What to Know Before You Start Your Own Accounting Firm
Dan Levenson March 30, 2018
As an accountant or CPA, you may have considered opening your own accounting firm. Luckily, the Bureau of Labor Statistics predicts your profession will continue to enjoy a high demand in the next decade. That means you have a good chance to succeed as an employee, employer, or self-employed professional.
Starting your own firm will give you a chance to build a great company from scratch, take more control over your income and working life, and introduce your innovative ideas to clients.
What to Consider Before Starting Your Own Accounting Firm
If the idea of working for yourself appeals to you, take a moment to consider these tips before you get started with your venture:
Are You Ready for Self-Employment?
An Accounting Today article recounted the story of a self-employed accountant who had begun his business two decades ago and never looked back. While he remained happy with his choice, he watched some of his peers struggle with a similar course of action.
He used this experience to suggest some questions that you might ask yourself before you decide which course to take:
- What’s your main motivation to work for yourself?
- Can you stay focused without a boss?
- Do you have a specialty that can offer you a competitive advantage against larger firms?
- Can you handle risk and absorb startup costs?
If you have a good reason to venture out alone, are self-motivated, believe you can offer something better and different to clients, and have realistic expectations about your income potential in the early days, you will have a good chance to succeed.
Develop Your Business Plan
You need to create a business plan to force yourself to think about your business goals, what you hope to achieve, and how you attend to achieve it. If you hope to attract funding or other business partners, you need to have a professionally crafted business plan to establish your legitimacy.
If you’ve always worked for an employer, you may not have experience developing business plans. You can use our Small Business Plan Worksheet to help you get started.
Consider All of the Costs
Once you consider the costs of starting your own business, you may decide to adjust your tactics. If your employer maintains a fancy office downtown and employs both accountants and support people, you may decide you can’t afford that sort of investment right away. That’s fine because you can begin your accounting firm in a home office or even in a co-working space. These days, you can even work remotely for small business clients, so you may not even have to be located in the same city, but you may need to invest in the right software and technology to get started.
If you don’t already have a few clients to prime the pump, you may also need to invest in marketing. Some accountants begin prospecting for their own clients on the side while they are still employed by another company. That way, they know they will already have income when they decide to cut the strings and begin their full-time journey into self-employment.
Don’t Forget About Insurance for Your Accounting Firm
As an employee, your employer may have picked up the bill for your professional liability insurance, worker’s compensation, and even cyber insurance. As a solo accountant or new business owner, you should take time to learn about risk management. Most small businesses and startups rely on insurance to protect them against unanticipated threats.
If you plan to hire employees, you may also need to buy insurance to cover them if they work in your office, or to protect them if they travel to visit clients. You may not have considered such coverage as commercial car insurance or employment liability before, but you can bet that your current employer has.
If you depended upon such company benefits as life insurance, health insurance, and a retirement plan, you may need to replace them on your own as well.
Before you begin your new accounting firm, speak with an insurance agent with experience covering small firms like yours. These professionals should help you by suggesting affordable coverage that can protect your company against unexpected hazards. Otherwise, one disgruntled employee, car accident, or computer virus can threaten all of your hard work.
When’s the Best Time to Start Your Own Accounting Firm?
Most people who have already started their own accounting firms would suggest having some savings or other funding to cover your first few months in operations before you can start collecting regular receipts.
If you already have clients lined up, they can offer you additional security. Otherwise, you are free to start enjoying the control and freedom of owning your own business. Just don’t forget to manage unforeseen hazards by speaking with an insurance professional.