The Ambitious Bookkeeper Podcast

217 ⎸ What You *Actually* Need to Start Your Bookkeeping Business

• Serena Shoup, CPA • Episode 217

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Hey there! In this episode, I'm breaking down exactly what you actually need to start your bookkeeping business - no fluff, just the tactical stuff that matters. As someone who accidentally started my bookkeeping business as a side hustle to motherhood and now mentors other bookkeepers, I'm sharing the five non-negotiables that will set you up for success from day one.

In this episode you’ll hear:

  • The complete education and experience foundation you need
  • All the paperwork and compliance stuff nobody talks about
  • How to actually get paid
  • The exact documents you need to ask every client for during onboarding
  • My honest take on pricing

Resources mentioned in this episode:

  • Become a Bookkeeper
  • Akadian Accounting Education
  • Relay Bank
  • Xero
  • Pricing for Profit
  • All Minicourses → Store

For experienced bookkeepers & accountants:

Learn how to start your bookkeeping business in The Bookkeeping Business Accelerator® >>

Grab my FREE Start your Bookkeeping Biz Checklist >>

Grab my FREE New Client Onboarding Templates >>

For new bookkeepers:

Learn the fundamental accounting skills in Katie Ferro's Become a Bookkeeper >>

For online course creators:

Become a client at my firm, Of Course Financial >>

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Today we're gonna have a little chat about what it takes to start a bookkeeping business. If you're new here, I'm Serena. Welcome to my living room. If you're listening on the podcast, hop on over to YouTube because I'm now doing everything on video. And I wanna bring you along for the journey. This is one of my very first YouTube specific living room chats. Welcome. If you're new here, I am Serena Shup. I'm a CPA. I'm an ex corporate controller, and I started a bookkeeping business on accident basically as a side hustle to motherhood when I left corporate in 20 16 to have more kids. And now here we are about eight years in. And for the past five years, I've also been mentoring and coaching other bookkeepers and accountants like myself who have maybe left corporate or maybe accounting students, other experienced bookkeepers who struggle a little bit with the business building side of things. So if you found this video and you're interested in starting a bookkeeping business, I want you to keep listening. Keep watching, because I'm gonna go over five things that it takes to start a bookkeeping business. These are tactical things, so grab a notebook, grab your favorite pen, a cup of coffee or tea or whatever it is, and let's get to it. There's a couple things that you have to do before you can even think about starting a business, and one of them is a lot of market research. Fortunately for us, and maybe unfortunately as well, we already know that businesses need our services. There are 34.8 million small businesses in the United States that need our services. Do all of them need our services? Probably not. Some of them have a bookkeeper or an accountant on staff. Some of them don't think they need a bookkeeper, but even so, there are millions upon millions of small businesses that need what we provide. And so that eliminates one thing we have to worry about when we start a business. The other thing that we don't have to worry about that a lot of, pretty much any other small business needs to worry about. We already know how to do the bookkeeping, and that's one of the, that's one of the major reasons for failure for new businesses is not being able to keep good records, understand their numbers, and make decisions from them. That being said, if you are here and you don't know how to do bookkeeping yet, hang on one moment, I'm gonna talk to you first. Unfortunately, there are a lot of subpar bookkeepers out there, but that's not you because you landed here on this channel and we're gonna make sure that you are providing the best possible services that you can, and I'm so glad you're here watching this video. Because I'm going to share five things that you need to get started with your bookkeeping business, starting with the number one thing, which is a complete non-negotiable, and that is the education and the experience of bookkeeping. My very first preference would be for you to go to college or go to university, whether that's a community college for bookkeeping certification or a full associate's degree, or a four year degree in accounting, and then get experience. I understand that that is a two to six year plan for some of us, and some of you might want to enter this profession a lot faster. So my next best recommendation would be to enroll in a program like Become a Bookkeeper by Katie Farrow or Acadian Accounting Educations programs around QuickBooks Online. The reason I like these two programs. Number one, become a bookkeeper. Focuses on exactly what you need to know from an accounting textbook, from the background of an accounting degree. Apply to the types of small businesses that you will be working with and helping you understand what are the best businesses for you to be working with, with limited experience. She demonstrates. The concepts and has exercises and practices within