How a Certified Public Accountant Can Run a Successful Bookkeeping Business
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How a Certified Public Accountant Can Run a Successful Bookkeeping Business.
The average salary of a Certified Public Account (CPA) in the United States can get up to $119,000 per annum. Top-level CPAs with extensive years of experience in public sector accounting and other finance fields can earn upwards of $150,000 per annum.
The pay for CPAs may seem decent to get by monthly, but many practicing CPAs push for more pay raise yearly. In the real sense of it, a pay raise may not happen quickly for some reason. It could be that the labor rates may not have been reviewed in the industry or simply, employers are not disposed to making such upward pay reviews.
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About 465,039 CPAs in the United States are fully engaged with women making up a larger percentage of about 56.8% of CPAs overall, while men make up about 43.2%.
Asides from doing the complex accounting stuff for average pay, do you know you can leverage your knowledge and skills as a Certified Public Accountant to make extra income? With the broad accounting fields at your disposal, you can pick one area, develop it and monetize it.
One of those side hustles is starting a successful bookkeeping business.
We have a post on How Accountants Can Start a Successful Side Hustle from Home, you can check it out. However, In this post, I’ll share insights into how a CPA can start and run a bookkeeping business
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Key Highlights
🎯 Accounting is a subjective assessment of what data implies for your company, while bookkeeping is a direct record of all purchases and transactions your organization makes.
🎯 An accountant can be a bookkeeper, but without the appropriate credentials, a bookkeeper cannot be an accountant.
🎯 Compared to someone who has not attained the certification, a CPA is likely to possess a greater understanding of the discipline of accounting. Additionally, a CPA is qualified to carry out specific tasks that ordinary accountants are not.
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🎯 It is not strictly necessary to be certified to operate a bookkeeping business. However, you might want to think about earning your Certified Public Bookkeeper (CPB) designation, which shows clients that you possess skillsets and may help you stand out in a crowded market.
🎯 You can also obtain certification for certain software programs to boost your expertise and customers’ trust.
SEE ALSO: How Much Do Bookkeepers Charge for Start-Up Businesses?
SEE ALSO: How Accountants Can Start a Bookkeeping Side Hustle from Home
Steps to Run a Successful Bookkeeping Business
Starting a bookkeeping side hustle, especially for a CPA (if you’re one) should not be difficult to do because you already possess the skills required in the field.
To develop and plan your bookkeeping side hustle, follow the steps listed below:
1. Draft a Bookkeeping Business Plan
Drafting a bookkeeping business plan should not be a complex one. A guide to this is to keep it simple and easy to understand.
What you should consider is planning each growth phase by outlining each of them carefully. You’d need to determine the exact skills required, and the software you will need to make your job easier.
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Remember that there will be hurdles to cross when starting and you need to prepare for them. And possibly the financial demands your new business will need to take off. In most cases, these demands will be little unless you’re considering purchasing software. Also, state what to expect from each growth phase.
In a business plan, you need to outline these phases.
- Startup phase
- Growth phase
- Reinvestment phase
Having a clear blueprint for your business will help you evaluate and appraise your progress.
Secondly, your numbers are also important in the sense that you need to know how much will be the base price for each service you’ll offer, you also need to know your breakeven point before turning a profit.
Your plans should include software you’d need or human hands you’d employ to help organize your business and scale faster.
2. Research the Market and Specialize
Since money management is usually a major concern to many business owners, the services of a bookkeeper or accountant are always in high demand. Even CEOs with accounting backgrounds still hire accountants to maintain proper records of accounts.
What this implies is that you need to understand what the market needs and then know how to fill the gaps. Some small businesses may not be able to afford an entire accounting package. This means that you could offer accounting modules in which simple bookkeeping could be one of the add-on services.
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In a nutshell, you don’t need to be a generalist in accounting, although CPAs are already vast and command lots of experience. However, it’s ideal to select a niche in the industry to pursue since you’re starting. As time goes on you can explore and expand into other areas.
