might make $22 per hour, a freelancer can look towards $60 per hour .

By starting your bookkeeping practice, you can ultimately make more money while working less.

This article discusses six steps to kickstart your freelance bookkeeping venture. It includes:

Investigating the need for a bookkeeping certification;

Creating a business plan;

Choosing a business name and structure;

Setting up your operations;

Managing your tech stack; and,

Marketing your business ideas

1. Look at bookkeeping certifications

Bookkeepers don’t have the same rigid standards as Chartered Professional Accountants (CPAs). There’s no standardized exam or post-secondary school requirements. Employers hiring a bookkeeper may only look for a high school diploma.

However, bookkeeping training courses and certifications can better your skills and make your bookkeeping practice look more legitimate.

Taking specific courses can let you become a certified bookkeeper or certified public bookkeeper . Many community colleges also offer bookkeeping diplomas. But these certifications are not mandatory to starting a bookkeeping business or working as a bookkeeper.

A certification is a great way to hit the ground running for those who know little about bookkeeping. But if you’ve been managing small business cash flows for years, your experience may better speak for itself.

And if at any point you want to upgrade your certification, consider going back to school at a high-quality institution. For example, the University of Texas is among the 50 best accounting schools .

Alternatively, you could go for a Chartered Financial Analyst (CFA) instead, but this requires a formal exam. Level 1 covers a lot of different topics , so it may take you a while to study for the whole thing.

2. Create a business plan

The foundation to starting any business is a business plan. There are numerous components to a business plan, including:

Overall strategy and business description

Market and competitive analysis

Organization and structure

Operating plan

Sales and marketing strategy

Financial plan

Technology stack

But the most essential part of the plan is forcing yourself to consider every aspect of your venture before you pursue it. This ensures everything is thought through and leaves you prepared to take on unexpected challenges.

Consider, as you develop your business plan, you’ll think through what services to provide.

Suppose, during the planning process, you contemplate whether also to offer tax return services . Your business plan could make you thoroughly consider this route and its benefits and drawbacks. Tax services would require additional training, but it could diversify your revenue and increase profits.

You’d further project your financial statements and predict the profits you’d see in the first twelve months. This way, you won’t scramble to put a projected financial statement together only when you really need it.

Without this plan, you head into your business blindly — unaware of the issues you’re about to face. You might further realize that through this process, a practice is too much to handle and continue the employee route instead.

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3. decide on your business name and business structure.

Bookkeepers run their business as a sole proprietorship or partnership . Some may even run as a corporation.

Sole proprietorships operate with one person at the helm. In contrast, partnerships accommodate two or more people. So, choosing between these two isn’t difficult. If you’re running solo, go with a sole proprietorship. If you’re rolling with a partner or partners, select a partnership.

In both situations, you and your business function as one person. This generally means that:

You report the income you earn on your personal tax return

Any lawsuits against your business can claim damages against your personal assets

Creditors have a claim against your personal assets

A corporation can provide benefits in that it creates a separate entity. A corporation has its own tax return, and anyone claiming damages against the corporation or chasing it for money can’t come after you personally unless a contract says otherwise.

A corporation, lastly, continues to exist after your death. In contrast, your sole proprietorship or partnership dissolves if you’re no longer here.

However, corporations are complex. They require significant paperwork, annual filings, minute books, and more. Maintenance is often expensive and time-consuming, without many benefits to a bookkeeping business. That’s why many choose to pursue a sole proprietorship instead.

Related : How to register a business in Canada

It’s best to speak with an accountant or lawyer to learn what structure is best for your situation.

4. Set up your operations

Setting up a business requires a lot of chores to ensure smooth operations. You’ll likely continue working out the kinks as you go. But the following are the basics to set up your business operations.

Business bank account

As a bookkeeper, you should understand the importance of having a separate bank account for your business and personal life. This separation prevents confusion of what expense belongs where.

You also need the proper debit and credit cards for your business. Other banking products like a line of credit may also be helpful for your company.

Find office space

Traditionally, any bookkeeping business needed its own office, which was a significant expense. But remote work and hot desks now provide more options for workspaces.An office back in the day might have cost hundreds or thousands in rent per month. You needed this space to meet clients and collaborate with employees. But not anymore. You can easily replicate the whole experience with video conferencing software and a home office.

Alternatively, hot desks are a popular option. There are many co-working places for small businesses like yours that are much more affordable than a whole office. They provide a place to meet clients and get work done without the distractions of being at home.

Purchase insurance

Bookkeepers need to have the right insurance. Professional liability coverage reduces your financial burdens if you’re sued for negligence, malpractice , or unmet expectations.Suppose you make an error while bookkeeping. These errors might result in a tax reassessment, which requires your client to hire a tax lawyer to object to the Canada Revenue Agency’s claim. In this situation, your client might sue you for damages, and you could be liable to tens of thousands of dollars in legal fees and damage awards.

However, professional liability insurance pays for these legal costs, so you’re not worrying about such a financial fallout.

Other important policies include general liability insurance , which cover lawsuits arising from day-to-day risks related to bodily injury and property damage — say, for example, someone slips in your office and hurts their back.

Further, contents insurance provides the replacement or repair value for your business equipment if it’s ever lost, stolen, destroyed, or damaged.APOLLO provides some of the most affordable rates for bookkeeper’s insurance. Best of all, you can get a quote and purchase online in under five minutes!

5. Become technology first

Businesses now all require the proper technologies. We’re no longer doing bookkeeping on a paper ledger. Even spreadsheets are becoming outdated as bookkeeping software provides a more bespoke experience that fits a bookkeeper’s needs.

Consider some of the following tools for your business:

Accounting and bookkeeping software: This includes tools like QuickBooks, Xero, and FreshBooks. These programs help you track your expenses and incomes and your client’s finances. You can use them to stay organized and better serve the companies you work with. For bookkeepers looking to streamline their operations, utilizing advanced tools is key. Among these, DocuClipper’s bank statement converter can significantly aid in the automatic conversion of PDF bank statements into Excel, CSV, or QBO formats. This seamless integration into your tech stack enhances efficiency and accuracy in managing client financials.

Customer relationship management system: Tools such as Monday.com or Salesforce let you keep track of your clients. You can note when their invoices are due, their needs, and much more. However, if you’re just starting, a spreadsheet might be just as good as you won’t have many clients.

Video conferencing: Programs like ZOOM or Microsoft Teams are a no-brainer nowadays. These tools let you meet with clients or employees from the comfort of your own home.

LinkedIn : Although LinkedIn might not seem like “software,” it’s commonly a powerful tool to build a business. It lets you scope out potential clients, network, and advertise your practice .

6. Market your business

Ensuring that other companies know that your bookkeeping services exist is vital. A website, social media, and networking are three ways to get your name out there.

Your website is the online headquarters of your business. It ensures leads understand your services, credentials, and more. Some bookkeepers even use their website as a client portal. This allows clients to check the status of their books and receive any finished deliverables.