using the software Zero, which if you've been on my channel for any amount of time, you probably already know. I'm a huge zero champion. The Acadian programs have something similar, but on the QuickBooks side, those programs are focused on helping you master the QuickBooks Online certification as well as actually understanding. How to do the work in QuickBooks online because unfortunately, just because you can pass the certification doesn't mean you actually know what you're doing. So the their programs can help you bridge that gap. Both of these programs have practice involved in them, which means you're not only learning the bookkeeping side of things and the accounting background of things. One thing that I didn't mention when I was recording this video, hi, I'm editing is. The two programs that I recommend, you can find links to in the show notes. Those are affiliate links, which just means that if you join those programs, I do get a small commission as a thank you for sharing about them. But what I really want to preface that with is I only back programs and share affiliate links for things that I truly believe in and can get behind or have experience with in my own firm and I have put my team through, become a bookkeeper with no prior bookkeeping experience, and that program has trained my team up to my standards when it comes to the actual technical piece of bookkeeping. The next thing that you're going to need to set up is your paperwork. And I will admit I lumped this all under one step, but the fact of the matter is there's a lot of compliance and paperwork that you need to understand and be aware of. So. I've put everything together in A PDF for you. If you go to ambitious bookkeeper.com/checklist, it's going to give you everything here that I'm talking about today. So first off, you need to. Select a business structure, whether you decide to start off as a sole proprietor, an LLC, or if you're going into business with someone else and want to be a partnership, the two other structures that you could be are an S corporation or a C corporation. And honestly, I don't even want you to mess around with those initially So focus on those first three structures that I talked about. If you don't know the difference between those business structures. That's your first homework in starting your business, is learning what those mean and the implications of all of 'em, plus the legal protections, because this is something that's going to come up when you bring on small business clients. You need to be able to understand these business structures. You won't necessarily be advising clients on them, but if you don't understand the business structures, you're not gonna be able to do the bookkeeping for them. The next thing that we need to get clear on is a name. Don't let this hang you up, but the reason it's really important to figure out your business structure first is to then be able to go to your state's Secretary of State website and figure out if the name that you want is taken or not, even if you're going to choose sole proprietor as your business structure, if you're not using your own personal name for your business name, you need to make sure that no one else has taken the name that you want as an LLC or a trademark in your state. Next, you need to consider the risk that you're taking by opening a business, and this goes for anyone, whether you're opening a bookkeeping business or any other type of business. I want you to talk to an insurance broker. I have one that I've had on the podcast multiple times and he's coming back on shortly, so make sure you hit subscribe and if that video is already available, it will be linked in the show notes. His name is Jock Wols, and he will help you figure out what your risk tolerance is and where you need to be insured. Whether that's errors and emissions, which is I believe the minimum you need as a bookkeeper of insurance coverage and cyber insurance. Those two are very, very important for a virtual bookkeeping business. if you're going to have a physical location, you might need to explore general liability. Next, you want to check with your state and your city, and possibly your county as well, whether or not there are certain license requirements to run a business, whether it be from from your home or anywhere in town or in that city limits or the county, and the state. So when you go to your Secretary of State website, if you've selected that you want to open a business, there's generally a whole step-by-step process that they will walk you through for your specific state. I don't really recommend forming your company in a state where you're not physically located. Even if you're not planning on seeing clients in your state, that just opens you up to possibly owing tax in another state and a slew of other issues you don't really wanna be dealing with when you're at the beginning stages of your business. Next. This probably goes without saying, but you've gotta open a separate bank account. This is something that we coach and teach our clients to do, and we need to do the same thing, whether you're a sole proprietor or an LLC. You can still open up a separate bank account at the bank where you currently bank. My favorite of all time Bank, especially for virtual and online businesses, is Relay. I will be dropping