How to Start a Virtual Bookkeeping Business

Denise Elizabeth P
Senior Financial Editor & Contributor
Last Updated: June 3, 2021
Date Published: June 2, 2021

Many business owners look for help when it comes to their accounting and bookkeeping and often times they look to outsource their bookkeeping services.

Businesses that outsource their bookkeeping usually do so because they only require weekly, monthly, quarterly, or seasonal bookkeeping help.

For these businesses, outsourcing their bookkeeping duties makes more financial sense, rather than hiring a full or part time bookkeeper in-house.

Virtual bookkeeping businesses provide the much needed support to businesses looking to outsource this key part of their operations.

According to ZipRecruiter, most freelance bookkeepers make an annual income starting at $34,000 and going up from there – the sky is the limit, really.

Full-time virtual bookkeepers can make $56,000 annually, and that is on the low end.

Bottom line is, the more clients and work you take, the more you make – and all out of the comfort of your own home!

If you have experience in this industry and are looking to branch out on your own, opening a virtual bookkeeping business is a smart option to look into.

Today we are going to discuss how to setup your virtual bookkeeping service and start being your own boss while doing something you are already good at!

virtual bookkeeping

Decide what Bookkeeping Services to Offer

Before forming your business, you are going to want to decided what bookkeeping services you want to offer.

Here are a few examples of the types of services bookkeepers do for clients:

  • Record financial transactions
  • Preparation of Financial Statements such as balance sheet, profit and loss, cash flow statement, etc.
  • Accounts receivable and collections
  • Accounts payable
  • Bank reconciliations
  • Payroll
  • Invoicing
  • Tracking short and long-term assets
  • Work with tax preparer and assist with tax compliance

You will want to highlight the areas that you are already knowledgeable in and perhaps take some training courses on the areas that you are not as familiar with so that you can offer a full one-stop bookkeeping service to your clients.

Write a Business Plan

Many small business owners skip this step when starting out but writing a business plan is actually a key component to success.

For a virtual Bookkeeping business, it doesn’t have to be super elaborate but it should at least include the following:

  • Goals – set short and long term goals for your business
  • Business strategy – how do you plan on making money
  • Target clients – who are you going to reach out to and who are your potential clients
  • Competition – analyze your competition so that you know what you are up against
  • Services – what services will you offer
  • Rates – establish your rates.

Writing out your business plan will help you see what your business will look like and will help identify your strength, challenges, and any areas that need more improvement or development.

A business plan maps out the specifics of your business and can shed light on unknown factors that could negatively impact your business down the road.

Consider Getting Certified

Bookkeepers handle confidential client information and financial data for their clients and getting certified helps increase your credibility, knowledge and trustworthiness.

There are not specific licenses or certifications that are required in the United States but there are some that are highly recommended.

Here are some certifications that will give you a competitive advantage:

  • CPB – Certified Public Bookkeeper via the National Association of Certified Bookkeepers (NACPB)
  • CB – Certified Bookkeeper via the American Institute of Professional Bookeepers
  • Accounting Software certifications such as Quickbooks ProAdvisor, Zoho Books, and/or Xero Advisor

These certifications will help you stand out and give you credibility.

Choose a Business Name

Now that you know what services you are going to offer and what certifications you need to gain a competitive advantage, you are ready to choose a name and actually form your bookkeeping business!

If you already have a name in mind, you can reserve your business name so that it doesn’t get taken by someone else while you make a final decision.

You can reserve a business name by completing a Name Reservation Request online in the state where you live.

There is a usually a filing fee ranging anywhere from $10-$25 and you can get name exclusivity for up to 90 days.

This gives you time to choose a name without losing the one that you love but are undecided on for now.

If you already have a name in mind you will want to do an internet search to make sure you name is not already taken.

You may also want to consider trademarking your business name once you decide on one.

This will prevent anyone from trying to create a business with the same name as yours.

When choosing a business name, be sure to choose one that is easy to remember!

Your clients will want to refer you, so make it easy for them to remember your name and spread the word.

Form Your Business

Once you have a name, you’ll need to decide on a business structure, also know as a business entity.

There are several business structures to choose from including sole proprietorship, limited liability company (LLC), Corporation, etc.

You will want to consult an attorney if you are not sure which business structure to choose.

You can also use a formation service that will handle the entire process for you.

Many small business owners choose an LLC because it provides limited liability protection to you as the owner and it benefits from pass-through taxation.

Learn all about LLCs here.

Checklist to Complete to Form Your Business:

  1. Select a business entity type: we recommend an LLC for a virtual bookkeeping service.
  2. Obtain an EIN (Employer Identification Number) from the IRS – once your online application is complete, you will receive an EIN instantly.
  3. Register your business locally in the State in which you will be conducting business. This is done with the Secretary of State in the State in which you will be doing business.
  4. Obtain any business licenses or permits required in your State to operate a virtual bookkeeping business. These can also be found at your local Secretary of State website or by simply doing a Google search.
  5. Open a business bank account using your EIN

Create Customer Contracts and Agreements

As a small business owner, these customer contracts and agreements are what are going to protect you!

Customer contracts and agreements define the relationship that you have with your client and the type of work you are engaging in.

An example could be a Service Agreement that outlines the duration of the agreement, rates, scope of work, and billing terms as well as dispute resolutions.

Non-disclosure agreements are also important.

If you are not sure what contracts and agreements you need, you can hire an attorney to help you create these.

Business Insurance

Another way to protect yourself is by getting the right business insurance coverage.

The most common type of business insurance for bookkeepers is professional liability also known as errors and omissions insurance, and general liability insurance.

These insurance policies will cover you should there be any legal issues that arise between you and your clients.

Software Tools and Technology

Because a virtual bookkeeping business is going to be run, well, virtually – you will need the right software tools and technology to work remotely.

Here are some core tools that you will need to be successful:

  • Core accounting software – Quickbooks online is a very popular accounting software for virtual bookeepers because it is cloud-based and can be easily accessed anytime. Others include FreshBooks, Zoho, Sage, and Xero.
  • Document management – Clients will be sending you confidential information, so you will what some sort of secure document management system like Sharefile, Google Drive, OneDrive, DropBox, etc.
  • Remote desktop software – There may be times when a client will need you to remotely login to their desktop to help them with bookeeping training or tasks. A remote desktop software will help you accomplish this.
  • Computer and/or laptop – Once you know what software you will use, you can purchase a laptop or computer that is capable of handling all of your needs.


Advertising and Marketing

Now that you have all of your ducks in a row, you are ready to take on clients!

Even though your bookkeeping service is virtual, you will want to consider both traditional and online marketing tactics.

Business cards and brochures can be dropped of at local businesses while e-mails and other online networks can help you market online.

Creating a website is always smart so that potential clients have a place where they can learn more about you and what services you offer as well as your prices.

You can also add a section with client reviews, your certifications, and experience.

Bookeeping Resources