Social media

Now, we’re not saying to make TikTok dance videos to promote your bookkeeping business. (But by all means!) We mentioned LinkedIn prior, and it’s crucial to create your business presence on LinkedIn through a company profile.

If you’re a sole proprietor, you are the business. That’s why leveraging your LinkedIn personal profile is a great way to attract leads to your company.

Posting relevant and thoughtful content and engaging with others is also a fantastic way to promote your personal brand and have others notice you and your services.

Networking is a crucial way to get your name out there as a bookkeeper. This could be attending local business or community events. Networking is also just meeting new people and understanding their pain points while advertising your solution.

Networking can happen anywhere. It might be at your child’s swimming classes or during your morning workout. Make sure to keep some business cards on you just in case!A bookkeeping business can be a fun and rewarding venture. It can pay significantly more than bookkeeping as an employee. However, there are several steps you must first take before you can start bookkeeping on your own rules.

Ensuring you have the right insurance to protect your business is one of these crucial steps. Learn more about what insurance policies a bookkeeper needs here . When you’re ready, you can get a quote for bookkeeper’s insurance and purchase it online in under five minutes with APOLLO.

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Originally published January 4, 2022, updated March 26, 2024

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Bookkeeping for freelancers: a beginner’s guide.

As a freelancer , getting paid and ready for tax season are crucial parts of your business. That’s why understanding the basics of bookkeeping for freelancers is so important.

It can be hard to keep track of your clients and when and how much they should pay you. Understanding how to manage your accounting and the tools you can use will help you stay on top of outstanding invoices and collecting payment from clients who owe you money.

When you’re keeping a consistent and accurate log of your business activities you can understand your business better and have an accessible view of your cash flow . Plus, you’ll be ready for tax season and an audit.

If you’re finding it hard to keep up with your financing, hiring an accountant or using bookkeeping software can give you more time to focus on what you love about your business.

Key Takeaways

• It’s important to stay on top of your finances all year long so you’re prepared when tax season comes around. 
• Keep track of all your expenses and set cash aside to avoid surprises during tax season.
• Accounting software is a major help to freelancers.
• Bookkeeping helps you stay on top of your freelance income and ensures you’ll be ready in the event of an audit.

This article will cover:

12 Tips For Bookkeeping For Your Freelance Business

Why Freelancers Should Care About Bookkeeping

Frequently Asked Questions

NOTE: FreshBooks Support team members are not certified income tax or accounting professionals and cannot provide advice in these areas, outside of supporting questions about FreshBooks. If you need income tax advice please contact an accountant in your area.

12 Tips for Bookkeeping for Your Freelance Business

Stay on top of your accounting.

Knowing what’s going on with your money can help you succeed as a freelancer.

Whether you use an accountant for tax season or not, it is important to have a handle on your finances all year long. This helps you anticipate future problems and grow your business. Set your freelance career up for success by allocating time daily to organize your bookkeeping and ensure you enter in every invoice or expense receipt .

Establish a System That Works for You

Bookkeeping can be daunting for freelancers and self-employed individuals, so finding a system that works for you is so important.

Luckily, there are many tools in the marketplace that will help you easily input your financial data anywhere and at any time. Accounting software will help you organize your finances by tracking outstanding invoices, managing your cash flow, invoicing clients and ensuring you have accurate financial records.

Accounting software will help you manage invoices and organize your finances by tracking outstanding invoices, your expenses, your various cash flow statements, invoicing clients, and ensuring you have accurate financial records.

You could also hire a bookkeeper who will help you devote more time to focus on more important things like finding more clients. The important thing is establishing a bookkeeping method that works for your freelance career.

Track Everything

As a freelancer, keeping track of your bookkeeping is so important when filing your taxes at tax time. Here are a few write-offs and data to track for the end of the year.

• Hours you worked on a project
• Jobs you have completed for clients
• Cost per hour for every client
• Office supplies
• Office rent (can be a room in your home, but not the whole house)
• Travel expenses
• Power and utility bills
• Phone and internet bills
• Bills for technology purchases like a computer, printer, or phone
• Advisory services
• Website design and hosting
• Career-related classes, books, and seminars
• Payments you made
• Bank transfers and online payments
• Client payments

Seeing your financial numbers in an easy-to-read table can make tracking your business cash flow even more effortless. The FreshBooks free accounting template is an excellent place to start, displaying everything you need to see at a glance. Click here to get started.

Set Aside Cash

Setting aside cash for your annual tax bill is always a good idea.

Newer freelancers might be used to having an employer automatically deduct a portion of their earnings from each paycheck to cover their income taxes. As a freelancer, you’ll have to be prepared for the possibility of a higher tax bill that will be calculated differently than what you might be used to.

The general rule is to save about 30 percent of your income. Using an accounting software can also help you create reports that can help you estimate your tax bill and give you a clear picture of:

• All your invoices
• Your cash flow
• The financial health of your business
• Who owes you what, and when
• How much you owe others
• Clients that are paying on time

Use Accounting Software

There are many benefits to using bookkeeping software that can benefit you as a freelancer.

Major benefits include getting paid faster, having clear financial records to submit when you’re applying for a loan and being prepared for a potential audit .

An online accounting software program, like FreshBooks online accounting software , will have advanced features to help you:

• Quickly create and send custom invoices
• Set invoice alerts for you and your clients
• Upload receipts and keep them organized
• Identify and follow up with late payers

Separate Personal and Professional Assets

As a freelancer, separating your personal and business finances can be tricky. You should open a separate bank account for business transactions to ensure everything is clear. This differentiation in your finances can make your life much easier and allows you to accept cash, checks, and electronic payments (bank transfers, online web-based payments like PayPal, etc.) without the waters becoming muddied.

Having separate accounts gives a more straightforward visual of how much money you have linked to your business at any time. This will help with bank reconciliation, make it easier to budget, and provide costs for your services. 

Most freelancers find that keeping accounts separate will eliminate the risk of cutting personal spending into your profits. 

A clearer view of your freelance finances will help you avoid financial problems in the future and help you decide which expenses are crucial for your work.

Be Transparent About Your Income and Expenses

If you don’t separate your business account and personal accounts, you can get paid straight to your personal bank account, which can make it tempting to brush things under the rug.

The immediate benefits will not be worth it in the long run.

If you’re caught during an audit, you could face penalties like fines or even jail time.

Transparency also helps your business by clearly showing where your money is going and coming from. This can be helpful when planning business strategies for growth too.

Set and Follow a Budget

Setting and sticking to a budget will help you manage your cash flow and ensure you have organized tax records.

There is accounting software that can help you track and monitor your spending habits and help you set up savings and growth goals for your business.

A strict budget plan will help you develop healthy financial habits as a freelancer. This smart money management will help your business grow in the long run.

Evaluate Your Financial Records

Your independence as a freelancer puts a lot of responsibility on your shoulders when making business decisions.

You can better visualize your business’s landscape by analyzing insightful business reports. These business reports can give you the necessary information to improve your business.