a link to Relay Bank in the show notes as well. And lastly, when it comes to paperwork. And this may be one of the most important pieces. All of them are really important, but this one's super important and sometimes overlooked. But this is gonna help you keep on track with doing what you say you're going to do and protecting you. And that is engagement letters or contracts. Now let's talk about getting paid. I'm a huge proponent of actually charging for your services upfront. I know it's kind of unpopular if you've come from maybe a corporate environment, but this is actually the way that things are done these days. This is also going to protect you and hold you accountable for the work that you've committed to doing. In that engagement letter that we just talked about. So some ways that you can get paid are utilizing QuickBooks Payments. If you're going to be setting up your own books on QuickBooks Online. If you're setting up your books on something like zero, which is my preference, we use a payment processor called GoCardless. They do automatic A CH. You can also pay via credit card through that, and the fees are a lot lower. When you use a CH and use that service, you can also connect Stripe, PayPal, and a slew of other payment services when you set up zero for your firm. If you're interested in hearing more about becoming a zero partner, make sure you. Check the show notes. Check below where you're watching this video, because I'm putting together a lot of resources on Xero coming up, and if they're already available, you'll be able to see those linked. One last thing I'll say about getting paid is make sure you do set up a system to invoice your clients and get that automatically done. And what's even better? If you charge a flat monthly fee, you can set up your system to automatically invoice your. And put them on automatic payments every month so you are not chasing down invoice payments, and you can just focus on the work that you're doing for your clients. You can even set up Xero or QuickBooks online to automatically email reminders to your clients when things are past due. And this is a great tip to understand to help your clients also manage their own accounts receivable and cash flow. The next thing that we need to figure out when we're starting a bookkeeping business is the actual work, right? One of the biggest questions I always get is, what do I ask my clients for when I'm onboarding them? I'm gonna give you a quick rundown right now. Number one, you wanna ask them for banking access. I know this might seem kind of like a hurdle to get over, especially when you're building up your business and you haven't built that trust yet and rapport with your clients. But if someone is willing to work with you as a bookkeeper, you wanna make it as easy on them as possible, and that means you getting statement only bank access. This way you can pull bank statements, you can pull check images if you need them. And you can manage bank feed connections or do the imports and exports that you need to get your job done. So that's how I always position it to my clients is, trust me, you don't wanna be pulling this stuff for us every month in order to let us do the work. So it's better to just give us access from the beginning. The next thing you're gonna need from clients is access to their bookkeeping system. If they already have one, if they don't, great you get to set them up on whatever you want to use. Again, my recommendation is zero. If they already have a system set up, which most likely if they do, it's probably gonna be QuickBooks online. You wanna make sure you get accountant access to that. And in order to get accountant access and not use up one of their licenses or user seats, you wanna make sure that you're signing up for a QuickBooks Online ProAdvisor account. You can do the same thing for Xero. Like I said before, I'm going to be putting out a lot more resources on becoming a zero partner and. Videos on how to use Xero, so stay tuned for, so stay tuned for those. Make sure you subscribe. The next thing I ask all of my clients for when they onboard with us, if they're not brand new businesses, if they've been in business for more than a year, is their previous tax returns. This one's a little controversial. I've seen questions from other bookkeepers about this when I mention it in Facebook groups and other communities, but for me, it helps. A ton with having the information at your fingertips when you need to look something up from the past, like their EIN or the address the IRS has on file with them, or if they're getting any IRS notices and things like that, you, it's just a lot easier to, to help them if you have a copy of their tax return on. Next one thing, like I just mentioned, is their EIN. So I always ask my clients to provide us with their actual EIN letter issued by the IRS, and we keep that in their permanent file as well. If you're interested in hearing about how I structure our client files digitally in our Google workspace, then comment below this video so I know that you're interested in seeing that and I will record a video for you. And lastly, arguably one of the most important pieces from the client side is their formation documents, and this would be their LLC paperwork, maybe the certificate that they filed with the