What Bookkeeping & Accounting Services Should Your Firm Offer?

Deciding which accounting and bookkeeping services to offer depends on your knowledge, experience, and ability to take on additional work. Accounting services are typically offered by CPAs, while payroll, tax preparation, and bookkeeping services may not require this level of certification. It’s also important to make sure you have sufficient resources to handle the workload.

Choosing Which Bookkeeping & Accounting Services to Offer

Your educational background and work experience will play a large role in what services you decide to provide. In addition, whether you start out as a solopreneur or plan to hire employees or contractors right out of the gate will help determine how much work you can take on.

While there are a variety of services that you can offer, the primary ones to consider are bookkeeping, accounting, payroll, tax preparation, and advisory services.

Before you decide to offer one or more of these services to your clients, you need to have a certain level of knowledge about what’s involved and some expertise in carrying it out. For example, you should not add payroll as a service if you have never done payroll. While you might think you don’t need to know payroll if you plan to outsource it to a payroll company, you would be dead wrong.

Whatever services you decide to outsource to a third party, you should be somewhat familiar with how they work because your clients will have questions. Assuming your clients won’t have direct communication with the third party doing the work, you’ll be responsible for answering any questions about the services the third party is providing. In addition, you need to be able to review the work done by a third party to ensure it’s accurate.

The four primary bookkeeping and accounting services firms can offer are:

1. Bookkeeping Services

Bookkeeping services are focused on managing the day-to-day financial operations of a business. This includes recording all income and expenses, monitoring and recording liabilities (e.g., business loans or lines of credit), and managing accounts receivable and accounts payable. In addition to covering what’s included in bookkeeping services, we will provide information about the certifications and licensing required, staffing requirements, the benefits and drawbacks of providing bookkeeping services, and options available for outsourcing bookkeeping to a third party.

What’s Included in Bookkeeping Services

Bookkeeping services include billing customers, paying vendors and suppliers, reconciling bank accounts, organizing receipts and other key documents, and communicating with customers and vendor suppliers.

While the tasks may vary by firm, bookkeeping services will generally include:

• Billing customers: Creating invoices and applying customer payments using an accounting software like QuickBooks.
• Paying vendors and suppliers: Entering bills and paying them via check, ACH, or online using an accounting software like QuickBooks.
• Reconciling bank accounts: Categorizing banking transactions to the appropriate account (e.g., office supplies, meals, telephone expense) and reconciling bank account balances with the books.
• Organizing receipts: Creating a filing system to store receipts, contracts, and other key documents.
• Communicating with customers and vendor suppliers: Following up with customers who have unpaid invoices regarding payment status; contacting vendor suppliers with billing issues that may arise.

Certification & Licensing Requirements for Bookkeeping Services

There is no mandate that says you must complete a certain amount of hours of bookkeeping training before you can provide bookkeeping services. However, if you want to be successful and earn the trust of potential clients, you should have an associate degree or a bachelor’s degree, complete a bookkeeper certification program, or obtain an accounting software certification before offering bookkeeping services.

Completing one or more of the following certification programs will give you the knowledge you need to provide bookkeeping services:

• Associate degree or bachelor’s degree: At a minimum, you should earn a degree in business, accounting, or a related field before offering bookkeeping services.
• Bookkeeper certification: There are several bookkeeper certification programs on the market. We recommend the certification offered by the American Institute of Professional Bookkeepers (AIPB). The AIPB is a national organization that administers a four-part certification exam and requires two years of work experience as a bookkeeper.
• Certified accounting software advisor: Many of the top accounting software programs have a certification program you can complete to earn the Certified Advisor designation. For example, I am a Certified QuickBooks ProAdvisor. I earned this certification by successfully passing a QuickBooks exam.

Staffing Requirements for Bookkeeping Services

While you may not offer tax services, January through April will be the busiest time of year for you. This is primarily due to the fact that many small businesses will need help organizing their income and expenses for the previous year so they can give it to their tax professional to prepare their tax return. As a result, you will need more staff during the first four months of the year than the remainder of the year.