Comparing different periods can help you prepare budgets anticipating problems you might not have detected before. Make sure you close off your accounts at the end of each reporting period to ensure reporting is relevant to a certain period, making it easier to compare.

Here are just a few reports that you can use to analyze your data:

• Aged Payable
• Aged Receivable
• Balance Sheet
• Income Statement
• General Ledger
• Trial Balance
• Journal Report

Reconcile Bank Transactions

Having your books organized and matching your bank accounts is crucial to the success of your freelance finances.

This can be quite a difficult task but using a bookkeeping software can help you reconcile your bank account in no time. To sync up your accounts import data from your bank accounts, credit cards, and Stripe and PayPal transactions to make sure your bookkeeping is up-to-date.

You can reconcile all your transactions within minutes when you get a live bank feed. Plus, you’ll get a good sense of your cash flow.

Reconciling your bank account can make the day-to-day business of freelancing easier and prepare you for tax season.

Send Invoices and Payment Reminders

Making sure you get paid is a surprisingly tough task for freelancers.

When you’re waiting to get paid, it can be difficult to stay on top of your income. To protect your cash flow and achieve your projected income, it is important to ensure you are getting paid on time by clients.

Sending out invoices with clear due dates and setting up late payment reminders for due and overdue payments will help you get paid faster. Too often, freelancers don’t get paid on time because their clients focus on other things and forget upcoming bill due dates. These recurring invoices and planned reminders will get you your money with just a little effort on your part.

Also Read: How to Make an Invoice as a Freelancer

Create Quotes and Estimates

Landing clients and negotiating contracts can be hard for a freelancer.

Providing potential customers with quotes or estimates of the work you will do upfront will help set the expectations and might significantly improve the rate of deals you’re closing. In these documents, you can provide an estimate of the time it will take you to finish their project, the rate, estimated taxes, and the scope of work. If prospective customers are still unsure about the deal, you can always send them a more detailed quote to further break down the charges they are unclear about.

If this detailed quote is logged in your accounting system, it serves as a contract once the customers agree on the terms. It can easily be turned into an invoice once the service or goods are delivered. And because your customer is already aware of the estimated costs, it’s easier for them to pay you faster.

Bookkeeping isn’t always at the top of a freelancer’s mind. You start your business because of an idea you are passionate about, and often that doesn’t include accounting. However, there are many reasons freelancers should care about keeping on top of their bookkeeping, and here are just a few.

Easier Trips to Your Accountant

You might be using an accountant to help you file your taxes. Those accountants likely charge a pretty expensive hourly rate. If you come with a shoebox of unorganized and sloppy records, you’ll cost yourself a lot of money for the hours your accountants charge you for organizing and locating the right document and numbers.

When your accountant doesn’t have to organize your financial records, they can focus their billable time on making sure that all of your tax forms are filled out properly before filing your taxes for you.

You’ll Be Ready for an Audit

The best way to painlessly get through the audit process is to always have your financial records organized and store the related financial records properly. The IRS usually selects freelancers for audits randomly and often focuses on deductions claimed like home office expenses, travel expenses, mileage, etc.

If the tax audit finds errors in your filing, resulting in additional taxes owed, you will be more likely to be selected for audits in the following years. If your bookkeeping is organized, you will be less likely to have mistakes on your next tax returns and filings and will be less likely to be red-flagged by the taxman.

Keeping up with Your Daily Business Tasks

Doing a little accounting daily will make your overall operations easier to handle. Organizing your receipts and invoices as they come in will save you from a huge amount of work during tax season.

As you make project management and bookkeeping a part of your daily routine, you’ll be able to spend less time on it. This task management will give you more time to focus on your day-to-day work and even help you plan future growth and long-term financial health.

Protecting Your Assets When Things Go South

It’s not fun to think about things that unexpectedly go wrong in your life that could impact your business. Good bookkeeping can prepare you for anything from a legal proceeding with an angry client to a difficult divorce.

While going through a legal proceeding, your financial records will likely play a critical role. Clean records will help your lawyer prove what assets and funds are truly yours.

Avoiding Legal Problems

There may be legal requirements in terms of your financial record keeping, depending on where you’re doing business. Failing to keep proper records could result in significant penalties and fines.

Recognizing Potential Issues

When you’re on top of your accounting and bookkeeping, just by looking at profit and loss statements, you can anticipate future problems that your business might face.

You can notice serious financial irregularities by consistently analyzing your books before they become a problem. Maybe you will catch an upcoming cash flow problem and realize you’re losing money on daily expenses or other serious issues impacting your bottom line.

Don’t underestimate how much difference good accounting software really can make in your day-to-day functions as a business owner. FreshBooks offers cloud-based accounting software for small businesses that will help you keep your business finances in order, send invoices, and receive payments. Click here to get started.

Conclusion 

Regular bookkeeping will help you keep up with any legal requirements your business needs to uphold. It can also help you anticipate any future problems your business may see. Keeping an accurate log of income and expenses is essential as a freelancer, as it will make taxes easier and help you in the case of an audit.

FAQs on Bookkeeping For Freelancers

How do freelancers record income.

Keeping track of all income for small businesses can be difficult, so utilizing freelance accounting software to record income and tax dollar amounts may be the best accounting solution around. Some of the best accounting software is the simplest to use, reducing your stress level as you track your finances.

How often should I review my bookkeeping as a freelancer?

Freelancers should do bookkeeping at least once a month but you can go over accounts more frequently if you wish. Some will do it at the end of every week, while others go over their bookkeeping daily. Just a few hours a month will keep your books balanced. 

What bookkeeping software is best for freelancers?

FreshBooks is the best free accounting software and the best bookkeeping software for freelancers because it is simple to use and provides powerful tools like invoicing software, automatic mileage tracking. and payment tools that will improve the efficiency and profitability of your small business.

How much should I pay a freelance bookkeeper?

Small businesses can expect to pay a freelance bookkeeper around $50 to $100 USD an hour. The price depends on the complexity of your needs and the bookkeeper’s experience and qualifications.

What are the benefits of bookkeeping for freelancers?

As a freelancer, bookkeeping will help you keep track of all expenses, tax payments, and income. It will make tracking late payments from clients easier and provide a clear view of your business’s health.

What expenses can freelancers claim on their taxes?

Some big expenses that you can write off at tax time include business memberships, education expenses, professional fees, marketing and advertising expenses, home office expenses, car costs, insurance costs, legal fees, professional fees, and retirement contributions. However, it can be challenging to keep track of and record these expenses. For a smarter solution to these problems, you can use expense tracking software. Our guide, Expense Tracking for Freelancers , will provide you with more insight into this.

What are the differences between bookkeeping and accounting for freelancers?

A bookkeeper only needs a basic understanding and certification in the field of accounting to help record transactions and financial data while keeping daily responsibilities organized. Accountants are experts in the field, with in-depth insight into accounting and taxes, allowing them to provide financial business advice.

What are the bookkeeping mistakes that I should avoid as a freelancer?

Some common issues freelancers have regarding bookkeeping include mixing business and personal transactions, failing to do bookkeeping regularly (at least monthly), and losing purchase receipts.

