How to Start a Data Entry Business

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Quick Reference

Data entry is a service used by many businesses to record data for information tracking and other purposes.  If you are an excellent typist and writer with good grammar skills, starting your own data entry business could be an opportunity for you to make a good living and be your boss.

Business Overview

Data entry jobs involve entering data into various formats for companies. Data could be from handwritten documents or data that will be consolidated into databases or spreadsheets for record-keeping or analysis.

Industry Summary

According to Technavio, the data entry outsourcing services market will grow by $351.8 million from 2019-2023.  According to Ardem, the global data entry market size was $4.3 billion in 2019.


Industry Trends

More and more companies are outsourcing their data entry needs to independent contractors to save payroll expenses and reduce the need for office space.  Companies are using data more and more to gain customer insights and make business decisions, which will drive the demand for data entry services into the foreseeable future.

Target Market

Your target market will be companies that need to have documented data and records.

Skills, Experience, and Education Useful in Running a Data Entry Business

There are several specific skills that you will need to open a data entry business.

  • Experience.  Experience doing data entry is valuable.   You also need to have excellent writing and grammar skills and be able to type quickly.
  • Business knowledge and experience.  You will need to have a basic understanding of marketing, finance/accounting, and human resources.
  • People skills. You’ll need to build rapport with your clients so that you retain them as customers and keep them coming back.

Costs to Start a Data Entry Business

The cost to start a data entry business is very low, and you may already have what you need to accept work. A few items include:

  • Good computer or laptop – $1,000 – $2,000
  • High-speed internet connection – $30-$50/month
  • Webcam
  • Software such as Microsoft Excel, Word, Access, and others depending on the client’s needs – $10/month

Steps to Starting a Data Entry Business

Step 1: Write your Business Plan

After coming up with the idea, the next step in starting your data entry business should be to write a business plan.  The business plan will make you focus on some important aspects of the business, such as who your customers are, how you plan to reach them, projecting sales and expenses, your value proposition to use for marketing, and more. You’ll also need to do some research to calculate exactly what your startup expenses will be and what your ongoing expenses will be.

Not only will a bank require you to have a business plan if you need financing, but multiple studies have shown that having a good business plan increases the odds of starting a successful business. Writing the plan helps you think through all the aspects of the business and then serves as a guide as you begin.

How to write a business plan
Free sample business plans

Step 2: Name the Business

Finding the perfect data entry business name can be challenging. Not only does the name have to reflect what you do and be appealing to customers, but it also has to be available to use. You can check your state’s website to see if the name is available and register your name.  Your name should make you stand out, reflect your brand, and tell potential customers exactly what you do.

Step 3: Form a Business Structure

A business structure (or legal entity) refers to how a business is legally organized to operate. There are four primary business entities to choose from, which include a sole proprietorship, partnership, corporation, and Limited Liability Company (LLC).  Each type of entity has its own pros and cons, such as protecting the owner’s personal assets, costs, and administrative requirements.

RelatedComparison of Business Entities

Step 4: Select your Location

You can operate your business from home.

Related: Choosing a business location

Step 5: Apply for Business Licenses and Permits

There are no business licenses specifically for a data entry business, however, there are general business licenses that may be needed, such as a local business license, Employer Identification Number (EIN), and more.

Related: Common business licenses, permits, and registrations by state

Step 6: Open a Business Bank Account

Keeping your business and personal finances in separate business bank and credit card accounts makes it easier to track the income and expenses of the business.

Step 7: Get your Marketing Plan in Place

Many data entry companies can find work on freelancer platforms like Upwork and Fiverr. While these services are convenient in finding companies looking for this type of work, the platforms take a small percentage of every job.

Once you gain some experience, word of mouth will spread. Additionally, sending direct mail and making calls to local companies, networking at Chamber of Commerce events, online advertising on social media platforms like LinkedIn, Facebook, and paid online advertising are all ways to spread the word about your business.

Related: Low-cost ideas to market a new business

Step 8: Get Insurance

A data entry business may need several types of insurance for full coverage:

General liability insurance can help protect you from third-party claims of bodily injury and property damage.

Professional liability insurance protects you from claims of professional errors or negligence that result in a financial loss.

Worker’s compensation insurance covers expenses like medical bills and legal fees that a business might face if an employee were ever hurt while working.

Insurance policies will vary. To get the most accurate idea of what to budget for insurance, request quotes from multiple providers. When comparing the quotes, consider not only the premiums but also how the plan exclusions, coverage limitations, and deductibles compare.

Related: Common types of insurance a business may need

Step 9: Hiring Employees

You may need additional staff members to help you run your data entry business.  Make sure that you select people with appropriate experience and training.

In addition to salary costs, your budget will also need to include other employee-related expenses. Workman’s comp insurance, unemployment insurance, and paid time off are common expenses that a business will need to cover when hiring staff.

Related: Hiring your first employee

Step 10: Set up an Accounting System

Setting up an accounting system for your data entry business is critical to the long-term success of your business.

Staying on top of taxes not only keeps the business out of trouble with the government but the numbers can be used to track and monitor trends and cash flow in the business and maximize profits.

Related: Setting up accounting for your business

How much can you potentially make owing a data entry business?

Generally, companies will pay you by the hour.  Your rate will depend on what type of data entry you are doing. Prices range from $10-$20 per hour.  If you can get enough data entry work (or want) to be full-time and charge an average rate of $15 per hour, you would make $31,200 per year.

Higher rates can be charged to clients in the healthcare industry, but be sure to research the data security requirements to avoid HIPPA violations later.

Things to consider before starting a data entry company

Running a data entry business or any business will have its challenges.  You need to be prepared and make sure that you know what you’re getting into.

Marketing and acquiring customers will be your biggest challenge and an ongoing expense. Your best bet will be to start calling businesses directly.

Use common sense and be careful when searching for data entry work. There are a number of scams for work-at-home data entry opportunities.

Competition in this industry is fierce. You will have competitors in other countries who will work for low pay, so speed, accuracy, and completing work by the client’s deadlines are critical.

Talk to other business owners for tips on starting a business and do your homework to determine costs.  Research other data entry businesses to see what they offer and what prices they charge.

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