How to start a bookkeeping business

What it costs to start

No primary US source publishes a bookkeeping-specific startup cost range; the SBA's official startup-cost guide gives categories and no dollar figures, and the only credible general anchor is the Census Annual Business Survey finding that 24.1% of new US employer businesses started with less than $5,000 and 50.9% with less than $25,000, with a bookkeeping practice sitting at the low end because the dominant costs are software subscriptions, professional liability insurance and client acquisition rather than premises or inventory.

Source: 1, 2, 3

What you have to file

Licensing is set by state, county and city, so this is what the category tends to require rather than a list for where you live. The state pages below carry the filing detail for each of the 50.

• Business entity registration with the state Secretary of State (LLC or corporation), or a DBA / assumed-name filing for a sole proprietorship
• IRS Employer Identification Number (EIN)
• State and/or city general business licence or tax registration (varies by jurisdiction; the SBA notes state and local requirements depend on activity and location)
• NO CPA licence is required to do bookkeeping. State accountancy acts restrict the TITLES 'Certified Public Accountant'/'CPA' and 'Public Accountant'/'PA' to licensees, and reserve ATTEST work, audits, reviews and compilations, to licensed CPAs and licensed CPA firms (South Carolina Board of Accountancy: unlicensed persons may not 'perform audits, reviews or compilations'; the SC Board states it 'does not have any authority over bookkeepers, tax preparers or accountants')
• Texas is stricter than most: the Texas State Board of Public Accountancy treats offering services as an 'accountant', or offering 'accounting services'/audit services, without a licence as unauthorised practice, and requires a non-CPA entity providing non-attest services to disclose 'This firm is not a CPA firm and its services are not regulated by the Texas State Board of Public Accountancy', so check your own state board before using the word 'accountant' in marketing
• IRS Preparer Tax Identification Number (PTIN), required only if you are compensated for preparing, or assisting in preparing, all or substantially all of a federal tax return. IRS guidance is explicit that a bookkeeper who only gathers receipts, organises information and does data entry does NOT need one
• IRS Electronic Filing Identification Number (EFIN), separate from the PTIN, required to e-file returns; the IRS notes 'most preparers need both' and that the EFIN carries no fee
• IRS Annual Filing Season Program (AFSP) Record of Completion, voluntary, gives unenrolled preparers limited representation rights
• Voluntary credentials (not licences): AIPB Certified Bookkeeper (CB); NACPB Certified Public Bookkeeper (CPB); Intuit QuickBooks ProAdvisor certification
• Professional liability / errors & omissions (E&O) insurance, the SBA lists professional liability as the coverage for 'malpractice and negligence' claims
• General liability insurance and/or a Business Owner's Policy; cyber liability cover for holding client financial data; a fidelity bond or employee-dishonesty cover if you have access to client bank accounts or payroll funds
• Workers' compensation, unemployment insurance and (in some states) disability insurance, the SBA states these are legally required of 'every business with employees'
• State sales tax registration only in the minority of states that tax bookkeeping, accounting or data-processing services, check your state Department of Revenue, as treatment varies

Source: 1, 2, 3

What the margins look like

IRS Statistics of Income data for Tax Year 2022 nonfarm sole proprietorships show 'Other accounting services' (the category most bookkeeping practices fall into) with $5,219,695 thousand of net income on $12,833,573 thousand of business receipts, a 40.7% net margin, and 'Offices of certified public accountants' at $1,722,199 thousand on $3,862,033 thousand, a 44.6% net margin. Both are far above the 19.7% average across all US nonfarm sole proprietorships, but note that sole proprietors take no owner salary, so this figure is the owner's total pre-tax return for their own labour plus profit, not a corporate-style margin.

Source: 1, 2, 3

Whether demand is growing

Shrinking

Declining as an employed occupation but not as a service: BLS projects a 6% fall in bookkeeping clerk employment from 2025 to 2035 with about 144,100 openings a year still arising purely from replacement needs, and the growth is shifting toward higher-value advisory and CPA-adjacent work (accountants and auditors +5%, management analysts +10% over the same decade).

Source: 1, 2, 3

How big the market is

BLS projects employment of bookkeeping, accounting and auditing clerks to DECLINE 6% between 2025 and 2035, from 1,532,400 jobs in 2025, while employment of accountants and auditors over the same decade is projected to GROW 5%, the routine data-entry layer is shrinking while the advisory layer grows.

Source: 1, 2, 3

The part that ends most of them

Winning clients and pricing the work, not doing the work. The Federal Reserve's 2026 Report on Employer Firms (from the 2025 Small Business Credit Survey, 6,525 respondents) found 'reaching customers and growing sales' was the most commonly reported operational challenge across small employer firms. For bookkeepers specifically the second recurring difficulty is scope creep into tax and advisory work that a non-CPA may not legally hold out as providing in some states.

Source: 1, 2, 3

Before you start

• What it will cost you, since the numbers above are the category and not your version of it
• Sole proprietor, LLC or S corp, what actually differs, with no recommendation
• What your state wants filed, read from the state's own pages
• What you have to sell to break even, which decides whether the margin above matters
• Which way you actually work, if the choice between these is really a choice about you

A different business

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