Launching an accounting firm is a major achievement in anyone’s career. It requires hard work and an enormous investment of time, money and resources; however, the rewards can be immense if you take the plunge.
Selecting an Accounting Specialty
When starting an accounting firm, it is essential to select a specialty that appeals to potential clients. This may involve finding a niche where the company’s skills and experience meet the specific accounting needs of the client, according to tax software vendor Canopy.
Selecting a niche is essential to creating an effective marketing plan, which can help the business gain clients and expand. Accounting firms can market themselves to new clients by creating thought leadership presentations, teaching community education classes, and participating in professional networking groups.
Establishing a Legal Business Structure
Many accountants opt to incorporate their firms, either through the formation of an LLC or individual partnership. These structures shield owners from personal liability and reduce taxes and costs. Furthermore, they give the business a distinct identity and can serve as effective marketing vehicles.
When selecting an entity for your accounting firm, the type of work you intend to do and anticipated income generation are important factors to consider. A sole proprietor may not require incorporation; however, limited liability corporations or partnerships could be better suited for businesses with more varied operations.
Calculate Your Startup Costs
The cost to open an accounting firm varies based on several factors, including revenue goals, delivery methods and geographic location. According to Hugh Duffy – a marketing coach for accountants – on average it takes $50K in revenue for every $150,000 spent by an accounting firm.
Starting an accounting firm requires enough capital to cover the initial expenses for office space, equipment and advertising for at least a year. Having enough money in reserve will give you peace of mind that your business won’t collapse until it generates sufficient profit.
Start With a Few Clients
An increasingly popular approach for accountants transitioning from employee to entrepreneur is taking on some side work. This provides them with the chance to test out their firm before taking the leap from full-time staff member to owner.
Establishing a steady clientele is essential for building credibility that will ultimately boost the practice’s reputation and attract additional clients in the future. To maximize profitability, it is essential to strike an equilibrium between cultivating existing clients and prospecting for new ones.
Finding new clients is the best approach. Start by asking those who know you or your business well for referrals. Not only will this bring in plenty of potential business, but it can also help you locate and hire top accountants for your company.