Start a transcription business by following these 9 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple step guide to starting your transcription business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
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 are the startup and ongoing costs?
- Who is your target market?
- How long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a transcription business?
The costs involved with opening a transcription business are variable. At the most basic level, starting your business from home means that you will need nothing more than the computer you already have and a foot pedal to allow you to start and stop audio without your hands: such pedals typically cost between $40 and $100. At that point, the only thing you are missing is clients, and it's not uncommon to find clients by simply calling them, emailing them, or visiting them directly and leaving a business card, and it's easy to print out 500 or more business cards for less than $30.
However, depending on what field you want to specialize in, there are some additional potential costs. Those going into medical transcription may choose to become certified in order to attract more customers. Such certification requires you have an Associates degree in medical transcription and then pass the Registered Medical Transcriptionist (RMT) certification exam, and doing both of these may cost thousands of additional dollars. Keep in mind that tuition rates will vary, but it is possible to defray some of these costs via Federal grants and loans so long as you are taking at least six credit hours per semester.
What are the ongoing expenses for a transcription business?
Aside from the hours, the most attractive thing about a transcription business is that there really aren't any ongoing expenses. Working from home means things like rent and utility are one and the same with what you already pay, and you'll be using the computer you already have (albeit with the addition of a foot pedal). Aside from periodically printing more business cards and visiting local potential clients, most of your marketing and outreach will be conducted for free online, requiring little in the way of monthly expense.
Who is the target market?
One of the benefits of a transcription business is its variable clientele. Depending on your area and any fields that you may specialize in, your ideal customer types will vary. Generally, though, major businesses and corporations make for good, steady clients. This is because they have a larger number of employees and a larger number of projects which may require your services. And, of course, your own quality service to them may result in a steady stream of work.
How does a transcription business make money?
A transcription business makes money by charging its clients for the act of transcribing the documents. The exact payment arrangement may be negotiated between yourself and the client, such as receiving a flat fee for the amount of minutes transcribed or billing them according to the number of hours that it took you to complete the transcription.
How much can you charge customers?
While you can set any amount to charge your clients, it's good to stay competitive with other businesses. As such, it's good to charge between one and two dollars per minute of audio that you transcribe. You may consider charging more for certain special requests (such as recording time stamps, transcribing extremely difficult audio, and so on).
How much profit can a transcription business make?
As alluded to before, your overall profitability hinges on how fast you can type and how many projects you can handle. Average speech includes about 130 words per minute, and a speedy typist may be able to type 65-75 words per minute. This means that even on the low end of both billing clients and typing words, you'll be making a minimum of thirty dollars an hour, not counting time spent editing your work (which, for those good with grammar, will not be long at all). And, as mentioned above, the vast majority of what you take in is pure profit due to the lack of ongoing expenses.
How can you make your business more profitable?
Most ways of making your business more profitable come down to improving your typing speed. This may mean reducing any distractions around your home office area and creating keyboard macros for familiar phrases, saving you time. Becoming more adept at keyboard shortcuts has a similar motivation as the foot pedal: it reduces your need to remove hands from your keyboard. Finally, you will become more profitable the longer you work. This is because you'll become a faster typist, your network will grow, and you will eventually have as much work as you could ever desire!
What will you name your business?
Choosing the right name is very important. 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.
After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your transcription business is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
For most small businesses forming an LLC is a great option, but if you still want to weigh all your options check our our article, What Structure Should I Choose for My Business?
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!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
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
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment 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.
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.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a transcription business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
In addition, certain local licensing or regulatory requirements may apply. For more information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
Release of Liability
To avoid liability and potential lawsuits, transcription businesses should have their clients sign a release of liability. Here is an example of one such form.
Recommended: Rocket Lawyer makes it easy to create a professional release of liability form for your transceription business when you sign up for their premium membership. For $39.95 per month, members receive access to hundreds of legal agreements and on call attorneys to get complimentary legal advice.
Services Contract (e.g. MSA)
Transcription businesses should require clients to sign a services agreement before starting a new project. This agreement should clarify client expectations and minimize risk of legal disputes by setting out payment terms and conditions, service level expectations, and intellectual property ownership (who will ultimately own the content, and how any royalties will or will not be distributed). Here is an example of one such services agreement.
STEP 7: Get Business Insurance
Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
How to promote & market a transcription business
It's good to have a website to help market your business; it's easier than ever to create a free website, though money permitting, you may consider hiring a professional. Having features on your site such as informative blogs and newsletters is a good way to increase your site's perceived value while bringing in more customers. Having a business presence on social media is another fast and free way to make your presence in the community known. Finally, use email to contact potential clients from around the world, and don't forget that your own city likely has a number of potential clients that would love to work with someone local, so it's always worth it to call or visit them.
Recommended: Get started with local advertising for your business with a $300 credit from Yelp.
How to keep customers coming back
Due to the nature of this business, the absolute best way to attract and retain customers is to provide quality service. Your existing customers will prefer to come back to someone they know as good, and they will also tell other potential clients about your quality. Also, don't forget to become a real part of the online community, from emailing potential clients to advertising your business via blog comments to guest blogging in your chosen field. Basically, anything that gets your name and voice out there is likely to help you net customers.
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Start A Transcription Business In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
This business is great for those who like to work at their own schedule and pace. While certain transcription services, such as court reporter, may require stricter scheduling requirements, most of the work involves transcribing audio or video that has been provided to you. As such, the job is also ideal for those who type fast and are comfortable using computers and other related software and technology.
What happens during a typical day at a transcription business?
The most basic day-to-day activities of a transcription business are to transcribe speech, edit the document, and then deliver it to clients. Beyond that, most activities would include things like making contact with prospective customers, corresponding with existing customers, and advertising and managing your business.
What are some skills and experiences that will help you build a successful transcription business?
The primary skill to help you build your business will be the speed with which you type. If you are not naturally a fast typer, classes (both online and offline) can help you develop this fundamental skill. Similarly, having a very solid grasp of English and grammatical rules can save you time: many transcribers rely on proofreading via services like Grammarly, but being able to edit your own work with accuracy will speed things up. Obviously, good listening skills are a bonus, as audio quality from files you are sent may not always be great. Finally, any formal training in transcription, from either previous work or from formal schooling, can be a major asset.
What is the growth potential for a transcription business?
The growth potential for a transcription business is variable. Specializing in a certain kind of transcription can actually maximize job security; for instance, medical transcription has been a field that has truly boomed within the last 10 years. However, the general growth potential comes down to the persuasiveness of your marketing and the speed of your typing, as the more work you do and the more clients you take on results in steady growth.
TRUiC's YouTube Channel
For fun informative videos about starting a busines visit the TRUiC YouTube Channel or subscribe below to view later.
Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a transcription business?
You're going to be spending a lot of time typing at your computer, so it's good to invest in a comfy chair and a comfortable and more ergonomic keyboard. While nothing requires you to use special software, use of transcription software can save you time. And time, in this business more than many others, is definitely money. Finally, as with many businesses, make sure you and the client both know what the client wants, particularly when it comes to any special formatting requests for the transcription itself.
How and when to build a team
Deciding to build a transcription team is tricky business. There are a great many major transcription companies out there, so many people who want to work as part of a larger team may already be drawn to those endeavors. However, if you reach a point where you have more clients than you can reasonably service, you may consider taking on a partner or small team. This can allow you to have the best of both worlds because you can churn out more transcripts under your company's brand while still allowing everyone to work from home, eliminating the need for expensive overhead each and every month.