What Is a Bookkeeping Business Plan?

Before we get to the details of a bookkeeping business plan, we should know the basics first, starting with the definition of bookkeeping. Bookkeeping is defined as the process of recording your company’s financial transactions into organized accounts on a daily basis. It provides information to conduct accounting tasks and helps interpret the accounting information for decision-making by internal and external users.

A bookkeeping business plan refers to a business document that provides a small snapshot of where your bookkeeping business currently stands and it also lays out a visible growth plan for the foreseeable future. This document also explains the goals of your bookkeeping business and the strategy needed to reach them. It also includes market research to provide further support to your plans.

Elements Of a Bookkeeping Business Plan

Here are some of the elements you need to consider and include whenever you create your bookkeeping business plan:

Executive Summary. Your executive summary introduces your business plan, but it is usually the last section you write because it summarizes each key section of your plan. The goal of your executive summary is to quickly pique the reader’s interest. Explain to them the type of bookkeeping business you run and its current status, such as whether you are a startup, have a bookkeeping business that you want to expand or run a chain of bookkeeping businesses. Next, provide an overview of the subsequent sections. You may want to discuss the type of business you are operating, detail your direct competitors, and give an overview of your target customers.Company Analysis. In this part of the business plan, you will detail the type of bookkeeping business that you are operating. In addition to explaining the type of bookkeeping and accounting business you need to operate, this section of the business plan should also provide background on the business.Industry Analysis. You must provide an overview of the bookkeeping business in your industry analysis. While this may appear to be completely pointless, it serves several purposes. First and foremost, researching the bookkeeping business industry will educate you. It aids in your understanding of the market in which you operate. Second, market research can help you improve your strategy, especially if it identifies market trends. It would be beneficial, for example, to ensure that your plan takes into account the seasonal nature of certain services, such as tax preparation. The third reason for conducting market research is to demonstrate to readers that you are an expert in your field. You accomplish this by conducting the research and incorporating it into your plan.Customer Analysis. Your bookkeeping business plan’s customer analysis section must include information about the customers you serve and/or expect to serve. The customer segment or segments that you select will have a significant impact on the type of bookkeeping business you run. Families would have different pricing and product options, and they would respond to marketing promotions in a different way than established businesses. Make an effort to segment your target customers based on their demographic and psychographic profiles. Include a discussion of the ages, genders, locations, and income levels of the customers you want to serve in your demographics. Because the majority of bookkeeping businesses primarily serve customers who live in the same city or town, such demographic information is readily available on government websites. In psychographic profiles, the needs and wants of your target customers are explained.Competitive Analysis. Your competitive analysis should identify your company’s indirect and direct competitors. In terms of direct competition, you should list the other bookkeeping firms with which you compete. Most likely, your direct competitors will be bookkeeping firms in close proximity to your location. In terms of direct competition, you should list the other bookkeeping firms with which you compete. Most likely, your direct competitors will be bookkeeping firms in close proximity to your location. The final section of your competitive analysis should include a list of your areas of competitive advantage.Operations Plan. The operations plan for your bookkeeping business describes how you will achieve the goals established in the previous sections of the plan. Your operations plan should be divided into two sections: daily short-term processes and long-term goals. The short-term processes include all of the tasks involved in running your bookkeeping business, while the long-term goals cover all of the milestones you hope to achieve.Management Team. A strong management team is required to demonstrate your bookkeeping business’s ability to succeed as a business. Highlight the backgrounds of your key players, emphasizing the skills and experiences that demonstrate their ability to grow a company. Ideally, you and/or your team members will have direct experience in the bookkeeping industry. If so, emphasize your experience and expertise. However, you should also highlight any experience that you believe will help your business succeed.Financial Plan. Your financial statement should be broken out monthly or quarterly for the first year and then annually in your financial plan. Your income statement (also known as a profit and loss statement), balance sheet, and cash flow statements are all part of your financial statements. An income statement indicates whether or not you made a profit, a balance sheet shows your assets and liabilities, and a cash flow statement will assist you in determining how much money you need to start or grow your business.Appendix. This is the final important element of your business plan. Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling.

Basic Types Of Bookkeeping

Here are some of the basic types of bookkeeping you may not know about:

