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Hattrup encourages all of his clients to address little details from day one in order to start off on the right foot, such as transferring internet bills from a personal to a business credit card. Typically, it only makes sense to hire an in-house accountant after your startup has expanded significantly. At that point, you’re likely to have more complex accounting needs each month and the cash flow necessary to afford full-time help. However, you typically don’t have to worry about keeping a copy of every receipt. In many cases, your bank account and credit card statements should provide sufficient supporting details for the average business expense. Contrary to popular belief, there are multiple ways you can choose to maintain your financial records.

Best Free Accounting Software for Small Businesses

For a small business, this can be a great way to get the benefits of having a dedicated bookkeeper and accountant without the need to build out your own accounting and bookkeeping department. As a startup founder, you’ll need to choose early on whether to spend your valuable time on accounting and bookkeeping tasks, or to outsource to the experts. As we mentioned above, you don’t technically need to be certified to run a bookkeeping business. You can launch an online bookkeeping business using the same process above, though naturally, you’ll need to place greater emphasis on your web presence and your file-sharing tools. But you’ll also be able to reach a wider market than if you only focused on your local area, reaching prospective clients from across the US.

Bookkeeping and accounting software

You’ll want to look up the exact rules for how to register your business with your secretary of state’s office. If not, you might consider using a file-sharing service such as Dropbox so you and your clients can exchange https://www.bookstime.com/ important data such as receipts or financial statements. While sole proprietorships are typically the easiest to manage, other business structure options can be helpful if you add employees as your business grows.

thoughts on “How To Start a Bookkeeping Business: 11 Actionable Steps”

You’ll typically need expert help to avoid making costly mistakes, in which case you can either outsource your accounting to a service provider or hire an accountant full-time. Many startup founders and small business owners do their own bookkeeping. It’s relatively simple, and software like the Lendio Bookkeeping Solution can automate a significant portion of the work.

Bookkeepers may also record other financial transactions, such as loans and investment returns. By learning early on what your target audience is, you will gain huge insight on what procedures you need to take to keep your bookkeeping business at the top of potential clients’ radar. Opening startup bookkeeping 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.

Do Startups Need In-House Accountants?

• The primary difference between the two processes is that bookkeeping is an administrative task involving little critical thought.
• Starting a bookkeeping business is one thing, but, building a client base is an entirely different challenge.
• Opening a business bank account can make it easier to keep track of what funds go in and out.
• We’ve found that our current clients refer the best new relationships, so take a look on social and see who we both know before reaching out.
• You could also look into Xero if you’d like, which is the second most popular accounting software as of now.
• 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.

For me, it was recommended to form an LLC because it keeps your business finances separated from your personal finances, so for instance, someone sues you, they cannot take all your personal assets. In order to be considered a legal bookkeeping business, you need to decide what form of business entity to establish, and then file your company with your state. The most common forms of business are a Sole Proprietorship, Partnership, Corporation, and S Corporation. A Limited Liability Company (LLC) is a business structure allowed by state statute.