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Starting your own accounting business

November 18, 2010

Even in a tight economy, CPAs, accountants and bookkeepers are in high-demand. 

In January 2010 the Bureau of Labor Statistics (BLS) reported a list of the 10 occupations expected to provide the greatest number of new jobs over the next decade – and accountants were on the list. The BLS attributes the growth to a rise in the number of new businesses, new financial laws and regulations, and more intense scrutiny of corporate finances.

Many accountants dream of setting their own work hours, maximizing their income, and becoming their own boss.  Now is a great time for anyone who has considered starting his or her own accounting practice to take the plunge.  

Any new business needs a plan

It’s cliché because it’s true: If you fail to plan, you plan to fail. Robert Krummer, Jr., chairman of First Business Bank in Los Angeles said, "The business plan is a necessity. If the person who wants to start a small business can't put a business plan together, he or she is in trouble.”

Business plans generally include the following:

•    Executive summary
•    Company description
•    Descriptions of products and/or services
•    Market and sales analysis
•    Strategy and implementation of your products and/or services
•    Management summary
•    Financial plan

It may sound overwhelming, but you’ll be surprised at how creating a business plan will help you better define your business and give you the plan necessary to succeed.  

Either as part of the business plan, or apart from it, you should create a marketing plan. If you don’t have a marketing plan, chances are you’ll struggle reaching your revenue desires, and if you don’t get many clients, your business will likely fail. Even if you’ll be marketing on a shoestring budget, you need to know what marketing strategies you will use so you can start to attract new clients.

Another critical part of the business plan would be the choice of a business name and location. A business name should be memorable and allow for the possibility of future expansion. The location might begin at home for a bookkeeping business, or in a centrally located office building for a tax preparation service.

Setting up an accounting practice

In addition to the traditional activities required for setting up a small business, there are some details to take into consideration that are specific for the accounting industry.

Your first task is to determine your business structure. Most practitioners begin and operate as a sole proprietorship, due to the simplicity and low cost involved. There are no particular forms that need to be filed, and the only cost will probably be your business license. For information on what is required to start a company in your area, visit your city or county clerk’s office.  

Of course, if you plan to have a partner, or wish to secure the benefits of a corporation or LLC, then you’ll want to contact an attorney to set up the business structure that best fits your needs.

Depending on the type of accounting practice and services you will offer, there are state and national regulations associated with accounting practices. Check with all professional associations, including the AICPA, to determine which apply to you, and make sure you are in full compliance.

Next, make sure you have the appropriate technology in place to start your accounting business. Luckily, accountants and bookkeepers simply need the basics – a computer, printer, telephone, fax machine, and perhaps a copier. Of course, good accounting software such as QuickBooks Pro is essential, and you must understand how all accounting programs work and how to integrate them.

Extra training may be a good idea, depending on your level of expertise. Consider continuing education courses or special training.  If you are opening a tax preparation business, you certainly want to be up to date on current tax law.  

How to find clients

Clearly, in order to grow your business to full-time status, you need clients. Depending on your current employment situation, let your clients know you are starting your own practice. If possible, send them all a letter with the details of your new business.

If you do not have any clients yet, start by telling family and friends about your services.  Pass out your business card, tell your own friends and family about your plans; take advantage of every opportunity to let people know about your business.

There are many other marketing strategies to choose from. Consider some or all of the following:

•    Flyers: Especially for basic services such as a tax preparation business, canvassing the neighborhood with flyers can be an inexpensive way to find new clients.
•    Press release: Notify your local papers of your new business with a press release, which is a short article announcing your new business.
•    Network: Three common organizations provide a forum for effective networking. They include your local Chamber of Commerce, various industry associations, and professional networking groups such as Business Network International (BNI).  
•    Word of mouth: Word of mouth has proven to be a primary source of customers regardless of business type. In marketing, nothing is as good as a positive referral from a happy customer.  
•    Find a niche market: Clients are always looking for accountants or tax preparers who are “experts” in their field. Choose a field and become an expert in accounting and taxes for the medical profession, real estate, insurance, or others.
•    Signs: A sign on your home or office building is a simple way to attract new clients.  
•    Public speaking: Offer to present on accounting and tax topics at local meetings such as Elk’s or the Chamber of Commerce.

Find and Use Free Resources
Those interested in starting their own accounting-based business should take advantage of the many free resources that are available today on the Internet:

•    Accounting, Bookkeeping & Small Business Forum
•    Accounting & Bookkeeping Tips Newsletter
•    Accounting Today’s & WebCPA’s Managing a Practice
•    Internal Revenue Service
•    National Association of Tax Professionals (NATP)
•    American Institute of Certified Public Accountants (AICPA)

Building a solid accounting practice

Take care in the initial steps of setting up your own accounting business. You may never recover from legal problems or a poorly written business plan that fails to consider the current market landscape. However, if you plan well, you can build a successful, profitable accounting and tax business.

Allen Bostrom is the chief executive of Universal Accounting and an expert in business management. He is the author of In the Black, and Red to Black in 30 Days.

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