Opening any kind of startup is a road rife with risks and challenges, and starting your own accounting practice is no exception. Opening an accounting firm presents a great deal of hurdles to jump. If done correctly, the right entrepreneur can create a successful practice that provides credible, high-quality accounting services that demand competitive rates.
Funding Your Startup
If you don’t have the resources to begin your own firm, you’ll need to consider lending options. Before approaching lenders, you’ll be tasked with creating a detailed business plan. Within your plan, you’ll need to include the goals for your firm, the target audience you’re hoping to attract, services you’ll offer, and how you’ll market your new firm to potential clients. Your business plan must also include details on your projected costs and revenues, including the expenditures dedicated to office setup, including equipment and leasing space.
There are a variety of ways to go about finding small business loans: you can pursue a loan for your small business from the SBA, or try less traditional lending methods like angel investing or hard money. General estimates advise that those starting their own accounting firm have at least $50,000 set aside—in many areas, this is enough to get the business up and running. Keep in mind that almost any accounting practice will be cash flow negative during the development phase, so you’ll need to have enough aside to handle your living expenses, including your mortgage payments, food, continuing education, and more.
If you’re not already a CPA, it’s important to get certified before opening your own firm. In most states, it’s the first requirement for setting up a practice. This means taking the difficult CPA Exam, which is composed of four parts and can see candidates taking years to complete. If you’re already licensed, be sure to check in with local requirements, because some states and cities require accounting firms to first acquire a business license.
Cultivate a Strong Team
You’ll want to keep your roster as minimal as possible to begin with; generally the CPA (you) runs the show, picking up employees as necessary. When you do hire, consider interns or young professionals new to the field. Hiring a team of CPAs off the bat can see you spending hundreds of thousands of dollars on first-year salaries alone. Instead of hiring experienced professionals that come with a higher price tag, consider investing time and money into promising new accounting professionals and interns that work within your firm. Offer to pay for the exam preparation materials and foot the bill for the exam fees.
Companies like CPA Exam Guy offer review courses that can help candidates prepare for their CPA Exam. This small investment is more than worth the prestige your company and roster will earn from having numerous CPAs on staff, and your employees will be encouraged by your commitment to fostering their personal growth; happy employees make for better companies, and even accounting firms can benefit from this logic.
Consider Software Needs
Like virtually every other field and industry, technology advancements are changing the landscape of the accounting world. Cloud computing is becoming more popular within the industry, and there’s never been more selection in terms of accounting software. There are numerous types of software products that can help you support your clients through your own services, including invoicing, project management, payroll options and more. Consider FreshBooks accounting software as a starting point and expand your software opportunities from there.
Finding New Clients
If you don’t plan on hiring a small business marketing company, you’ll need to become a marketing aficionado yourself. Before beginning your marketing schemes, make sure you target a specific type of client you’re hoping to obtain. If you’re hoping to specialize in tax preparation, you may want to target young professionals who need first-time filing help. Show your desired client the services you can offer them to entice more business.
Launching an accounting practice is a challenging task, but if you can manage to find the right location, hire the right team, and attract the right clients, it promises great rewards.