Jami Gong, MPAcc, CPA

About the author

Jami Gong is a Chartered Professional Account and Financial System Consultant. She holds a Masters Degree in Professional Accounting from the University of New South Wales. Her areas of expertise include accounting system and enterprise resource planning implementations, as well as accounting business process improvement and workflow design. Jami has collaborated with clients large and small in the technology, financial, and post-secondary fields.

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Free Accounting and Bookkeeping Sample Business Plan PDF

1 min. read

Updated February 26, 2024

Looking for a free, downloadable accounting and bookkeeping sample business plan PDF to help you create a business plan of your own? Bplans has you covered. 

Keep in mind that you don’t need to find a sample business plan that exactly matches your business. Whether you’re launching a larger accounting business in a bustling city or a smaller neighborhood office, the details will be different, but the bones of the plan will be the same. 

Are you writing a business plan for your accounting firm because you’re seeking a loan? Is your primary concern building a clear roadmap for growth? Either way, you’re going to want to edit and customize it so it fits your particular company. 

No two accounting businesses are alike. Your strategy will be different if you’re partnering with other CPAs, rather than working independently, for example. So take the time to create your own financial forecasts and do enough market research so you have a solid plan for success. 

• What should you include in an accounting and bookkeeping business plan?

Your accounting business plan doesn’t need to be hundreds of pages—keep it as short and concise as you can. You’ll probably want to include each of these sections: executive summary, company summary and funding needs, products and services, marketing plan, management team, financial plan, and appendix. 

One of the things that makes an accounting business plan different than some other service-based business plans is that you might decide to only work with businesses and not with individuals.  

You may offer different tiers of service to different types of clients. If that’s the case, make sure you include ideas like up-selling small businesses from hourly consultation to quarter contracts.

Download this accounting and bookkeeping sample business plan PDF for free right now, or visit Bplans’ gallery of more than 550 sample business plans if you want more options.

There are plenty of reasons accounting business owners can benefit from writing a business plan —you’ll need one if you’re seeking a loan or investment.

Even if you’re not seeking funding, the process of thinking through every aspect of your business will help you make sure you’re not overlooking anything critical as you grow.

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Kody Wirth is a content writer and SEO specialist for Palo Alto Software—the creator's of Bplans and LivePlan. He has 3+ years experience covering small business topics and runs a part-time content writing service in his spare time.

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How to Start a Freelance Bookkeeping Business

A bookkeeping service is a great option for a freelance business. The initial investment if you start as a freelancer is not huge. You can start with a small fund and your business acumen. It is a plus if you are trained in accounting and financial management, you can easily start your bookkeeping start-up.

Bookkeeping services include tracking client income, preparing their tax returns, and processing payrolls. There are enough accounting software applications that will allow you to build and maintain a successful bookkeeping business. You can launch your business from home and expand it over a short period. 

Developing a business plan for setting up any kind of business is very essential. Read the following sections to understand what kind of a business plan you need to start and grow your bookkeeping services. 

Seek Professional Training

To create a successful bookkeeping service, you will first need to get trained. It should be the first step. Look for courses that provide extensive training on bookkeeping. Join a course that offers practical and hands-on knowledge. It will help you in the professional field. 

The professional training you receive will not only teach you the basics of bookkeeping but also advanced services. Make sure that the training institute is nationally recognised and is offering a certificate. If you have a certificate your clients will trust you more. 

Get Software Certification

While professional training in bookkeeping is necessary, you should also get certified in the use of certain software applications. Accounting software like QuickBooks and Xero can help in streamlining the bookkeeping process. Some of these software companies also offer partnerships. You can sign up for such partnerships to expand your business. 

Such software certifications are usually free of cost and can be obtained online. These online certifications are available for free. Once you are trained to use the software, you can purchase it. If you are certified, your potential clients will trust you more. Using the right software will allow you to work efficiently and reduce errors. 

Apart from accounting software, you should also learn to use payroll software, as well as software for practice management and electronic file sharing. Payroll software will come into use when you hire new employees. Practice management and electronic file sharing software applications will make your work hassle-free. You will be able to manage your clients’ books with ease and share transcripts and other files with them.

Organise Funds

Every freelancer needs some funds to start their business. As a bookkeeper, you need funds to set up operations, buy the insurance and pay for advertising and marketing. Take note of how much money you can afford to spend as a part of start-up costs. You can apply for a business credit card to deal with these initial expenses. Try to raise enough capital to create a proper bookkeeping service. You should figure out what you need to invest in and keep aside some funds for emergencies. Do not use all your funds at once. Keep in mind that you will have to expand the business at one point in time, so make sure you have some money kept aside for that. 

Register the Business

You need to register your business. It is one of the crucial steps as it establishes your business as a legal one. Legitimising and registering your bookkeeping business helps to limit or prevent personal liability at the time of lawsuits. At the time of registration, you will have to select a name for your business. 

Choose a name that communicates exactly what your business is about. If you are not sure about the name and have a few options, talk to potential clients and ask your friends and family to review the names. You can also compare the name to the brand names of other bookkeepers. 

After you select a brand name, you need to determine the structure of the business. It can be a limited liability company (LLC), a sole proprietorship firm, a corporation, or a partnership firm. The structure you decide on during registration will affect tax liability, capital, and your liability if the business is ever sued. 

You can register your freelance bookkeeping business as a sole proprietorship firm and then change it to an LLC once you hire more people and are ready to expand. Before you select a business structure and register, consult an attorney. It is so that you can understand personal liability in the event of a lawsuit and choose a structure accordingly. 

Create a Website

You need to have a functional website for your bookkeeping services. If you do not have the skills to build the website on your own, you can hire professional services to do so. Make sure that the site is user-friendly and easily navigable. Having a website will help clients find out about all the services you offer and the costs of each. Provide all details, including contact information on the site. 

A website will also help you promote your business better. You can refer potential clients to the site or ask friends and family to do the same. Since most people search for everything online, having a website will make your bookkeeping business more accessible. 

Plan for Office

Having adequate space for an office is essential for any business. As a freelance bookkeeper, you might decide to work from home, instead of investing in an office right away. But you need to make sure that you have a room or space in your home so that you can concentrate on work. If that is not the case then you need to set aside some funds and look for a co-working space or rent an office. 

Set Up Everyday Operations

Certain operations allow your business to function properly every day. Once you launch your freelance bookkeeping service, you will need to look into these processes and enable certain operations so that you can work efficiently. These include setting up services for financial management and establishing proper communication with clients. 

The first thing that you should do is open a business bank account. After you have registered the business, you should not keep using your bank account for business transactions. Open a separate business account at your local bank. Banks often offer several perks for business finance management through these accounts. Use this account to keep track of all expenses related to your bookkeeping services. 

Now, you might want to wait till you have landed a client and there is a steady cash flow, before opening a business account. However, this is not a good idea. Open the account right after registration. Use it to manage all finances even before receiving payments from clients. It will help you get a better idea about the startup costs and handle your finances accordingly. 

