How to Start a Transcription Business
Transcription is a service used by many businesses, law firms, and medical professionals. If you are an excellent typist and writer with good grammar skills, starting your own transcription business could be an opportunity for you to make a good living and be your own boss.
A transcription business converts speech into a written document. The speech can be either live or recorded video or audio files. It is often used by businesses to record meetings, speeches, or other important conversations. Lawyers may use the service to document court proceedings, and physicians may use it to document patient notes that they record.
Many companies outsource this type of work to independent contractors as they may not have enough work to hire a full-time person or lack office space.
A transcription service offers a lot of flexibility as it can be a part-time side job to earn extra money, or it can be a full-time career and you can transcribe anywhere.
According to Grandview Research, the transcription market size in the U.S. was $19.8 billion in 2019 and is expected to grow at a rate of 6.1% per year to reach $32.7 billion in 2027. The transcription industry has grown steadily for the last five years.
While the sales in the industry are expected to increase, the U.S. Bureau of Labor Statistics (BLS) projects there will be a 2% decline in the number of jobs over the next decade. Speech recognition software continues to improve, and competition from companies outsourcing overseas are the leading factors leading to this decline.
Data Entry Business
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The amount of data used by companies has driven a need to record data accurately, driving the demand for transcription services. All sorts of organizations need to ensure data and record-keeping accuracy, including government agencies, corporations, and non-profit organizations.
The target market for a transcription service will be companies that need to have documented data and records.
Checklist for Starting a Transcription Business
If you’re thinking about starting your own transcription business, there are a few things you should keep in mind. Here is a checklist of the essentials to get started.
Step 1: Write your Business Plan
After coming up with the idea, the next step in starting your transcription 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.
Related: How to write a business plan
Step 2: Name the Business
Finding the perfect transcription 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 Entity
A business entity refers to how a business is legally organized to operate. There are four primary business entities to choose from, which include the sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.
When deciding on which business entity is best for a transcription service, it normally comes down to the sole proprietorship and Limited Liability Company.
A partnership opens the owners up to unnecessary personal liability because if a partner does something to get the business sued, or runs off with cash from the business, the other partners are personally liable to repay. The corporation can be a good choice because it separates the business assets from the owner’s assets. If the corporation is sued or certain business debts can’t be paid back, the owners aren’t personally responsible to repay them. The downside to the corporation is that it is more complicated than all the other entities and requires more administration than the LLC. If you plan on raising a lot of investment though, the corporation is usually the better choice.
That leaves the sole proprietorship and LLC.
The sole proprietorship is the least expensive and easiest entity to start which is appealing. The downside is the owner is personally liable should anything happen to the business, which is an important consideration. The LLC offers the ability to operate as a sole proprietorship with the liability protection of a corporation. Depending on the state, the cost to form an LLC runs from $40 – $500, which is pretty inexpensive for protecting the owners from business-related lawsuits and certain debts.
Related: Guide to forming your LLC
Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.
Some popular LLC formation services include:
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Step 4: Select your Location
Most transcription businesses can operate from their home office as dedicated commercial office space isn’t usually necessary.
Related: Choosing a business location
Step 5: Apply for Business Licenses and Permits
While there is no licensing specifically for a transcription business, there are general business registrations you may need. A few common ones include a local business license and Employer Identification Number.
Some specialty areas like legal transcription and medical transcription require schooling and certifications. Medical transcriptionists, for example, will need to successfully complete a two-year associate’s degree program in medical transcription.
Related: Common business licenses, permits, and registrations by state
Step 6: Open a Business Bank Account
Keeping your small business and personal finances in separate bank accounts is important to track the income and expenses of your business and identify trends.
Many banks offer free business checking accounts, so be sure to find a cost-effective option for your business.
Step 7: Get your Marketing Plan in Place
Getting transcription work may be challenging for a new business. There are marketplaces like Upwork and Fiverr where companies look for a freelance transcriber to complete a project. There are also transcriptionist marketplaces like Rev, Quicktate, and TranscribeMe, though they often have lower pay rates than working directly with companies. These online platforms can be an excellent place to start, but eventually, with some experience under your belt, you should be able to get more consistent and higher-paying work.
A transcriptionist business can also market directly to local businesses with direct mail, attend Chamber of Commerce events, and market online with social media platforms like LinkedIn and Facebook. Having a nice-looking website is essential as you may get local clients searching for this service.
Related: Low-cost ideas to market a new business
Every business is going to need a logo. Make a professional logo in no time with the free logo makers from BrandCrowd and Canva.
Step 8: Get Business Insurance
There are a few types of insurance to consider when starting a transcription business. A couple of these include:
– 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.
The cost to insure a transcription business will vary on several factors. 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.
Step 8: Hiring Employees
You may need to hire additional transcribers to help run your 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 transcription 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.
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How much does it cost to start a transcription business?
Here are some of the typical costs you will face when you open a transcription business.
– Relable computer or laptop – $1,000 – $2,000
– Solid internet connection – $30-$50/month
– Foot pedal to control audio – $100
– Transcription software – $0 – $500
– Transcription course (optional in many cases, but will allow for higher paid work) $3,000 – $15,000
– Medical transcription certification (optional) $2,000 – $4,000
– Business cards, flyers, and other marketing collateral – $50-$100
How profitable is a transcription business?
Your revenue will vary depending on the type of transcription jobs you are able to take on. A general transcriber will earn less than a medical transcriptionist or someone providing legal transcription work. In addition, the amount of time you can put into your daily transcription work will influence earnings as well.
Generally, when providing general transcription services, you can charge $1 – $2 per audio minute (or live time). If you can transcribe 4 audio hours per day, 5 days per week at $1.50 per minute, you would make $93,600 per year.
What skills are needed to run a transcription business?
Experience. Transcription experience is extremely valuable, but not required. You also need to have excellent writing and grammar skills and be able to type quickly. Here is a free transcription training course to help get you up to speed!
Typing skills. Transcriptionists need to have a high typing speed and be extremely accurate.
Education. If you plan to specialize in healthcare or medical transcription, you should become certified.
Business knowledge and experience. You will need to have at least some basic knowledge of marketing, finance/accounting, and human resources.
People skills. You’ll need to be able to build rapport with your customers so that you retain them as customers and keep them coming back.
Are there grants to start a transcription business?
It’s extremely rare to find a grant to start a transcription company. If you search for business grants, you will come across a lot of scams and misinformation. Occasionally an organization will offer grants to start a business, however, be skeptical and don’t provide any sensitive personal information or pay money to get more information.
Legitimate federal grants can be found at Grants.gov and you can check on your state’s economic development office to see if they have any grants available.
What is the NAICS code for a transcription business?
The NAICS code for a transcription business is 561410, which is classified under Document Preparation Services.
The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.