Opening your own accounting firm takes more than just exemplary math skills. If you’ve been in the field for a few years, and feeling the itch to start your own practice, know that operating a successful business means more than education and experience – it means thorough understanding of business-building as a whole. If you’re ready to pursue the autonomy of self-employment, read through this how-to guide to be fully prepared before diving in.
Step 1: Check Your Requirements
States require licensing for all firms that offer public accounting services. You, as the owner and manager of the firm, must have a CPA license and apply to your state’s board of accountancy to register the firm. As the sole proprietor of an accounting firm, you’ll have to meet the minimum education and experience requirements to obtain a CPA license. All 50 states will require at least a Bachelor’s degree to qualify for the license. Additionally, some states might mandate a minimum of 150 credit hours in a specified accounting program. As a candidate, you must qualify for the license in addition to passing the Uniform CPA Examination. Consult your state’s legislation to determine your exact requirements for starting a small business.
Step 2: Allocate Funds and Support
Entrepreneurship is an incredibly difficult endeavor. Aside from passion and persistence, you will need a significant amount of capital to launch your firm. As a general rule of thumb, you should have enough funding for a year’s worth of operation before starting the firm. Calculate how much it will cost to establish an office outside of the home, dependent on geographic location. Include the costs of technology, such as tax preparation software for CPAs and office equipment, as well as what it’ll take for successful advertising. Don’t forget to factor in your own general living expenses to your overall budget. When you have your number, decide where to get the capital – from your own funds, or with the help of an investor? Either situation entails serious responsibility, so be sure to receive the support of your family and friends before making a steep business decision.
Step 3: Develop a Business Plan
Do not proceed in opening your own CPA firm unless you have a clear picture of your company’s role. Your business plan must be formally written, and include: your firm’s revenue goals, the accounting services the firm will provide, the niche market you intend to target, and a mission statement. Having clear goals and a well-defined target audience will be the key elements to making your business work. If this is your first venture into opening your own business, consider using a business plan template to help better turn your vision into a reality.
Step 4: Strategize Your Marketing
You might have a few loyal clients that support your new firm, but for your business to grow, you’ll need to attract new clients through effective advertising. Use your existing clients for referrals and testimonials to build your firm’s rapport. The American Institute of CPAs offers a marketing toolkit you can use as a resource for assistance in communication efforts. Decide on which platforms you’ll use to get your firm’s name out there – television, newspapers, billboards, bus stops, and social media are all viable options depending on your goals. Most importantly, decide who you are marketing to and tailor your advertisement campaigns to that audience.
Step 5: Put on all the Hats
As an entrepreneur opening your own CPA firm, you’ll be doing very little accounting in the beginning. You might be brilliant in payroll or tax preparation, but are you ready to take on all the tasks involved in starting a business? You’ll need to be savvy in finances with respect to negotiations and contracts. To reel in new clients, you have to be a pro at marketing and sales. When your printer stops, you’ll be your own IT support, and when someone’s dissatisfied, you are your entire HR department. In the beginning, you’ll need to wear a large number of hats that are likely outside the role you’re used to occupying.
At the end of the day, consult both your head and your heart before opening your own CPA firm. The rewards can be bountiful, but the risks are also tremendous. If you decide you’re ready to take on clients for your small accounting business, be sure to follow this how-to guide to avoid potential pitfalls.