How to Start a Back Office Support Business

Start a Back Office Support Business by following these 10 steps:

1. Plan your Back Office Support Business
2. Form your Back Office Support Business into a Legal Entity
3. Register your Back Office Support Business for Taxes
4. Open a Business Bank Account & Credit Card
5. Set up Accounting for your Back Office Support Business
6. Get the Necessary Permits & Licenses for your Back Office Support Business
7. Get Back Office Support Business Insurance
8. Define your Back Office Support Business Brand
9. Create your Back Office Support Business Website
10. Set up your Business Phone System

We have put together this simple guide to starting your Back Office Support Business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

Exploring your options? Check out other small business ideas.

STEP 1: Plan your business

A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:

• What will you name your business?
• What are the startup and ongoing costs?
• Who is your target market?
• How much can you charge customers?

Luckily we have done a lot of this research for you.

What will you name your business?

Choosing the right name is very important. Read our detailed guide on how to name your business. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.

What are the costs involved in opening a Back Office Support Business?

Industry leaders report that many new back office support businesses fail early on because they invest too heavily in unnecessary tools. Startups are encouraged to carefully consider the sector they wish to enter when developing a business plan. Once they have identified that, they will have a clearer understanding of how much space and equipment they need and if it is necessary to hire a team.

When first starting out, it may be possible to manage your business out of a home office. Necessities include a computer, high-speed internet, a dedicated phone line, and software geared towards the services you offer. As the need for a larger workforce grows, it will be necessary to move into an office space. Each employee will need their own headset and computer, and your payroll expenses will increase. Additionally, since managing your clients’ needs successfully is directly tied to employee performance, you will want to look into workforce management tools such as project management, performance tracking, and call conferencing software.

What are the ongoing expenses for a Back Office Support Business?

As with any organization, you will need to budget appropriately to ensure maximum profit. As the business begins to grow, you will need to hire additional employees and move into a space large enough to fill your expanding needs. Payroll, health insurance, business insurance, rent, and equipment maintenance and repair should all be budgeted for.

Who is the target market?

Traditionally, back office support businesses have serviced large organizations. The last decade, however, has broadened that scope to include small and mid-size businesses. The research phase of developing your business plan should focus on specific sectors and where organizational needs are not being met. Once you have identified these needs, you will be better equipped to determine where your skills and knowledge are most needed.

How does a Back Office Support Business make money?

The revenue generated from your back office support business comes from each company you take on as a client. The two parties will come to a fee agreement based on the scope of services provided and the number of employees required to successfully complete these services. Some support businesses specialize in a specific function that supports various industries, while others tailor their services to specific industries, such as retails, financial services, or healthcare.

How much can you charge customers?

Again, there is no blanket rule for developing a fee structure as support costs are directly tied to the scope of each project. A business that offers accounting support for small to mid-size businesses may charge $89 a month, while IT support may charge $100 to $200 per user per month. Startups are encouraged to carefully consider their monthly expenses when setting customer prices.

How much profit can a Back Office Support Business make?

How much profit can a back office support business make?

Back office support businesses that are managed effectively stand to deliver significant profits and long-term success. A one-man accounting service that charges 40 clients a monthly fee of $89 will earn $3,560 in monthly fees. The IT company that charges $150/user with 300 users will generate a monthly revenue of $45,000.

How can you make your business more profitable?

The key to maximizing profits is to keep overhead costs low. Business owners should work closely with a financial adviser to ensure quality service is maintained. As you gain more knowledge and experience, you will want to consider offering additional services. For instance, if you offer IT services, perhaps you could expand by taking on a web developer.

STEP 2: Form a legal entity

The most common business structure types are the sole proprietorship, partnership, limited liability company (LLC), and corporation.

Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your Back Office Support Business is sued.

You can form an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.

STEP 3: Register for taxes

You will need to register for a variety of state and federal taxes before you can open for business.

In order to register for taxes you will need to apply for an EIN. It's really easy and free!

There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.

STEP 4: Open a business bank account & credit card

Using dedicated business banking and credit accounts is essential for personal asset protection.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.

Open a business bank account

Besides being a requirement when applying for business loans, opening a business bank account:

• Separates your personal assets from your company's assets, which is necessary for personal asset protection.
• Makes accounting and tax filing easier.

Get a business credit card

Getting a business credit card helps you:

• Separate personal and business expenses by putting your business' expenses all in one place.
• Build your company's credit history, which can be useful to raise money later on.

STEP 5: Set up business accounting

Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.

Make LLC accounting easy with our LLC Expenses Cheat Sheet.

STEP 6: Obtain necessary permits and licenses

Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.

Federal Business Licensing Requirements

Certain state permits and licenses may be needed to operate a Back Office Support Business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.

State & Local Business Licensing Requirements

Certain state permits and licenses may be needed to operate a Back Office Support Business business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.

STEP 7: Get business insurance

Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.

There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.

Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.

Is this Business Right For You?

Do you have a lifelong dream of owning your own business? Do you possess a targeted skill set and the experience necessary to help other businesses work towards reaching their short and long-term goals? Do you possess the necessary drive and financial means to turn your visions into reality? If so, you have what it takes to launch a successful back office support business.

What happens during a typical day at a Back Office Support Business?

The day-to-day activities of your new business will vary depending upon the type of support you offer.

The most common back office support services include:

• Customer service - inbound and outbound calls via trained industry professionals
• Website development and IT services
• Marketing and search engine optimization (SEO) services
• Transcription
• Medical coding and billing
• Data entry

Regardless of which industries you serve and what services you offer, your role is to ensure each client’s account is handled timely and professionally. Your team should be thoroughly trained, with a clear understanding of the client’s expectations.

What are some skills and experiences that will help you build a successful Back Office Support Business?

Launching this type of business requires strong business acumen and leadership qualities. Successful business owners must possess an unwavering commitment to both their business and that of their clients. Adaptability, problem-solving, and a willingness to continuously learn and grow will, ultimately, define your organization’s long-term success.

What is the growth potential for a Back Office Support Business?

As more and more data regarding the successes of back office outsourcing becomes available, an increasing number of organizations are transitioning over to this strategy. This movement has led us to what is now known as the “gig economy” - a shift that is expected to achieve over 18% growth by 2024. The growth and earning potential for these businesses is limited only by the leadership’s vision and drive.