state or any other documents that signify how their business was formed. Again, going back to that business structure, it's really important to understand what type of business structure your clients have when it comes to year end, and helping them with any type of paperwork, like filling out a W nine so those are all the documents that we ask for our clients. Take a screenshot. I'm gonna have it on the screen and then let's move on to the last, but not least. The biggest question that I probably get when it comes to starting a bookkeeping business is, what do I charge my clients? I already talked about charging a flat monthly fee. I feel very strongly that especially with the advancement of technology and AI and everything that we have at our fingertips. Charging hourly is going to become very, very obsolete very quickly. And so if you are just starting out try to keep that in mind. But I do understand that when you are just starting out, you may not really understand how long things should take or how long they'll take you. And you don't wanna undercharge by charging a flat monthly fee and. It only being maybe two or $300 a month, but you're spending six hours a week on that client as you're learning. So for you, only for you, if you are starting out brand new, I want you to think of how much money you want to be making with the time that you're spending and how much time you actually have to be able to work. On your clients and try to come up with an hourly rate that will help you get to that point of what you wanna be making. Then what I want you to do. Is start there on your very first client. I know this might not seem like the advice you were expecting, especially because I'm a huge proponent of flat monthly fees, but I do understand that at the very beginning you have to get your bearings and you have to figure out your workflows and understand how much time things are gonna take you, and so I do want you to Take what your goal is for how much you're wanting to make, how many clients you wanna work with, and. How much time you're able to actually dedicate to your business and reverse engineer what you think an hourly rate could be. I have a great resource for you. I have a mini course called Pricing for Profit and. You can get access to that if you go to ambitious bookkeeper.com/store where I have all of my mini courses and I walk you through that exact exercise of figuring out how much money you want to make or need to make, how much you wanna be working and helping you establish an hourly rate that works for you at the beginning. And also helps you figure out a base package fee for when you start moving your clients to that package. Pricing flat monthly fee pricing structure. I. If you're already at the point where you know, without a shadow of a doubt that you're not gonna charge hourly, maybe you already have a client or two, and you already have kind of an understanding of how much time you're spending, how much time things are going to be taking you, and you're ready to move away from that hourly fee pricing, go ahead and grab that pricing for profit mini course. And I'll give you one little tidbit that is inside of that course that I think is one of the best pieces of advice that I don't even know if I heard it anywhere. This is just something that I figured out early on in my journey was a good litmus test on pricing a client is, is it one to 3% of their revenue? Because this is gonna allow them to be able to afford us, and also it's going to. Help me validate the package pricing that I've come up with. Now, of course, you can't do this unless you understand or know what your client's revenue is. But if you have access to their books before you price them, or if you've asked them their revenue, when you've done your discovery call, or on your pre-call questionnaire, this is information that you can take into account when you are pricing that client. if you are ready to start your business, but you aren't quite confident in your skills of bookkeeping, please check out Become a Bookkeeper or the Acadian Accounting. Education courses to help you further your education and your experience before you take on your first client. Because there is really nothing worse than taking on a client and realizing that you've bitten off more than you can chew. And you have to either go back to that client and tell them I'm in over my head. Or you brush things under the rug and leave a giant mess for your client or for another bookkeeper to clean up or worse, that client ends up having to close their business. I don't take it lightly what we do for our clients, and you shouldn't either. And I hope that since you're watching this video or listening to this podcast, that you understand that integrity is the number one value that you need to have as a bookkeeper. Thank you so much for tuning in. Make sure you watch the following videos to get more information on Acadian Accounting, education, and Insurance, and cyber risk with Jock Walls. Those are two interviews we have coming up. If you don't see them on the screen that means they're not released yet, but if they're on the screen, you can click here and go watch those interviews and prepare yourself for this amazing business that you are about to embark upon.

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