With the introduction of cloud accounting software, it is easier than ever to hire employees and contractors. Cloud accounting software, like QuickBooks Online, allows you to work from anywhere—all you need is an internet connection. You can easily give other users access to the client files they need to get their work done. You and your team can also work simultaneously in a client’s file, which makes your firm more efficient.

Benefits of Providing Bookkeeping Services

Like a number of industries, bookkeeping has benefited greatly from advanced technology such as artificial intelligence and cloud accounting. As a result, providing bookkeeping services has a number of benefits. As part of our research, we spoke with Mariette Martinez, EA, who has provided bookkeeping and tax preparation services for more than 10 years.

Martinez shared her thoughts on how artificial intelligence and cloud accounting have contributed to her firm’s success:

Automation Saves Time

FSB: One of the biggest changes in the bookkeeping field is the introduction of automation. How has your firm been able to capitalize on machine learning and other advancements in technology?

Martinez: “Five years ago, it would take me hours to enter transactions manually, and now I can simply connect my client’s bank and credit card accounts to their accounting software and the data imports in minutes!”

Many tasks, such as manually entering banking data, have been eliminated due to the integration of financial institutions with most accounting software. As a result, bookkeepers and accountants are able to reduce the amount of time spent manually entering data and focus that time on reviewing and analyzing the information to assist business owners with making decisions.

Virtual Software Tools Open the Door to Hiring Remote Employees

FSB: The ability to work virtually has saved many small businesses thousands of dollars that would have been spent in a brick-and-mortar office. How has your firm been able to take advantage of some of the virtual tools?

Martinez: “When I need help to get through the tax season, I will interview potential candidates using a virtual meeting room like Zoom. This has opened the door to allow me to hire remote employees. Once I bring new team members onboard, I set them up with a secure user ID and password so they can access the accounting software and other tools they need to do the job.”

Virtual meeting room tools allow you to go beyond your geographical location to find qualified employees. Cloud accounting software makes it possible to give other users access to your accounting and tax software by assigning a secure user ID and password. Instead of giving users access to everything, you can restrict users to specific areas of the program.

Cloud Accounting Software Fosters Mobility

FSB: Cloud accounting software has been a game changer. Just five or so years ago, many people didn’t really understand the concept of “the cloud,” and were often led to believe that it was not as secure as having data stored on your desktop computer. How has cloud accounting helped you in your practice?

Martinez: “Having access to my client’s data 24/7/365 has been amazing! Before the cloud, if I was out of the office and received a call from a client, I would have to tell them I would get back to them when I got back to the office. Now, I just open up my tablet, log in, and access the information right away. I can work from a coffee shop or the beach!”

Cloud accounting software gives you the flexibility to access your client’s data from anywhere. All you need is a mobile device and an internet connection. Having access to information from anywhere allows you to respond to clients in a more timely manner. Plus, you can review your client’s data simply by logging in. This eliminates the hassle of emailing a QuickBooks file or traveling to the client’s office.

Drawbacks of Providing Bookkeeping Services

While advancements in technology are beneficial for those providing bookkeeping services, there are a few drawbacks as well. Similar to providing tax services, the tax season can be brutal. A lot of the work that you will do will involve cleaning up someone else’s mess and dealing with clients who have unrealistic expectations, which can be challenging.

A few drawbacks of providing bookkeeping services are:

• Tax season can be brutal: As we mentioned, tax season is going to be your busiest season. Therefore, you will need to set expectations with family and friends that you will be working 12- to 18-hour days, seven days a week, from January through April.
• Mostly cleanup work: Nine out of ten clients who come to you will have their data in an accounting software, but it needs to be cleaned up because the person doing the books was not skilled at it. So you must be OK with fixing errors someone else made.
• Unrealistic client expectations: Tax time can be a stressful time for not only you, the practitioner, but for the small business owner as well. As a result, it is common for clients to expect you to complete 12 months’ worth of bookkeeping within two days. However, it is your job to set expectations with your client upfront.