With an area of specialization, identify your target market and pursue it. You should conduct market research to find out about other bookkeeping companies to see what they do and the market they are serving. Then you can compare it with your area of specialization to assist you to identify the most favorable and penetrable market.
3. Pricing
When starting a business, getting your pricing right could be a challenge, it’ll involve a lot of market research and testing to get the right and profitable pricing for your services. Charging too high or too little has implications.
If you charge above market price, then penetration could be difficult, and getting your return on time and resources invested may take a longer time.
Charging too little may create a perception of a “trashy or low-quality service” and won’t be appropriately compensated.
The average hourly pay for a bookkeeper, according to PayScale, a website that tracks wages and rates, is roughly $17 ($10 on the low end and $24 on the high end).
For clarity, you could also check out some freelance websites where people publish their pricing. To determine what you should be charging, look for bookkeepers with expertise and skill sets similar to your own.
4. Consider a Simple Website
A simple business website is another way to introduce your business. As many potential customers visit your website to learn more about you and your business, ensure you do a very good presentation of your business by outlining your services properly.
A website is required if you’re specifically operating an online bookkeeping service which I’ll recommend as a startup.
The benefits of being online will increase your reach and accessibility. Your ground cost will also be reduced since you’ll only need a hosting and domain with a little knowledge of WordPress CMS to manage your clients.
WordPress CMS helps track and manage your clients’ orders and run other tasks. You can create your process using a CRM and project management application. You can also research particular accounting practice management programs, some of which are directly integrated into programs like QuickBooks Online.
5. Invest in Marketing
No matter what kind of business you run, projecting your business through investments in marketing is crucial. The most adept small-business marketers are those who pinpoint their target audience and advertise to them specifically.
As a CPA, you should develop a unique selling proposition that will assist you in thinking of the most inventive ways to promote your business, which may include email campaigns, direct mail or radio ads, social media advertisements, or through other mediums.
6. Consider a Bookkeeping Software
Having sophisticated software in place is a no-brainer, a bookkeeping software will help you remain efficient and manage multiple client orders fast.
Since there are many software in the world today, you need to carefully consider all of your alternatives as you search for the best bookkeeping software. QuickBooks Online is one of the most widely used accounting software providers in the world and it’s used by both small and large enterprises.
Other well-liked options to pick from includes – Zoho Books, Wave Financial, Plooto, Oracle Netsuite, FreshBooks, ZarMoney, GoDaddy, Sage Business Cloud Accounting, Xero, and Melio. Each of these programs offers certifications that position you and your business as an authority in accounting practice.
7. Business Registration & Insurance
A brandable & niche-specific business name is ideal to register. Try to make the name short and memorable.
When registering a name, look for names that communicate accounting and bookkeeping services, so that your clients can find you when they choose to search Google for related keywords.
When you’ve found one, the next is registering it officially and possibly buying a domain to host it online as a website. As a small business owner, this will determine how you pay taxes, as well as how you’ll organize your company, and what type of liability protections you have in case something goes wrong.
You’ll likely be working alone initially if you’re just starting a bookkeeping firm. However, you can consider looking into sole proprietorships and LLCs as a place to start your research on company entities for bookkeepers. The latter could be a fantastic choice if you plan to employ one or more workers in the future.
Although it’s not required, you might wish to research insurance for your bookkeeping company.
If you’re insured, this can provide cover from expensive liability from your clients.
SEE ALSO: 12 Lucrative Side Hustle Ideas Accountants Can Do At Spare Time
SEE ALSO: 30 Brilliant Side Hustles Compatible While Working Full-time
Final Thoughts
Starting a personal bookkeeping company can be financially and personally highly rewarding, and you’ll be giving your clients a first-hand specific service that will assist keeping proper book of account and enable them operate their businesses effectively.
In addition to having a strong grasp of finances and accounting software, running a successful bookkeeping business entails keeping up with technological advancements in the field, marketing your company, running your operations, and building strong customer relationships.
