ON THIS PAGE
- How to Start a Bookkeeping Business
- How Big is the Bookkeeping Industry?
- What are the Key Segments of the Bookkeeping Industry?
- What External Factors Affect the Bookkeeping Industry?
- Who are the Key Competitors in the Bookkeeping Industry?
- What are the Key Customer Segments in the Bookkeeping Industry?
- What are the Key Costs in the Bookkeeping Industry?
- What are the Keys to Launching a New Bookkeeping business?
- What are the Typical Startup Costs for a New Bookkeeping business
- Additional resources in the Bookkeeping Industry
How to Start a Bookkeeping Business
If you’re looking to start a bookkeeping business, you’ve come to the right place. Since we’re going to show you exactly how to do it.
We’ll start with key bookkeeping industry fundamentals like how big the market is, what the key segments are, and how revenues and profits are generated.
Then we’ll discuss the keys to not only starting a bookkeeping business but succeeding in it!
And definitely check out our bookkeeping business plan template if you need a business plan to start or grow your bookkeeping business.
How Big is the Bookkeeping Industry?
There are currently 287,920 bookkeeping businesses in the US, with collective revenues of $81.1 billion. This represents a 7.8% annual growth over the past five years. Revenue growth is forecast to slow over the next five years to 2.8%, but this rate is in line with projected GDP growth.
What are the Key Segments of the Bookkeeping Industry?
There are a number of product segments within the industry, but the majority of the industry’s revenue comes from payroll services. The remaining revenue is split between the following services:
- Billing Services
- Other Services
- General Accounting Services
- Bookkeeping and Compilation Services
- Payroll Services Sold Separately
- Tax Preparation and Representation Services
- Tax Planning and Consulting Services
What External Factors Affect the Bookkeeping Industry?
A number of factors affect the performance of the bookkeeping industry. These drivers include:
Outsourcing: American companies are expected to increase their outsourcing activity, especially for administrative activities that are outside their core offering. Since bookkeeping is an outsourced activity, this trend bodes well for the industry.
National Unemployment Rate: All changes in the unemployment rate have an effect on industry demand: Higher unemployment means less work for bookkeepers, and vice versa.
National Unemployment Rate: All changes in the unemployment rate have an effect on industry demand: Higher unemployment means less work for bookkeepers, and vice versa.
Corporate Profit: Low profit margin businesses arenot likely to outsource their bookkeeping services. But when corporate profit rises, companies are much more likely to outsource bookkeeping and payroll services so that they can concentrate on their core functions.
Who are the Key Competitors in the Bookkeeping Industry?
Key competitors in the market today include:
- ADP LLC
- Paychex Inc.
- Intuit Inc
- Ceridian Inc.
What are the Key Customer Segments in the Bookkeeping Industry?
The largest customer segment in the bookkeeping market are private businesses. The other major sources of revenue include:
- Manufacturing Firms
- Healthcare Providers
- Financial Institutions
- Individuals
- Governments
What are the Key Costs in the Bookkeeping Industry?
Wages – These tasks are labor intensive and require firms to hire a significant pool of skilled labor to meet service agreements. Consequently, wages and salaries constitute the largest expense for this industry. This is trending downward, though, as businesses invest in labor-saving software systems.
Purchases – Operators in the Payroll and Bookkeeping Services industry typically only are required to purchase basic capital equipment that requires relatively infrequent replacement, such as fixtures, fittings and furniture for offices, as well as office equipment. Purchases have increased as a proportion of revenue over the past five years because of increasing reliance on computer equipment.
Other – Other costs include office equipment and administrative expenses, utilities and leasing, and marketing.
What are the Keys to Launching a New Bookkeeping Business?
1. Training or experience
To run a bookkeeping business, you must either have some training – no need to become a CPA, but you do need to complete some courses; and/or you need to have at least one to two years’ experience. Otherwise, it will be difficult to attract those crucial first few clients.
2. Location
Decide whether you will purchase or lease office space. It should be a very professional space to give potential clients peace of mind about letting you handle their books.
3. Set your fees
Bookkeeping service providers usually charge on a per-hour basis. Do some investigating to see what other bookkeepers in your area are charging before you set your rate.
4. Choose your software
As you start investing in your bookkeeping business, be sure to choose software that not only helps you comply with all state and national laws, but also makes your workload lighter.
What are the Typical Startup Costs for a New Bookkeeping Business
- Startup costs for this industry are minimal, but include office furniture, software, office down payment and rental, legal fees, and marketing.
- Ongoing costs include software and hardware upgrades, office rent/mortgage, utilities, and marketing.
Additional resources in the Bookkeeping Industry
For additional information on the bookkeeping market, consider these industry resources:
- American Payroll Association: www.americanpayroll.org
- Human Resources Outsourcing Association: www.hroassociation.org
- US Bureau of Labor Statistics: www.bls.gov
- ATM Mavericks: www.atmmavericks.com
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Bookkeeping Business Plan