For many people, their ultimate career goal is to be self-employed. The way they see it, if you have to work to earn a living, why work for someone else when you can build something of your very own?
For CPAs, becoming self-employed means starting their own practice. As with any other type of business venture, starting a CPA firm isn’t always going to be right for everybody. If you’ve been toying with the idea of striking out on your own, here are a few very important things you’re going to need to think about first.
Starting a business of any kind is risky and CPA firms are no exception. Not only is there a financial risk involved, but going solo means giving up the perks of working for others. Being self-employed can be liberating, but working for someone else means you at least have things like a steady paycheck and health insurance. (Not to mention benefits like paid vacation time and sick days.) As a business owner, you might not be able to draw a paycheck for a while. If you need that steady paycheck to support a family or can’t handle losing your health insurance, starting your own firm might not be the best idea for you.
What’s Your Plan?
Every successful business is based on a solid, well-researched business plan. There are a whole lot of questions you’re going to need to answer before you get started. Is there a particular type of service you’d like to specialize in offering? What types of clients would you like to work with? Do you want to have a business partner? Which type of business structure would be best for you? What are your business goals?
We all know it takes money to make money. But since so many businesses fail because of a lack of funding, it’s very important to make sure you’ve planned for all your initial startup costs. Some basic expenses that come with starting a CPA firm include an office location, equipment, software, marketing costs, and malpractice insurance. How do you plan to get the money you need to get started?
According to Build Your Firm, it typically costs over $50,000 to be able to generate $150,000 worth of new business. Of course, your exact costs will vary depending on many different things. Some of the biggest factors that impact your cost include things like location, if you’re buying an existing firm or starting a brand new one, or if you’ll be leasing office space or working out of your home.
Finding Your Clients
It goes without saying that your new firm is going to need some clients. But how do you plan on finding and reaching those clients? Do you have a list of clients you’ve worked with at other firms who you know are unhappy with the quality of service they’re receiving? Do you have a marketing strategy in mind? Another option Monster.com suggests is gaining clients by working with small and mid-size firms on a per-diem basis. Or do you have another idea in mind?
Your Skills Beyond Accounting
You may be a great accountant, but when you have your own firm, those skills will only take you so far. If you like the idea of starting your own firm as a way to have more control over your schedule, be aware that you might actually end up working more hours in the very beginning because of all the work that needs to be done beyond handling your client’s needs.
Business owners often need to fill many different roles when their business is in its earliest stages. As the owner of a firm, you’re going to need to handle things like marketing, recruitment, business development, and administrative work on your own; at least until you’re generating enough income to be able to hire someone else to do them for you.