Cash Account. Nothing is more fundamental for a business than having a cash account. Every business transaction, whether incoming or ongoing, will be routed through a cash account. The more active the business, the more difficult it is to keep track of its cash flow. As a result, many bookkeepers keep two records (cash receipts and cash disbursements) to better track the activities.Accounts Receivable. Accountants must have an accounts receivable aspect to their bookkeeping if your company has a debt contract with customers that allows them to pay later (for example, a 30-day credit period). This account enables accountants to track the status of payments, whether they have been collected or are still owed. Accountants must pay close attention to this account because if some orders are misplaced, they may be required to make up the difference for the invoices for balance. It is critical to organize this account in order to send out up-to-date bills and provide the best customer service when it comes to payment.Inventory. The inventory account must account for all of the company’s products that are in stock. Regular stock takes should also be performed to keep track of every item in stock. Accountants will then be able to account for every penny that is currently sitting there waiting to be sold. It is critical to ensure that you have properly accounted for everything in order to accurately forecast how your business will perform over an accounting period.Accounts Payable. This type of bookkeeping allows you to clearly see what money is leaving for and when it has left the business. You must take good care of this account, as you would any other type of bookkeeping, so that your company does not make late payments, does not overspend, and does not fall short of the monthly outgoing. Most importantly, monitoring this account ensures that you do not pay anyone more than once.Sales. This account keeps track of all incoming revenue from sales transactions. It records these transactions on a regular and timely basis, which is critical for understanding the true state of the business. You should not wait too long before recording sales, especially if you are receiving a high volume of orders per day, because it is easy for things to be overlooked or mixed up. Some common errors include sellers forgetting to send products to customers or failing to update stock in a timely manner.Loans Payable. If your company has ever taken out a loan, you must keep track of it in the loans payable account. This account will keep track of everything you still owe and the dates that the payments are due.Payroll Expenses. Payroll is frequently the most significant cost for business owners. This account must be kept up to date and accurate in order to pay employees the correct amount each month, as well as calculate taxes and other government reporting requirements. Paying the incorrect amount of tax can land you in hot water, so every accountant must ensure that you do everything correctly.

Step by Step Process in Bookkeeping

Here are the steps to be taken to keep things in order when doing the bookkeeping for a business:

  • 1. Preparing the Source Documents

    Prepare source documents for all transactions, operations, and other business events in this step; source documents serve as the starting point for the bookkeeping process. Purchase invoices, promissory notes payable, credit card slips, and salary rosters are examples of source documents. All of these key business forms are sources of information in the bookkeeping system, which the bookkeeper uses to record the financial effects of the business’s activities.

  • 2. Determine and Record the Financial Effects of Transactions and Other Business Events

    Transactions have financial consequences that must be recorded — the business is better off, worse off, or “different off” as a result of its transactions. Paying employees, making sales to customers, borrowing money from the bank, and purchasing products to sell to customers are all examples of typical business transactions. The bookkeeping process starts with determining the pertinent information about each transaction. The rules and methods for measuring the financial effects of transactions are established by the company’s chief accountant. Of course, the bookkeeper must follow these rules and procedures.

  • 3. Create Entries of the Effects Into Journals and Accounts

    The bookkeeper makes the first, or original, entry into a journal and then into the business’s accounts, using the source document or documents for each transaction. In recording transactions, only the official, established chart of accounts should be used. It is critical to enter transaction data correctly and in a timely manner. The prevalence of data entry errors was one of the primary reasons that most retailers began to use cash registers that read barcode information on products, which more accurately captures the necessary information and speeds up data entry.

  • 4. Perform the Necessary End-Of-Period Procedures

    A period is defined as a time span ranging from one day to one month to one quarter (three months) to one year that is determined by the needs of the business. A year is the longest time a company would wait to prepare its financial statements. Accounting reports and financial statements are required by most businesses at the end of each quarter, and many require monthly financial statements.

  • 5. Compile an Adjusted Trial Balance

    After completing all end-of-period procedures, the bookkeeper compiles a complete listing of all accounts, known as the adjusted trial balance. Small businesses keep hundreds of accounts for their various assets, liabilities, equity, revenue, and expenses. The accountant uses the adjusted trial balance to group similar accounts into a single sum that is reported in a financial report or tax return. The accountant should group the accounts in accordance with established financial reporting standards and income tax requirements.

  • 6. Close the Books

    The term “books” refers to a company’s entire set of accounts. Transactions in a business are a constant stream of activities that do not end neatly on the last day of the year, which can make preparing financial statements and tax returns difficult. The company must draw a clear line between activities for the previous year (the 12-month accounting period) and those for the coming year by closing the books for one year and beginning with fresh books for the next.


What is a virtual bookkeeping system?

A virtual bookkeeper is an online agent who manages your financial records. Virtual bookkeeping services are popular among those who consider both single-entry and double-entry accounting systems to be complex and difficult to manage. Because of the cost savings, a virtual bookkeeper is a great alternative to an in-house bookkeeper or accountant; they cost a fraction of what an on-site employee would cost a small business, but they’re just as effective.

What is a business roadmap?

A business roadmap is a visual representation of your company’s major goals and strategies. Business roadmaps are used by stakeholders to illustrate initiatives and deadlines occurring in various departments. A roadmap, like a business plan, provides a long-term view of where your organization is going and how it will get there. Stakeholders must share a common understanding of the big picture for businesses to succeed. Business roadmaps break down team silos and provide a clear vision of the future.

Why is a business plan needed for a bookkeeping business?

A business plan is needed for a bookkeeping business because it will help you raise funding, if needed, and plan out the growth of your bookkeeping business in order to improve your chances of success. Your bookkeeping business plan is a living document that should be updated annually as your company grows and changes.

The business of bookkeeping can prove to be a big mountain to climb for new accountants because there are too many things for them to remember and organize. There are also far too many documents that they need to review, store, and organize frequently. To make matters a bit easier for them, they can put together a business plan for their startup business in order to make it a worthwhile endeavor for them. This makes the new accountants have a deeper understanding of the bookkeeping business, lets them get acquainted with their competition, and lets them have a greater knowledge of who their customers are. In this article, examples of an effective bookkeeping business plan are available for you to download and use as a personal reference.