Outsourcing Options for Bookkeeping Services

Now that you have a pretty good understanding of what’s included in bookkeeping services, the knowledge and expertise required, staffing requirements, and the benefits and drawbacks, you should also be aware that you don’t have to do it all on your own. If your business grows to the point where you just can’t manage all of the work and you haven’t had much luck with hiring reliable contractors or employees, consider outsourcing to a bookkeeping services firm.

A bookkeeping services firm like Bench for Accountants will partner with you to take on the day-to-day bookkeeping tasks for all your clients. The way it works is you pay Bench a monthly fee, which you will then pass on to your clients. You can decide if you want your clients to interact directly with Bench or if you will remain their main point of contact. Bench for Accountants also has a client dashboard that includes all of the financial reports and other pertinent data for each of your clients.

2. Accounting Services

In general, accounting services pick up where bookkeeping leaves off. Once all of the day-to-day transactions have been recorded, the certified public accountant (CPA) will review and analyze the financial statements. In addition to covering what’s included in accounting services, we will provide information about the certifications and licensing required, staffing requirements, the benefits and drawbacks of providing accounting services, and options available for outsourcing accounting to a third party.

What’s Included in Accounting Services

Accounting services include financial statement preparation, review, and analysis. It also includes making adjustments before closing the books. You could create budgets and forecasts, and file all federal and state tax filings.

Similar to bookkeeping services, the tasks included in accounting services may vary but will generally include:

• Financial statement preparation and review: This process includes reviewing and analyzing financial statements to help a business make economic decisions. The most common financial statements reviewed are the income statement, balance sheet, statement of cash flows, and the statement of changes in equity.
• Fiscal year-end adjustments and closing the books: The accountant will typically make year-end adjustments to record depreciation for fixed assets, inventory adjustments if you sell products, and make any other corrections necessary before producing financial statements. If you close the books monthly, these adjustments will be made on a monthly basis.
• Budgeting and forecasting: For companies that want to gain better control of their costs, creating a budget for income and expenses is ideal. Every month or quarter, you can provide budget versus actual reports to your clients so that they know where they stand and can make adjustments if needed.
• Federal and state tax filings: As a CPA, you don’t have to file tax returns. However, if you are providing the bookkeeping or accounting work for a client, it makes sense to prepare their tax returns and all state and federal tax filings. This would include, but is not limited to, sales tax returns, payroll tax returns, business license renewal, and property tax filings and payment.

Certification & Licensing Requirements for Accounting Services

At a minimum, you should have a degree in accounting to ensure you have the knowledge and expertise to provide accounting services. Similar to the bookkeeper certification, a CPA license will give you the credibility you need when it comes to taking on new clients. The CPA is regulated by an organization called the State Board of Accountancy. The requirements to become a CPA vary by state; to learn more, check out this state board of accountancy list for more details.

Staffing Requirements for Accounting Services

If you are a CPA or you have one on staff, you probably won’t need to hire additional staff in order to provide accounting services. However, as your business grows, you may need to hire additional staff to assist with performing the accounting duties. Similar to bookkeeping, you can give another CPA access to your client data so that they can perform their duties from their office.

Benefits of Providing Accounting Services

Most accountants and CPAs who do bookkeeping work also provide accounting services since they go hand-in-hand. The benefits of providing accounting services are very similar to the benefits of providing bookkeeping services. The ability to work virtually, use cloud accounting software, and the low startup cost are just a few of the benefits.

The benefits of providing accounting services are:

• Low startup cost: Like bookkeeping services, you can do accounting work at your client’s office or in your home office. Since there is no need to rent office space or hire a team of people, your overhead costs can remain low. As long as you have a reliable computer, internet, a printer, and the software that you need, you’re in business.
• Not limited to geographical location for new clients: As we have mentioned, technology has made it so that we can do business with anyone in the world. By incorporating virtual meeting tools combined with the ability to access client data via cloud accounting software, you can have clients located all over the world.
• Cloud accounting: Cloud accounting software like QuickBooks allows you to easily log into client accounts, review client data, make adjustments, and produce financial statements without having to leave your office

Drawbacks of Providing Accounting Services

If you provide bookkeeping services to your clients, adding accounting services is a logical next step. However, there are a few drawbacks to providing accounting services. Tight deadlines that require long hours are common. There is the risk of a client coming after you if you make a mistake. Finally, most of the work you will do will involve cleaning up the mistakes made by non-accountants.