After setting up the business account, you need to think about the mode of communication you want to use. Clients should be able to contact you and seek assistance whenever required. As a freelancer, you might not always be able to get back to clients immediately. So you should hire answering services. An answering service directs your clients to customer support through live chat, text message, call, or email. If you do not use such a service and miss calls from clients, your business might suffer. So invest in these operations and provide prompt support to your clients. 

Another essential aspect of setting up your freelance bookkeeping business is establishing a reliable business mailing address. For those working from a home office, maintaining privacy and professionalism with a separate mailing address is crucial. Renting a post office box is a popular option, offering a secure and private solution for receiving business correspondence. Understanding the monthly cost of a P.O. Box can help you budget effectively for this aspect of your business. Whether you opt for a traditional post office box or a UPS mailbox, which provides a real street address for your business, consider the size and location of the box to ensure it meets your needs.

Invest in Advertisements

Freelancers need to advertise their services. It helps to secure clients and create a customer base. Once you are ready to start work as a freelance bookkeeper, you need to invest in proper marketing strategies. Make use of the various social media platforms to advertise your business. You can start posting on Instagram and Facebook after creating a page for the business. 

You can also pay for specific advertisements targeted at potential clients. It is one investment that you should not compromise on. Apart from paid advertisements, you can also spread the word about your services by asking friends and family to share details about them. 

Hire a Marketing Manager

Marketing your bookkeeping services is another important part of your business plan. While building the website for your business, you can hire a marketing manager to customize it. Such customization includes the creation of a logo and specific content for the target audience. A marketing manager will optimize the website so that it is easily found by clients. 

Marketing might seem like an expensive investment at the start of a freelance bookkeeping business. But it will help you gain more clients. Marketing managers will promote the brand and generate more revenue. A marketing manager will also come up with strategies like incentives for clients which will lead to better client loyalty. 

Pay for Insurance

Business insurance is necessary for all types of businesses, even small start-ups or freelance services. You can pay for bookkeeper insurance. The reason why insurance is a must investment is that you can be sued by a client for errors. Now when this happens, you will need to cover all legal charges and pay damages. Bookkeeper insurance provides liability protection. With such insurance, you will not need to pay for liabilities from your pocket. 

Decide on a Revenue Model

Once you start advertising, you are going to get clients. Now before you start working, you need to figure out how you will receive the payments. You can charge by the hour or set up a monthly payment plan. You can also keep different options so that the clients can choose whichever is convenient for them. Be very clear about the breakdown of charges so that your clients know what they are paying for. Assess your work and keep reasonable fees. However, make sure that you are profiting.  

Prepare a List of Recommendations

When you begin work as a freelance bookkeeper, you will have to go on with just your certificate. But after you work with some clients, you will need to prepare a list of recommendations. This step needs to be a part of the business plan once you are ready to expand your customer base. 

Ask your clients to provide these recommendations. You can post these on your website and make them accessible to potential clients. If you do good work, most of your clients will be glad to recommend your services. 

Grow the Business

As you prepare a plan for your bookkeeping services, include strategies that will help you grow. Make sure to invest in the right tools and build your finances in a way that will help you take on more staff. 

You will have to hire more people if you want to increase your clientele. You can also invest in administrative assistance so that you can focus on the actual work and personally engage with new clients. You can hire other bookkeepers or interns to share some of the workloads. It will help you develop the business and provide services to more clients. 

Manage Your Accounts

Your bookkeeping skills are not just for the clients. Apply your strategies to your accounts so that they are well maintained and there are no discrepancies. Professional bookkeepers do not wish to pay another person to manage their accounts. However, some also end up ignoring the state of their accounts until it is necessary to check them. It is not good practice. Keep time aside to go over your accounts, manage your finances and make sure you do your taxes on time. 

Every freelance business has its challenges. But once you start the work, you are going to hugely benefit from the business. With a small fund, you will have to invest in the right tools to make your bookkeeping services as error-free as possible and interact with your clients. Client interactions will help you understand where you can do better in the business, and in turn, it will help you succeed as a freelance bookkeeper in no time at all!

Freelance bookkeeping is a type of job in which a person provides bookkeeping services to their clients on a contract basis. It involves keeping financial records up-to-date, preparing financial reports, reconciling accounts and more.

Typical skills required for freelance bookkeepers include excellent knowledge of fundamental accounting principles, strong analytical and problem-solving skills, excellent organizational and communication skills and the ability to accurately complete financial tasks under tight deadlines.

Popular software used by freelance bookkeepers include Quickbooks, Xero, MYOB, and Freshbooks.

Depending on the jurisdiction, freelance bookkeepers may need to hold certain certifications or be licensed to practice bookkeeping. In addition, freelance bookkeepers should be familiar with generally accepted accounting principles, antifraud regulations, IT requirements, and data privacy regulations.

To get started as a freelance bookkeeper, you should first become familiar with the software used by bookkeepers and attain any needed certification and/or license. Additionally, having a business plan in place and the appropriate business insurance is important.

The amount a freelance bookkeeper earns varies depending on experience, qualifications, and the services provided. The typical hourly rate for freelance bookkeepers is between $25 and $60 an hour.

Freelance bookkeepers typically find clients through online job marketplaces such as Upwork, referrals from friends and colleagues, and by building a professional website and utilizing social media platforms to connect with potential clients.

Yes, it is typically possible to work as a freelance bookkeeper from home. However, clients may sometimes need access to the bookkeeper’s computer, so some on-site visits may be needed.

Yes, freelance bookkeepers should be aware of any potential tax obligations they may have, such as self-employment tax or registering for local sales tax. Additionally, these workers may need to maintain records of their income, expenses and deductions.

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Bookkeeping for Freelancers: A 2022 Guide

May 10th, 2022 |  Accounting & Bookkeeping , Contractor Resources , Small Business Resources

The term “freelancer” was originally used to describe a medieval mercenary whose lance wasn’t sworn to the service of one lord. And while they’re no longer hired assassins, freelancers are still “killing it.” According to Payoneer , a freelancer’s average hourly wage in 2022 was about $28, almost double the national average .

While freelancing may improve your pay, it also brings new responsibilities—including the obligation of keeping your own books.

Build a sustainable career as a freelancer by approaching bookkeeping as an integral part of the job and setting aside enough time and energy to do it correctly.

What is bookkeeping?

Bookkeeping is the process of recording your professional financial transactions and the techniques you use to record these business transactions. (Fun fact, it’s also the only word in the English language (besides bookkeeper) with three consecutive double letters.)

The key components of bookkeeping, whether you’re a freelancer or a multinational corporation, are always the same:

• Recording of transactions: For freelancers, income and expenses are their most relevant recorded transactions.
• (Income) sales revenue, $2,400 (money came from customer)
• (Expense) rent paid, $1,500 (money went to the rent expense account)
• Reconciliation: Reconciliation is process of matching transactions entered into your records with the corresponding bank or credit card statements. Reconciliation is done at the end of every month.

