Starting an accounting firm allows you to chart your own professional path while also enjoying the freedom and control that comes with being your own boss. Accounting is also one of the most profitable small businesses one can start.
Starting a business necessitates a significant amount of research and effort. As a result, when deciding how to start your accounting firm, many factors must be considered.
1. Choosing an Organizational Structure
For an accounting firm, the type of business entity you choose has legal and tax implications. You can form a Limited Liability Company (LLC), Professional Limited Liability Company (PLLC), or Professional Corporation if you plan to be the sole employee of your company (PC). If you want to start an accounting firm with a partner or partners, the Limited Liability Partnership (LLP) structure is a good option.
2. Examining Commercial Insurance
The formation of a formal business entity reduces an owner’s liability for business debts and lawsuits. It will not, however, protect your personal assets if you are sued as a business owner for your own wrongdoing or negligence.
Fortunately, you can now purchase additional protection for your accountant by purchasing insurance online. This can be tailored to your specific requirements, giving you peace of mind so you can concentrate on growing your business.
3. Taking into account business licenses and permits
Depending on the services you intend to provide, you may need to take the CPA exam to obtain a CPA certificate and practice license.
You can, however, run an accounting firm without having a CPA certificate. Even so, you won’t be able to provide auditing or assurance services. Furthermore, each state has its own set of educational and experience requirements before allowing someone to work as a CPA. So, before you begin, make sure to review your state’s specific rules.
4. Constructing a Business Plan
As with any small business, developing a business plan is essential when starting an accounting firm. Begin by asking yourself why you’re doing this and what your end goal is.
Knowing why you’re starting a business can help you not only write a solid business plan, but also figure out how you’ll structure your company, define your target market, and make financial projections.
5. Creating a Budget Plan
The development, monitoring, and management of a budget are critical to a company’s success. It will be easier to allocate resources where they are needed if you have a budget framework in place before you start your accounting firm.
To begin, keep in mind that the requirements and costs of forming a business entity differ from one state to the next. Then consider operational costs, sales volumes forecasted, revenues, assets, liabilities, and cash flows. It may appear difficult at first, but calculating and estimating what you are likely to earn and spend during the budget period is critical.
6. Estimating the Cost of Your Services
Your accounting services should not be priced at random. It must be deliberate and strategic. At the very least, you should think about the size of your company, the scope of your work, and the area in which you are located when approaching potential clients.
Additionally, consider factors such as the value of your services to the target market, profit margin maximisation, and competitiveness. Take a look at and evaluate some common pricing structures used by other accounting firms to get you started.
7. Obtaining an Employer Identification Number (EIN)
When starting a business, whether it’s an accounting firm or any other type of business, you’ll need to get an Employer Identification Number (EIN) (EIN). Your business entity will be identified by this number, which is also known as the Federal Tax ID Number. It’s a must-have because you’ll need it for tax filing and reporting, as well as opening a business bank account.
8. Open a bank account for your business
Separating your personal and business finances is crucial, but as an accountant, you already know this. After you’ve registered your business with the state and obtained an EIN, you’ll have everything you need to open a business bank account.
Final Thoughts
It’s just as difficult to start an accounting firm as it is to start any other business. However, after you’ve gone over all of the must-do items, there’s one thing you need to keep your eye on finding new clients.
Because your customers are at the heart of your business, consider advertising across a variety of mediums, using social media to your advantage, beating competitors’ prices, coming up with new ways to save customers money, and being active in your community.
Learn more from business and read Advice For Starting A Developer Business.
