Ken has gained a wealth of business experience through his previous employment as a CPA, Auditor, Tax Preparer and College Professor. Today, Ken continues to use those finely tuned skills to educate students as a professional writer and teacher. Invest in secure software, use strong passwords, enable two-factor authentication, and educate yourself on cybersecurity best practices to startup bookkeeping protect your clients’ data. Utilize social media, create a professional website, network with other professionals, and consider offering free webinars or workshops to showcase your expertise. Once again, this process is state-specific, so you’ll need to see what the requirements are for where you live. Fortunately, this step is a lot easier than getting a general business license.

• A virtual business easily crosses state lines and time zones, so you can work when you want to.
• This free resource includes a ton of the most popular accounting templates including monthly bookkeeping, weekly accounting analysis, client onboarding procedures, and common tax return forms.
• It meets my needs for my bookkeeping business and it was very easy to set up a Gmail email address using my website address.
• You can read more about our ratings for various business accounting software here.
• I’ve had a lot of conversations with bookkeepers and accountants on how to start a virtual bookkeeping business.

Since the business income is reported on a personal form 1040, it’s taxed at your personal rate rather than a corporate rate. That means that this type of business has very little impact on your taxes when compared to starting a business using your own social security number. However, that also means you are personally responsible for paying taxes on business income even if you don’t “pay” yourself at all. Starting a virtual bookkeeping business is a great side hustle or small business if you know what you’re doing.

The Process for your clients and your team

Most of the process is extremely similar to starting a business in the United States. You still need to register your business and get all required licenses. However, you’ll need to check with your province to see what specifications you need to meet. You should also plan to open a business bank account to separate your finances.

• Failure to do so won’t just lead to your business failing— you’ll have to pay hefty fines or even face jail time.
• If they are using different software and tools, you should figure out why and use that to determine if you really want to work with them.
• It can be difficult to trust a virtual service with your books, and even harder to know which service to choose.
• Simply ask them what the deliverables will be each week or month.
• This assumes your error was an accident, so don’t plan on a liability insurance policy protecting you from intentional errors.
• Starting up a virtual business doesn’t require ordering a bunch of office supplies.

Working remotely can be equally or even more collaborative and efficient if you use the right tools that can help with automation and project management. When using mobile devices and laptops for work, it is much easier for devices to be stolen or hacked. Keep a robust data security policy in place for employees, and plan for disaster ahead of time. By taking precautions and having actionable steps for when something does happen, you will be able to prevent large-scale damage to your company.

Maximizing Your Income

Commingling funds or using a single QuickBooks subscription for multiple LLCs could potentially lead to confusion, complications in record-keeping, and legal issues. If you mix funds or transactions between different LLCs, it might undermine the limited liability protection that LLCs offer. You’ll need to understand the tax obligations for your business, any licensing requirements, and ensure you have contracts in place for your services. It’s also important to have a privacy policy to protect your clients’ data. Initial costs can include business registration fees, software subscriptions, marketing expenses, and any educational courses you may need.

When I started my virtual bookkeeping business, I completed the testing to become a Certified Public Bookkeeper. My Master’s of Professional Accountancy degree provided me with more than enough knowledge to pass the exams, but the certification lends credibility to a new entrepreneur. An Employer Identification Number (EIN) is the business equivalent of a Social Security Number, so it’s important to obtain an EIN when starting a virtual bookkeeping business. The most important tool for any remote bookkeeper is accounting software. This will be used to manage client accounts and financial records, so it’s important that you choose one that meets your needs and budget.

Essential Regulations for Virtual Bookkeepers

Below is a breakdown of everything you need to do in 8 simple steps. This makes it possible for you to log in and access all records in the comfort of your home. If you need to communicate with other employees in the office, you can do so through video conferencing apps like Zoom, Google Hangouts, and Skype. Email sped up the process so that documentation could either be dropped off with the “ShoeBox” approach, but much of the documentation could be emailed in. It’s called the 5 Minute Bookkeeping Community, where you can come and ask questions. It’s a safe and positive place for you to learn from others, to ask questions of me, and ask questions of the group.