The Ultimate Guide to Starting an Accounting Practice
So, you’ve been in the accounting industry for a handful of years and have grown tired of working for someone else. Have you ever considered hanging your shingle and starting your own accounting practice? Here, we’ll walk you through all the essential steps to launch a successful accounting practice, including the important questions to ask yourself, business requirements, valuable resources, and more.
What are the benefits of opening your own accounting firm?
Not every accounting professional sets out with the goal of starting an accounting firm. Many can and have led long and successful careers, joining the ranks of an already existing firm. And while this could very well be the case for you, owning your own accounting firm does have its own share of substantial rewards.
If you find you are a more independently-driven person, starting your own firm could be a perfect choice. After all, as the owner, you essentially become your own boss. You call the shots in terms of what you want your firm to do, and how you wish to serve your clients.
This also means you have a lot more freedom when it comes to work hours, as well as location. In our new hybrid work environment, it's entirely possible for many professionals to perform their work remotely, allowing them more time to spend with their families or performing errands. If you’re the boss, you have no one to answer to for requesting time off or choosing where to work—it’s up to you!
Perhaps the most obvious benefit to opening your own accounting firm is the financial rewards. Since you’re not being employed by anyone else, you stand to take home the lion’s share of the profits your business would make. And you’ll have the freedom to make key decisions as far as how to invest that money into your business.
Make sure this is what you want
It's very important to note that opening a new business is not easy. It’s an incredibly risky endeavor that requires dedication and commitment for it to have any chance of success. You’ll be subjecting yourself to a great deal of stress as you manage several aspects of the business on your own (at least until you have enough revenue to begin hiring other staff to assist you). Sit down and truly ask yourself, “is this what I really want to do with my career?” Make sure you can answer this question with confidence.
If you’re not entirely sure, you can benefit greatly from working for another firm for several years to get the necessary experience you’ll need. Sharpen your accounting skills in an environment where you are a pivotal part of the machine, rather than the primary driver of the business. You can use this experience to inform your decisions when and if you venture into the world of setting up an accounting practice.
How to start an accounting firm: Step-by-step guide
If you’re certain that opening your own accounting firm is the path you need to take, this section will give you an overview of all the necessary steps you’ll need to take to get your business off the ground.
Step 1 - Create a business plan
Your business plan is your go-to playbook that defines what you hope to accomplish with your business and what will be required to get it off the ground. This written plan will also be essential when pitching your upcoming accounting firm to prospective investors.
This plan should include the following:
Who your clients will be: Define your target market. This is perhaps the most important step, as you’ll need to do research on this to decide what services you’ll provide and where you’ll be operating.
A demonstration of your credentials: This can include successful cases working for other firms, your CPA certification, and anything that shows that you’ll provide a competitive advantage for your clients.
A financial estimate: This needs to include not only your estimated cost of services, but the costs for marketing, costs for employees, and any other overhead costs. If you’re uncertain about what to put here, do some local research on how much it costs to start an accounting firm in your area.
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Aside from a written business plan, this is the stage where you’ll want to knock out other requirements to open an accounting firm. These include acquiring a Federal Tax ID for your new business, operation licenses, as well as a business bank account and business insurance. You’ll also want to ensure you’re well aware of any laws and regulations of running your business in your area, especially any related to the type of accounting you intend to practice.
Step 2 - Build your client base
Of course, you can’t expect your new venture to have any chance of success without its most critical element—clients! Without clients, your business will have no source of income. Thankfully, you have a wealth of options to build a customer base.
One of the most common recommendations amongst seasoned accounting professionals is to acquire clients through word of mouth. Speak to any customers you’ve worked with before, whether it be through a previous accounting practice or through any other business venture, and see if they know anyone who is in need of the services you’re providing. If they had a positive experience working with you before, there’s a good chance they’d be happy to send you more business from their friends or family. Best of all, word of mouth marketing often doesn’t cost you a dime, and can prove to be incredibly fast and lucrative if you get in touch with the right people.
Aside from finding referrals, you can also do your new business quite a bit of good by networking with your peers. Attend conferences and industry events to meet with other accounting professionals in your field. There’s a good chance someone you’ll meet there will know a potential client or two that could be sent your way. Plus, there are always benefits to hearing about the latest trends and practices happening in the accounting world that could fuel the direction of your new business.
Finally, there’s always plenty of ground that can be covered by employing solid digital marketing practices. Make sure that your new accounting firm has its own dedicated website and a Google listing at the very least. If you don’t have one of these up and running, your business may as well be invisible to prospective clients searching for accounting services online.
Step 3 - Take advantage of technology
Technology has become a must for running a modern accounting practice, particularly in our current hybrid work environment, where both in-person and remote business dealings have become the norm. As you begin to research, the sheer number of options when it comes to accounting technology can be daunting. To keep things simple, it's best to start with the essentials, and then branch out as you begin to learn what your technology needs are.
Modern accounting practices of any kind can benefit from using a cloud-based practice management solution like TaxDome. These powerful solutions have features such as client portals, online invoicing, document management systems, and more. Armed with a solid practice management solution, accounting professionals will have a robust set of tools that can help make their practice a success.
Aside from practice management, it’s absolutely essential that you implement an online payment solution, like CPACharge. These solutions let your clients pay invoices using a debit card, credit card, or eCheck. Secure information is encrypted and transmitted directly between financial institutions, which keeps it from being compromised. CPACharge in particular integrates with a variety of other software solutions valuable to an accounting practice, including TaxDome.
The process of starting a business is no small undertaking, and many entrepreneurs find that they struggle more than they need to without a solid plan. The steps outlined in this guide will help you establish a solid foundation and plant the seeds for a successful accounting practice.
Learn more about how CPACharge can help you kick-start your new accounting practice by scheduling a demo today!