Common drawbacks of providing accounting services are:

• Requires tight deadlines: Most small businesses will hire an accountant to prepare financial statements and close the books in preparation of filing their tax returns. This typically means that you have a very short window of time to get the work done.
• Creates potential professional liability: Similar to bookkeeping services, if you make a mistake, you could be liable financially if it results in penalties, fees, or interest to your clients. Therefore, you must purchase professional liability insurance to ensure that your clients can’t come after your personal assets.
• Includes a lot of cleanup work: Part of the accounting work you will do will involve cleaning up mistakes made by someone who is less knowledgeable about bookkeeping and accounting. However, this can be a great opportunity to show them the mistakes so you can reduce the amount of cleanup that may be required in the future.

Outsourcing Options for Accounting Services

If you provide bookkeeping services but you don’t have the expertise to do the accounting work or you just don’t have the bandwidth, hire someone else to do it for you. However, I recommend that you do your research to find a local CPA you can trust to not steal your clients, or hire a firm that provides virtual CFO services.

When outsourcing accounting services, it’s important to find a firm that provides services complementary to those you offer. It’s not a good idea to hire a firm offering the exact same accounting services because of the potential of losing clients to the company you hired. It’s best to establish reciprocal relationships, where you give some business to them and they give other business to you.

3. Payroll Services

Generally, you won’t offer payroll services when you first start your bookkeeping business. However, once you get a client who needs to pay employees, it’s something you should consider offering. In addition to what’s included in payroll services, we will provide information about the certifications and licensing required, staffing requirements, the benefits and drawbacks of providing payroll services, and options available for outsourcing payroll to a third party.

What’s Included in Payroll Services

Payroll processing includes creating paychecks for each payroll, completing and filing payroll tax forms, making payroll tax payments, and filing payroll tax returns. Providing employees with their annual W-2 form so that they can file their taxes is also included.

The tasks for payroll services will generally include:

• Processing payroll: Calculating payroll checks weekly, bi-weekly, or monthly, printing payroll checks, or submitting direct deposit payments.
• Completing federal and state payroll forms: Completing all federal and state payroll reporting requirements.
• Paying taxes and filing payroll tax returns: Reporting all payments made to employees and remitting payroll tax payments as required.
• Preparing and sending annual W-2 forms: Providing all employees with their total earnings on Form W-2.

Certification & Licensing Requirements for Payroll Services

Payroll is one of those areas where you don’t need to be certified in order to provide the services. However, before you consider providing payroll services, you should have previous experience managing payroll or you should take a few classes to learn how to do payroll. The rules on how payroll should be handled differs by state, which is why you need to invest the time to learn everything you can.

The Employment Development Department (EDD) offers classes to teach small business owners how payroll works. I’ve taken a few of these classes and they are very good.

Staffing Requirements for Payroll Services

As mentioned previously, payroll is an additional service you can offer to your clients on top of bookkeeping and accounting services. In general, you won’t need to hire additional staff to provide this service. Instead, you will need to invest the time to learn how to manage payroll, or you could use a payroll service like Gusto for Partners, which we will discuss later on in this section.

Benefits of Providing Payroll Services

There are a number of benefits to providing payroll services. If you are already providing accounting and bookkeeping services to your clients, offering payroll is an easy way to increase your billable hours without having to go out and get a new client. The best part is that if a small business doesn’t have employees in the beginning, they will at some point hire an employee as the business grows and expands.

The benefits of providing payroll services are:

• Add-on service for existing clients: If you are already doing the accounting and bookkeeping for a client, payroll is an easy service you can provide once your client starts to hire employees. Make sure your clients are aware that you provide payroll services. This way, they will automatically come to you for this service when they hire their first employee.
• Easy setup: If you’re using a cloud accounting software like QuickBooks, you can easily turn on the payroll feature. You can choose to have your client billed directly or you can pay for the service and then pass the cost onto your clients. Most payroll programs offer wholesale pricing to accountants, which makes it very lucrative for the bottom line.
• No certification required: As we mentioned previously, there is no certification required for payroll. You can learn what you need to know by taking a few classes at the Employment Development Department (EDD) or by signing up for a tutorial with the payroll software company that you use.