The purpose of bookkeeping is to keep your financial records up-to-date. When your transactions are up-to-date, you’re able to create accurate financial reports that measure your performance and help you make adjustments when necessary.

What’s the difference between bookkeeping and accounting?

Bookkeeping makes accounting possible—it’s the act of recording your financial transactions. Accounting is what you do with those records.

Through business accounting, you can gain insight into your business’s health based on your bookkeeping records.

Here’s a list of common bookkeeping tasks:

• Recording and categorizing daily payments and expenses
• Sending invoices
• Recording payments received
• Conducting monthly bank reconciliations

Accounting tasks would be the following:

• Adjusting revenue and expense entries
• Analyzing financial statements
• Offering general financial advice
• Performing audits
• Providing tax planning and advisory services
• Filing tax returns

Anyone can do bookkeeping (especially with the aid of bookkeeping software), but accounting requires greater financial expertise. Many freelancers, even the most independent ones, hire certified public accountants (CPAs) to handle more complex financial matters like financial forecasting, tax planning, and tax filing.

An accountant can turn the bookkeeping data you’ve compiled into insights you can use to improve the financial health of your freelancing business.

Why is bookkeeping for freelancers important?

When your books are in order, you’ve set the foundation needed to develop financial strategies that can increase revenue and career stability. A balanced bookkeeping system helps you measure success, plan strategically, develop realistic objectives, and make sure you’re prepared when tax time comes around.

You can plan

Bookkeeping shows you not just what you’ve earned and paid, but what you’re owed and owe others. When you understand your cash flow, you can plan ahead, create budgets, and manage your money more effectively.

Tidy profit and loss reports, income statements, expense reports, and balance sheets give you a clear vision of your business’s health that you can use to predict potential opportunities and problems.

You’re able to make fast business decisions

Control of your finances also leads to confidence.

When you have real-time data about the state of your finances, you can react quickly, fearlessly jump on opportunities, and lead your business with conviction.

Figure out ways to boost profitability

Identify pointless expenses and cut unnecessary spending.

You can also identify what type of jobs make the most sense for you to take. Bookkeeping data gives you visibility into how much time you’ve spent on each job and how much money you made.

Use this data to adjust your hourly rates and pick jobs that make the most financial sense for you to take on.

Ability to secure loans more easily

Banks don’t give businesses or individuals money without making sure they’re a safe and reliable investment first.

They’ll want to see your credit score, your business plan, and, of course, your cash flow history and financial projections. Unorganized and error-riddled bookkeeping paints you as a risky client.

Fewer potential problems with the IRS

While Internal Revenue Service (IRS) audits are sometimes inevitable, bad bookkeeping leads to sloppy tax filing—which is the quickest way to get yourself on the IRS’s radar and potentially incur a plethora of fines and penalties.

If you get audited, proper bookkeeping will make the process much less stressful. You must comply and be able to provide proof of accounting records when asked.

Easy cooperation with your accountant

Freelancers don’t need to hire a full-time accountant, but consulting an accountant on complex matters is never a bad idea. Contractors and independent workers commonly hire accountants to help them file their taxes properly.

When you’ve done a good job with bookkeeping and organizing your financial records, that makes an accountant’s job much easier. It also decreases the time it takes them to help you, which works out well for you financially, especially if your accountant charges by the hour.

How to set up a bookkeeping system

Based on your needs as a freelancer, decide how you are going to receive and send money and what methods and tools you’ll use to keep track of these transactions.

Luckily, freelancers can usually keep their bookkeeping system very simple.

Open a bank account

Open a bank account specifically for your freelancing duties. Having a separate freelance account instead of using your personal bank account will minimize confusion.

According to DebtHammer CEO Jake Hill, a business checking account is the way to go for freelancers.

“These are usually much easier for companies to set up direct deposit with and it also makes it easier for freelancers to have a clear record of the money they make, as well as their own business expenses for tax purposes.”

Decide on payment terms and methods

Based on the nature of your freelancer business, decide on how you want to collect payments.

For example, if you offer ongoing consulting services, it might make more sense to offer customers a credit system and charge them on a subscription basis (with weekly, monthly, or annual rates). If you are charging by the task, it’s probably best to invoice your client upon delivery.

No matter what method of payment you’ve chosen to receive, make sure you’re keeping detailed records.

“The key is documentation,” according to Carter Seuthe, CEO of Credit Summit Consolidation . “Whether you take checks, electronic transfers, credit cards, or all of the above, you should keep your invoices and receipts.”

Choose between cash-basis and accrual-basis

Choose your method of recording your transactions. There are two main options: cash-basis and accrual-basis.

Cash-basis means you record all of your income and expenses when cash transactions are made. For example, you record your revenue when the customer pays you, not when you agree on a job. This method is the simplest, but it also has limitations. Cash-basis provides a limited look at your income and expenses and doesn’t let you make financial projections.

Accrual-basis means that you make a record of the revenue or expense before the actual payment is made. Small businesses prefer this method because it allows them to get a more accurate picture of their financial position based on expected cash inflows and outflows.

However, freelancers might prefer the simplicity of cash-basis.

“If your freelancing work is primarily fee-for-service, such as writing or coding, cash accounting usually works perfectly fine. If you deal more in large projects or maintain an inventory and purchase supplies, accrual may be a better choice,” Seuthe said.

Use bookkeeping software

The main benefit of using bookkeeping software is that it streamlines and automates many of the processes associated with bookkeeping.

Compared to keeping a ledger or maintaining a spreadsheet, bookkeeping with the help of software is far less time-consuming and, more importantly, less error-prone.

“I started bookkeeping with Excel, but that got unwieldy fast, said freelancer marketing consultant Matt Lally . ”I don’t have time to reconcile every transaction manually in a spreadsheet. It’s essential to move to online accounting software that does it for you.“

Software helps freelancers save time through a number of features, including:

• Invoicing and billing: Bookkeeping software can automatically create digital invoices for recurring orders, track them, and help you to remind customers to pay you.
• Online payments: Most bookkeeping software integrates with all of the most popular online payment gateways, making it easy for your clients to pay you quickly and securely.
• Expense tracking: Software helps you track and categorize your expenses to better understand where your money is going. You can also scan and upload receipts to help you reconcile at the end of the month.
• Reconciliation: Bank reconciliation is the process of summarizing your banking and business activity by reconciling your bank account and financial records. Bookkeeping software streamlines this process by connecting with your bank account to automatically fetch statements from bank feeds and keep track of them digitally.
• Reporting: The best accounting solutions help you track not only your finances but also give you the functionalities needed to analyze them. Accounting reports provide insights into financial trends and help you maintain your freelancing business’s financial health. Neat’s accounting software allows you to run a variety of vital reports—including profit and loss statements, cash flow statements, balance sheets , and transaction reports.

Software also saves data securely in the cloud, so you don’t need to worry about losing critical financial records.

