Running your own bookkeeping business is easier than you think. Even if you’re not a tax pro or a math whiz, you can do more than just file 1040s. You’re only a step away from being a professional bookkeeper.

Why offer bookkeeping services?

First, let me reassure you, bookkeeping is not scary (you don’t even need a college degree). The basic tasks of bookkeeping involve categorizing and verifying transactions, but I’ll speak to this later. Let’s talk about the why.

The most obvious benefit of starting your own bookkeeping service is increasing your income. You may have already made some money helping latinos complete their personal 1040s, but odds are, this job is seasonal.

Businesses who need bookkeepers need them year round. With your own bookkeeping company, you can charge a monthly rate for your services, giving you with better job stability and consistent income.

Not to mention, if you use a cloud-based accounting software like ZipBooks, you’ve gifted yourself greater work-life flexibility. Take your bookkeeping business to the beach with you or set up a 3-day work week. As long as you’re communicating well with clients and verifying transactions in a timely manner, bookkeeping can be a breeze.

What does a bookkeeper do?

The primary function of a bookkeeper is—as you might guess—“keeping the books” for a business.

It’s pretty common to mistake bookkeepers with accountants, CPAs and other tax professionals. So here are a few distinctions:

• A bookkeeper does not need any kind of formal certification or degree
• A bookkeeper does not need to pass a CPA or IRS exam

Of course, accountants, CPAs and other tax preparers can also work as bookkeepers, but as these roles require more extensive training and experience, they typically delegate bookkeeping to others. This is where you come in.  

In the past, keeping your books required a lot of data entry. Today, (thankfully), most bookkeeping is done digitally through online accounting software. You just have to complete two simple tasks: categorization and reconciliation. Then, your software will do the heavy lifting to create reports.

Task #1 Categorization

The first basic task of bookkeeping is categorizing transactions. Transactions that have been correctly categorized (books that have been accurately “kept”), produce reconciled accounts and up-to-date financial statements.

Every transaction that a business makes needs to be assigned to a certain category. These categories stem from your “Chart of Accounts”—accountant-speak for an organized hierarchy of business spending. Typically, when you set up your accounting software, you’ll have a set of default categories to choose from.

These categories have multiple levels. For example, a transaction for “Office Supplies” would fall under the parent category “Office Expenses,” then “Expenses” and finally “Owner’s Equity.”

Categorizing transactions is necessary for tax purposes and itemizing expenses. However, the greater value to a business owner is helping them to know where their money is coming from and where it’s going.

Task #2 Reconciliation

Once every transaction has been categorized, it also needs to reconciled. Reconciliation is the process of verifying that a transaction really occurred as the books say it did.

An easy analogy for reconciling the books is balancing a checkbook. Back before digital banking ruled the world, financially savvy mothers depended on their checkbooks for financial security. Line by line, they would guarantee that every transaction was accounted for, so the lines in her checkbook matched the bank statement at the end of the month.

These days, both paper-and-pen and manual data entry are things of the past. Modern accounting software syncs with your bank and automatically pulls in every transaction. A bookkeeper’s job is simply to go through the transactions and make sure they match up with what you know happened in reality.

On occasion, the syncing systems aren’t perfect—either the bank connection was off or someone in the accounting system did something wrong. This is why we reconcile.

Task #3 Reporting

The last thing a bookkeeper may be responsible for is the creation of standard financial statements. If you’ve got good software on your team, odds are, these reports generate automatically for you. So, while you don’t need to know how to crunch the numbers, you should know what these reports mean for business owners.

Let me mention the three reports that will be of most value to your clients:

1. The Balance Sheet is called such because it expresses a “balanced” accounting equation (Assets = Liabilities + Equity). The Balance Sheet is invaluable to business owners because it helps you to see where your business stands right now, particularly in terms of cash in the bank and debts owed.
2. The Income Statement (also called “Profit and Loss Statement” or “P&L”) breaks down sales and expenses over a specified period of time. The net income, or “bottom line” on an Income Statement is what businesses pay taxes on—plus, it shows whether or not a business is actually making a profit!
3. The Cash Flow Statement combines data from the balance sheet and P&L to provide a summary of a business’ cash position. The ability to create a positive cash flow is what gives a business value.

Other tasks

Three tasks—bookkeeping really is that simple. But if you want to offer even more to your clients, consider adding these services:

• Prepare invoices
• Prepare tax returns
• Payroll services
• Accounts payable management
• Accounts receivable management
• Budgeting and forecasting
• Tracking long-term assets (machinery, equipment, etc.)

How do I succeed as a bookkeeper?

Anyone can run a successful bookkeeping business with a little bit of drive and the right software.

Find the right software

In order to build a modern bookkeeping business, you’ll need to be equipped with smart software. The norm for accounting software today is cloud-based (not desktop), and some platforms even offer a free starter plan.

In addition, programs like ZipBooks Accountant enable you to manage all of your bookkeeping clients in one place. You can access your dashboard at any time or from any place—and you can even text your clients directly to streamline communication and reconciliation.

Automation is a huge benefit to ZipBooks users as well. Financial reports (such as the 3 I mentioned earlier) are totally automated and can be customized based on tags. Invoicing can also be automated in order to regularly bill clients for your monthly bookkeeping services.

Grow your business

Once you’ve found your first customer, it only gets easier to grow your bookkeeping business.

Ask clients to refer their friends (if you’re that awesome, they’ll just do this naturally)! Create a beautiful website and optimize for local SEO. Claim your Google My Business listing and get tons of reviews for your company. And of course, take feedback seriously. Always be learning and striving to improve.

You’re gonna kill at this.

 

 

Rachel Cottam is the Content Manager at ZipBooks and a former high school English teacher. Her writing and editing have been featured in academic journals and tech websites alike.