Drawbacks of Providing Payroll Services

Like accounting and bookkeeping, there are a few drawbacks to providing payroll services to your clients. Payroll is something that must be done on time, every time. If you don’t provide employees with their paychecks on the date they expect them, there are huge consequences. By the same token, you must make payroll tax payments on time or you will have to pay late fees and penalties.

Three drawbacks to providing payroll services are:

• Strict deadlines: As discussed, payroll is one of the areas where there is zero flexibility when it comes to meeting deadlines. Payroll must be processed on time so that employees can receive their paychecks. Payroll taxes must be paid on time to avoid penalties and interest.
• Liability: If there are miscalculations in paychecks or payroll taxes, you are ultimately responsible. Therefore, we recommend that you purchase liability insurance to protect yourself if you should have to pay penalties or interest due to errors in payroll tax payments or tax returns.
• Stay current on rules and regulations: It’s important you stay on top of new rules and regulations that affect how employees are paid (e.g., if there is a minimum wage mandate or minimum number of sick days an employer must provide to employees in certain states). The best resource for this type of information is Employer.gov for federal regulations and your local EDD office for state matters.

Outsourcing Options for Payroll Services

You can make offering payroll services more manageable and profitable with a payroll provider like Gusto for Partners. As an accountant, you get paired with a dedicated advisor who’ll help you get set up, migrate existing clients (for free), and serve as an ongoing consultant. You clients will also love Gusto’s affordable pricing, automatic tax filing and reporting, and the ability to offer benefits to their employees, all with one product.

Visit Gusto

Gusto’s dashboard makes it easy to manage multiple payroll clients and add new ones

4. Tax Services

Unlike payroll services, which tends to be something you add on after you have been in business for a while, tax preparation services is something that you could offer right out the gate. As a matter of fact, it might be the only service you choose to provide. In addition to what’s included in tax services, we will provide information about the certifications and licensing required, staffing requirements, the benefits and drawbacks of providing tax services, and options available for outsourcing tax work to a third party.

What’s Included in Tax Services

Tax services will typically include preparation of business and personal income tax returns. You may also choose to do sales tax and payroll tax returns if that is something your clients need. Tax resolution and planning are additional services that you should consider offering.

Tax Services will generally include:

• Income tax return preparation: If you have clients who are sole proprietors, their business and personal taxes are one and the same. However, you may also have clients who are partnerships or corporations, and you will have to complete their personal tax return along with their business tax returns for them.
• Payroll tax returns: In general, this will include filing Forms 940 and 941 along with any state reporting requirements.
• Sales tax returns: For clients who collect sales tax from their customers, you will need to complete their sales tax returns and submit them as required.
• Tax resolution: Tax resolution consists of assisting clients with filing back taxes, getting them set up on a payment plan to pay off their tax bill, or representing a client in an audit.
• Tax planning: Consulting with your tax clients on what they can do to maximize their tax deductions in order to reduce their tax liability.

Certification & Licensing Requirements for Tax Services

Providing tax services requires that you are knowledgeable about how the tax code works and are up to date on the most recent revisions to the tax laws. If you are not a CPA, you will need to become an Enrolled Agent (EA). Similar to the CPA exam, the enrolled agent exam is a comprehensive exam that ensures you understand the tax code and can apply it in a variety of situations.

Staffing Requirements for Tax Services

If you don’t have the expertise to provide tax services, you may need to hire an Enrolled Agent (EA) or CPA who can review and sign off on tax returns. You may also need to hire a couple of contractors to do the manual data entry into the tax software. The beauty of tax season is that you would only need the additional staff for the tax season, January through April. You may also need additional staffing when extensions are due in the fall.

Benefits of Providing Tax Services

The advancements in technology, such as cloud tax software and cloud storage options, as well as the fact that tax season is only four months out of the year, are all benefits of providing tax services. If you also provide bookkeeping and accounting services, you have access to all of the information you need to prepare your client’s tax returns.