Best practices to make bookkeeping for freelancers easier

If you’ve spent most of your career as a salaried worker, then you’ve probably never had to keep your own books. Thanks to modern technology—namely bookkeeping and accounting software—tracking your professional finances doesn’t have to be a burden or a chore.

Bookkeeping software simplifies data entry and the storage of your financial records, while accounting software also provides features like cash flow analysis and forecasting. Neat checks all these boxes.

To make keeping consistent and accurate records of your freelancer activities a breeze, couple your accounting software of choice and these basic freelance bookkeeping best practices.

Schedule time for bookkeeping duties

If you’re getting caught up in other parts of the job and are forgetting to dedicate time to your bookkeeping, use a calendar app or task management app to pencil time in for bookkeeping each week.

Too much time spent on bookkeeping—even with the help of software—could be a great sign. It could mean the volume of transactions has increased significantly, and your freelancer business is flourishing.

If that’s the case, it might be time to hire a freelance bookkeeper to help you out.

Keep meticulous records

A serious pain point of freelancing is getting paid on time. Meticulous record-keeping can help you get your money on time as well.

Keep records of the following:

• List of clients
• Cost per task or hour
• Hours spent on tasks
• Business expenses
• Invoices sent/received
• Payments received

All this data can be neatly collected, organized, and automatically updated with bookkeeping software. You can also use bookkeeping software to set due dates and reminders to make sure you’re always on top of your invoicing.

Prepare for tax season by saving and claiming freelancer deductions

If you’re used to a salary, you might experience a real shock when you make your first tax payment as a self-employed worker. To prepare for tax time, set aside money for tax purposes every month into a savings account. A rule of thumb is to set aside at least 30% of your income each month for taxes.

As a freelancer, there are also a number of tax deductions you’ll be able to claim to save money. Make sure you know what they are and keep track of them. Some common tax deductions available to freelancers include:

• Business-related travel and vehicle expenses
• Self-employment tax deduction
• Power and utility bills
• Office supplies and equipment
• Website design and hosting
• Phone and internet bills
• Career-related education: classes, books, seminars
• Business-related software (accounting software included)
• Health insurance
• Retirement contributions
• Advertising expenses

Couple these best practices with keeping detailed financial records to set yourself up for a stress-free tax filing experience.

Modern professions call for modern bookkeeping solutions

Technology like bookkeeping software can make bookkeeping—one of the most stressful aspects of striking out on your own as an independent worker—incredibly easy and convenient. The biggest challenge is finding accounting software that fits you best.

Neat’s bookkeeping solutions are tailored to fit the exact needs of freelancers. Neat provides all the tools you need to automate and streamline financial record-keeping without having to navigate unnecessarily complex systems and features that aren’t designed for you.

Start a free trial today to see how Neat makes bookkeeping for freelancers super easy.

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Pricing and charging

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

The importance of pricing

You have two levers to drive profitability – money in and money out. Money out (or expenses) is affected by many things like efficiency, marketing, technology, staffing and more. Money in is driven by the volume and value of work, which can both depend on pricing.

It goes without saying then, that pricing will have a big bearing on your revenue and profitability. It’s worth spending some time on it. Think about what you and your client need out of a pricing structure.

• You – enough income to run the business and make your work financially rewarding
• Client – a good return on investment (ROI) at an overall cost that will fit in their budget

Pricing advantages for bookkeepers

Because there’s so much at stake, setting prices can be daunting. But as a bookkeeper, you have some advantages to keep in mind.

You can deliver a lot of value

Small businesses often feel lost when it comes to bookkeeping, finance, tax and accounting. By taking away a lot of that anxiety, you deliver immediate relief. That initial perceived value might then plateau for a few months while you go about getting their books in order, but it will spike again when the first tax returns come due and the monthly reports start sinking in. If you can structure a deal that keeps clients onboard for a few months, they’ll really begin to see the ROI.

You can get really good at estimating work

Bookkeeping is cyclical. Some tasks come round monthly, others annually. That makes the workflow fairly predictable. Estimating work can become relatively straightforward based on the jobs your client wants done. As a result, you may be able to offer a flat fee for certain tasks, which clients love because it makes budgeting much easier for them.

Affordability is at an all-time high

Technology can smooth away a lot of the data double-handling that traditionally made bookkeeping labor-intensive and expensive. You can now deliver a top-class service for a fraction of what it used to cost. That allows you to pitch a more affordable price while still generating a good margin. Consider using a job costing system so you can easily see profit margin or loss.

How bookkeepers charge

There are many models for charging clients but they essentially fall into three main categories.

Hourly billing

You charge a stated hourly rate until the work is complete.

• Pro: You don’t, in theory, get stuck doing free work, although consultants commonly write time off when clients push back against bills
• Con: There can be uncomfortable surprises when the hours are tallied up and the cost calculated

Fixed price/Flat fee

You provide an upfront price for the services required.

• Pro: Everyone knows the score before work has started. And bookkeepers are rewarded for developing smarter, faster work processes.
• Con: Unexpected difficulties can diminish the profitability of a project. You’ll also need to set clear expectations about the scale of the work, because jobs will get bigger as clients grow.

Subscription

You charge a fixed monthly fee for an agreed set of services.

• Pro: You get consistent income and cash flow, while clients find it much easier to budget for your services.
• Con: You don’t want to underestimate the cost of servicing an account because you’re locked in for a year. You’ll also need to consider what happens if a client leaves your business part way through the year.

Fixed fee models give customers certainty about what their money is buying. Meanwhile the vendor can increase their profitability by finding faster and smarter ways to deliver the agreed service

Meryl Johnston, Bean Ninjas

What bookkeepers charge

Your market will have a big say in the price you can charge. Are your prospective clients price sensitive? How much do they value your services? And what else can they get for their money?

The fastest way to answer these questions is to check what other bookkeepers are charging. You’ll see a big range of course. But look for bookkeepers in your region, or serving your industry, or providing the same services as you.

You can do all of this on the Xero advisor directory .

More on pricing strategies

You can read more on pricing strategies in our guide to starting a business.

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.

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

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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Start using Xero for free

Access Xero features for 30 days, then decide which plan best suits your business.

• Included Safe and secure
• Included Cancel any time
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• Small business bookkeeping: The complete guide

Last reviewed on May 17, 2024

Reading time: 10 min

• SME support
• Swoop guides

Page written by Chris Godfrey . Last reviewed on May 17, 2024 . Next review due October 1, 2025.

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A business without bookkeeping is a business risking failure. Bookkeeping builds the financial records that are essential for success, provides order and structure to business performance, and gives business owners and managers clear sight of how well their business is working.

What is bookkeeping?

Bookkeeping is a vital role for the smooth functioning of a small business. It involves the day-to-day recording and reporting of an organisation’s financial information, and it is different to accounting, which is the process of using the business’ data to establish its financial position and make decisions about how the finances are managed.

Bookkeeping involves a variety of activities, including:

• Keeping sales and purchase ledgers to track income and expenses
• Monitoring cashflow
• Making payments to suppliers 
• Chasing payments from customers
• Ensuring the business pays its taxes on time and pays the correct amount due 
• Claiming tax back against business expenses
• Managing staff payroll and paying and reporting PAYE to HMRC 

Why do small businesses need to do bookkeeping?

