Starting your own accounting firm is like starting any other business–it requires a lot of hard work. However, starting your own accounting firm can be a highly profitable and rewarding career move. The process of starting your own business can be long, confusing, and expensive, and without the right guidance, you might not end up with the business you envisioned. In this article, we'll give you an overview of everything you need to know about opening your own accounting practice.
1. Determine the type of accounting firm you want to start
First, you'll need to decide what type of accounting firm you want to start. There are many different types of accounting firms, each with their own strengths and weaknesses. There are four main types of accounting firms: public accounting firms, management accounting firms, government accounting firms, and internal audit firms. Each type of firm has its own unique set of challenges and opportunities.
There’s a good chance you'll already have a specialty based on your experience and skills, but if you don't, take some time to research the different types of firms to see which one is the best fit for you.
2. Find a niche for your services
Not every accountant does this, but finding a niche for your accounting services can significantly increase your earnings potential and overall efficiency. Since certain industries have unique accounting needs, they're often willing to pay a premium for an accountant who specializes in their industry.
For example, nonprofits need accountants who understand their tax-exempt status, and software startups require accountants who understand equity compensation. By knowing what kind of financial data your clients need to be successful, you have the opportunity to be more than just a bookkeeper–you can be a trusted advisor.
If you're not sure what kind of niche you should specialize in, think about the industries you're passionate about, your skillset, and the types of businesses you have experience working with. You can also research which industries are growing quickly and which ones are expected to have high earnings potential across all professions.
3. Register your business with the state
After you've decided on the type of accounting firm you want to start and found your niche, it's time to register your business with the state. This process is different in every state, but generally, you'll need to choose a business structure (e.g., sole proprietorship, partnership, or corporation), obtain a business license, and register your business name.
For accounting practices, LLCs and S-Corporations are the most common business structures. These business structures offer liability protection and tax advantages for single-member businesses and companies with few workers. You may also need to get a professional license to practice public accounting. If you're not sure what steps you need to take, contact your state's Secretary of State office for more information.
4. Get a tax identification number and open a bank account
Once you've registered your business, you'll need to obtain a tax identification number from the IRS to start paying taxes on your earnings. To do this, you can fill out and submit Form SS-04. You'll also need to open a business bank account to deposit your earnings and pay your business expenses. Most banks require that you have a Tax ID number before they'll open an account for your business.
When choosing a bank, look for one that offers free or low-cost checking and savings accounts, has low fees, and provides good customer service. You should also consider applying for a business credit card to help you manage your business expenses. Business credit cards often have higher credit limits than personal credit cards and offer rewards like cash back or points that can be used for travel. You'll also need to find accounting tools to help you with bookkeeping, invoicing, and tracking expenses.
5. Find an office to do business
If you're starting a small accounting firm, you may be able to work from home, but as your business grows, you'll likely need to find an office space to accommodate your employees and clients. When looking for office space, consider the location, size, cost, and amenities that are important to your business. You should also think about whether you want to lease or buy office space.
Leasing may be a better option if you're not sure how long you'll need the space or if you don't have the capital to buy an office outright. If you decide to lease, make sure to read the lease agreement carefully and negotiate key terms like the length of the lease, the amount of rent, and any options to renew or terminate the lease early. If you need help finding an office space, contact the Jeff Tabor Group to find the perfect place for your accounting firm.
6. Find new clients
If you're opening an accounting firm, you probably already have some clients lined up. but if you're starting from scratch, you'll need to find new clients to get your business off the ground.
There are a few ways to find new clients, including networking, online marketing, and cold-calling. Networking is a great way to meet potential clients and build relationships. You can network at local business events, Chamber of Commerce meetings, or online through LinkedIn and other social networking platforms.
Online marketing is another great way to reach new clients. You can create a website and use SEO to attract visitors to your site. You can also use social media to connect with potential clients and promote your business.
Creating informational content on TikTok, Instagram, LinkedIn, and your website is another good way to attract clients while building your personal brand. It also doesn’t have to be expensive, as you can produce content yourself with a smartphone.
Don't forget the old-fashioned way of finding new clients: cold-calling. This involves calling potential clients and trying to sell them your services. While it may not be the most fun way to find new clients, it can be effective if you're good at sales and have a thick skin, though you'll want to consider other channels as well.
Opening your own accounting practice can be a great way to control your own career and income. Before you start, there are a few things you need to do to get set up for success. Follow these steps and you'll be on your way to opening your own successful accounting firm.