Some of the benefits of providing tax services are:

• Tax is generally a seasonal business: The fact that the tax season is only four months out of the year is a benefit because you can make a ton of money in a short period of time.
• Consider using cloud tax software: Similar to cloud accounting software, there are tax software products that allow you to give other users access so that you can hire workers who can work remotely.
• Implement cloud storage: You no longer have to wait for clients to drop off their “shoebox” of receipts. Instead, you can set your clients up with a receipt scanner app so they can take a picture of their receipts and store them in the cloud.

Drawbacks of Providing Tax Services

There are a few drawbacks to providing tax services. First, there is the liability that you could incur if you make any errors that result in additional interest and penalties. As discussed previously, you will need to purchase professional liability insurance to ensure you are covered. Second, the tax season is essentially a four-month period. As a result, there is little room for error and no flexibility when it comes to the tax return deadline.

Some of the drawbacks of providing tax preparation services are:

• Liability: Exposure to interest and penalties for errors or omissions in tax returns. Invest in professional liability insurance to make sure that you are covered.
• Tight deadlines: Similar to payroll, there is very little wiggle room when it comes to the deadlines for filing tax returns. This is one of the reasons why the work hours are so brutal. You’ve got a short window to prepare and file hundreds of tax returns—all due on the same day.
• No work and life balance: The number of hours that you will put in during tax season can be brutal. On average, you will work seven days a week, 12 to 18 hours per day for four months. This leaves very little room for a personal life.

My colleague, William Perez, a writer at Fit Small Business and a tax practitioner for 20 years, summed it up like this:

“Tax season can be horrible because you work long hours with no days off, you will always have those clients who will call at 9 p.m. expecting someone to pick up the phone, and you will have to accept the fact that chasing down missing documents and information comes with the territory. The hardest part about preparing tax returns is getting your clients to give you everything that you need, and the easiest part is sitting down to actually fill out the forms.”

Outsourcing Options for Tax Services

If you don’t want to deal with the drawbacks of adding tax services to your firm, you’ve got a few options. You can partner with a local CPA or EA and refer your clients to these folks. Similar to outsourcing accounting services, partner with a firm that does not offer tax services. That way, you don’t have to worry about them stealing your clients. I recommend that you partner with someone who does not provide the same services that you do.

Frequently Asked Questions (FAQs) About What Bookkeeping Services Your Firm Should Offer

The most frequently asked questions about what accounting services your firm should offer are:

How much should I charge for bookkeeping services?

Based on a study published by ZipRecruiter, the average national rate for a bookkeeper is $23 per hour. If you are a certified bookkeeper, licensed CPA, or EA, you will be able to charge more. To learn more about what to charge clients for bookkeeping services, check out our Freelance Bookkeeper Rates guide.

How do I get bookkeeping clients?

There are several ways to get bookkeeping clients. You can partner with local practitioners who don’t offer the same services as you, create professional social media accounts to market your business, join meetup groups, and ask your existing clients for referrals. For more ideas, check out our How to Get Bookkeeping Clients guide.

What does a bookkeeper do for a small business?

Bookkeepers handle the day-to-day business transactions for a small business. This includes managing accounts payable and accounts receivable, and reconciling bank accounts. Bookkeepers will also do clerical work such as keeping organized files for paper receipts, customer invoices, and vendor supplier bills.

How do I start a bookkeeping business?

Starting a bookkeeping business doesn’t have to be complicated. In fact, we’ve broken the process down into eight easy steps. Read our article on how to start a bookkeeping business for the details.

Below are the eight steps to start a bookkeeping business:

1. Become a certified bookkeeper
2. Create a business plan
3. Incorporate your business
4. Establish your business operations
5. Select an accounting software
6. Get funding
7. Set up your home office
8. Market your bookkeeping business.

Bottom Line

Now that you have more insight into what’s included in providing additional services like accounting, payroll, and tax preparation, you need to decide which services to offer in your firm. Remember, you can always start with bookkeeping and then gradually add additional services when or if you have clients who require them.