Bookkeeping is necessary for these important reasons:

• It allows the business to keep on top of money owed to suppliers and from customers,  understand its cash position and cashflow , and to measure its financial performance.
• It ensures the business does not fall foul of late charges or penalties from HMRC or miss other mandatory expenses, such as business rates.
• It gives the business the records and information it will need to secure loans and credit from banks and suppliers, or grants from public sources.
• It allows the business to plan properly. If you don’t know where you stand financially, how can you make the big decisions that will determine the long-term success of your business?
• It gives your business the information it needs to hire more staff, accrue assets , acquire other businesses, even buy property .
• It provides the essential data that your business needs to grow.

How to do bookkeeping:

Many small business owners will initially conduct their own bookkeeping, but as their business expands, they may find their time is better spent elsewhere and they will hire a bookkeeper or use an external service to maintain financial records. However, no matter who does the bookkeeping, the first step is to decide what type of accounting method to use: T raditional accounting records income and expenses at the date of the sales or purchase invoice.

Cash accounting records income and expenses on the date when you actually receive or pay the money. Cash accounting reduces the risk of having to pay tax on money you haven’t received yet, but it is only available if your business turnover is £83,000 or less.

Once you’ve settled on your accounting method, follow these key steps:

Record everything

Bookkeeping tracks the finances using these types of records (also known as ‘books’ or ‘ledgers’):

• Cashbook – records everything moving in and out of your account – reveals your cashflow.
• Sales ledger – records everything you’ve sold and shows paid and unpaid customer invoices. (Unpaid sales invoices are known as your ‘ accounts receivable ’ – because you are waiting to receive them).
• Purchase ledger – records what you’ve bought, when and how you paid for it, and what invoices from suppliers you have still to pay. (Unpaid bills are known as your ‘accounts payable’ – because you haven’t paid them yet).

Small businesses may have other records books, but these are the minimum you will need to get started. Use your books to track every sale and payment and make it clear when the transactions were made or received so you can easily find them to compile end of year statements, chase clients or suppliers, or share your finances for an audit or bank inspection.

Reconcile transactions

Transaction reconciliation means cross-referencing your business books against your bank statements to check that your transactions and bank balances match – and identifying the reasons if they don’t. 

Transaction reconciliation also means allocating expenses to projects or sales you are in the process of completing – for example, if you were carrying out a plumbing repair where you bought spare parts and piping, the cost of those materials will need to be reconciled against the job so that you charge the customer the correct amount. 

Transaction reconciliation can be carried out daily, weekly, monthly, or less often, depending on the number of transactions you make. However, you will be required to reconcile your books before submitting tax returns at the very least. 

Monitor cash flow

More small businesses go bust because of poor cashflow than any other reason. Cashflow is the measure of the money in and money out of your business. In an ideal world, you want funds coming in faster than they go out so that you always have a strong cash buffer against unexpected costs or downturns. However, for many small businesses, the difference between money in and money out is often very tight, so it is important for you or your bookkeeper to carefully monitor cashflow. Use forecasts (estimates) to project future sales and expenses, so that you can spot issues, (such as a cash shortfall), long before you get to them. (If you can see a problem with cashflow looming, you may want to consider an early application for a working capital loan to tide your business over).

Watch out for late payments

Customers who pay late can cause major problems for your business – hurting cashflow, limiting your ability to grow, eve affecting how much you can pay yourself. Part of the bookkeeper’s role is to keep track of late payers, and when necessary, chase the customer for payment. 

Paying taxes

Running a successful business means getting paid on time and paying your suppliers and HMRC on time. The taxman can be harsh on businesses who do not pay their taxes when they are due, and the interest and mounting penalties they apply can sometimes tip a small business into bankruptcy. Ensuring you pay your taxes is therefore crucial to long-term growth, and it is part of the bookkeeper’s responsibility. 

(Many small businesses struggle with paying their VAT when it is due, and it can be especially difficult for organisations who must wait 60, 90, or more days for payment. However, smart businesses make sure they pay their VAT on time, regardless of their cashflow situation, by using a short-term VAT loan to cover the payment).

Other small business bookkeeping duties

On  top of the tasks described above, and as well as issuing invoices, paying suppliers, and managing payroll, bookkeepers may also p rovide other services, such as helping with financial reports (profit-and-loss, balance sheet, cash flow report), and measuring business performance.  

How software can help

A small business’ books have to be recorded somewhere. They could be kept using pen and paper, but that’s not efficient in the digital age. Using software, even if it’s only basic Excel spreadsheets, can significantly improve the accuracy of your books, and also give you access to a wide array of tools, apps, and services that old school manual ledgers cannot provide.  

Use software to:

• Pull transaction data direct from point-of-sale (POS) systems, invoicing software, and banks
• Speed up transaction reconciliation
• Automatically pay bills
• Send automated invoice reminders to customers who owe you money
• Tell you when sales invoices have been paid
• Let you to check your cashflow from your phone

Small businesses that are considering investing in purpose-built accounting software should ask their accountants which programme is best for them, and if it will integrate with the systems the accountants use to generate the business’ end of year tax returns. 

Why do some small businesses outsource bookkeeping

In short, to maximise their productivity. In many cases, a small business’ books are maintained by the business owner, but, when you consider the owner’s value to the business, this may not be the most productive use of their time. Instead, it may make better financial sense to hire a bookkeeper, or outsource the bookkeeping to a dedicated service, than for the senior management to spend their time recording every transaction. In other cases, the business owners may not have the skills required to manage the books, so employing a bookkeeper or outsourcing the role is the only sound solution. 

Which option is right for me?

It depends on your situation. If your business is very small, or very new, it may make more sense for you to initially manage the books if you have the skills to do so, as this will reduce your overall expenses. However, if your business is growing and your time is too valuable to spend logging every transaction, or if you don’t have the necessary skills to manage the books, then hiring a bookkeeper or outsourcing to a service is probably a better way to go.

How Swoop can help

Managing the books of a small business can be difficult or time consuming at the best of times, doing so when finances are tight can be even worse. Swoop understands the daily financial challenges that many UK SMEs face, and we have the best solutions for those problems. Register with Swoop today to access our full range of funding options. From commercial mortgages and unsecured loans , to business credit cards , start-up loans , and business leases , we have the financial tools to keep your business growing. 

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Chris is a freelance copywriter and content creator. He has been active in the marketing, advertising, and publishing industries for more than twenty-five years. Writing for Wells Fargo Bank, Visa, Experian, Ebay, Flywire, insurers and pension funds, his words have appeared online and in print to inform, entertain and explain the complex world of US consumer and business finance.

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At Swoop we want to make it easy for SMEs to understand the sometimes overwhelming world of business finance and insurance. Our goal is simple – to distill complex topics, unravel jargon, offer transparent and impartial information, and empower businesses to make smart financial decisions with confidence.

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