Mark Stewart is the in-house Certified Public Accountant, an accomplished author and financial media specialist.
Published on February 9, 2022 Updated on February 14, 2024
$2,350 - $12,300
$100,000 - $1.5 million p.a.
Time to build
0 – 3 months
$90,000 - $300,000 p.a.
Accountants provide tremendous value to businesses, individuals, and families, which is why it’s a $120 billion industry in the US alone. If you’re a certified public accountant (CPA) and tired of working for someone else, why not take the leap and start your own accounting firm? You’ll have more control and your income potential will be unlimited. In fact, some financial analysts rank accounting firms as the most profitable type of small business.
While accounting will of course be a crucial element of the business, you’ll need to know a great deal more before starting your own firm. Fortunately, this step-by-step guide provides all the information you’ll need to supplement your expertise and put you on your way to accounting success.
Looking to register your business? A limited liability company (LLC) is the best legal structure for new businesses because it is fast and simple.
How much does it cost to start an accounting firm?
If you’re already a CPA and have a reliable computer, you can start your own firm from home for about $2,300. If you need to take the CPA exam and want to rent an office space and purchase a computer, you’ll spend about $12,000.
You’ll need to meet education and experience requirements, which vary by state and are extensive, to take the CPA exam. To take the exam and become certified costs about $1,500. The entire education, experience, and exam process will take 6 to 7 years if you’re starting from scratch. You can get your education at any college or university that offers an accounting program, and there are online self-study courses to help you prepare for the exam through places like the International Association of Cerftified Professional Accountants (IACPA).
Even if your business is mainly online, as a US-certified CPA you can, for the most part, only provide services to clients within the US, as other countries have different rules and regulations and certification requirements. A handful of countries, such as Australia and New Zealand, have mutual recognition agreements (MRAs) that enable you to provide services to clients in those countries.
You’ll need a handful of items to successfully launch your accounting firm, including:
Setting up a business name and corporation
$150 - $200
Business licenses and permits
$100 - $300
Business cards and brochures
$200 - $300
$1,000 - $3,000
Initial marketing budget
$500 - $1,000
$0 - $1,000
$0 - $2,500
$300 - $700
Office space rental
$0 - $3,000
$2,350 - $12,300
How much can you earn from an accounting business?
The average hourly rate of a CPA is about $200. Working from home, your profit margin should be about 90%.
In your first year or two, you could work from home for 10 hours a week, bringing in more than $100,000 in annual revenue. This would mean more than $90,000 in profit, assuming that 90% margin. As your brand gains recognition, you could add other accountants to your staff and have 150 hours of work per week. At this stage, you’d rent an office space and hire additional office staff, reducing your profit margin to around 20%. With annual revenue of more than $1,500,000, you would make an impressive $300,000.
What barriers to entry are there?
There are a few barriers to entry for an accounting firm. Your biggest challenges will be:
Having accounting education and a CPA designation
Facing a highly competitive market
Related Business Ideas
If you’re still not sure whether this business idea is the right choice for you, here are some related business opportunities to help you on your path to entrepreneurial success.
Now that you know what’s involved in starting an accounting firm, it’s a good idea to hone your concept in preparation to enter a competitive market.
Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.
Why? Identify an opportunity
Research accounting firms to examine their services, price points, and customer reviews. You’re looking for a market gap to fill. For instance, maybe the local market is missing a CPA firm that provides internal auditing.
You might consider targeting a niche market by specializing in a certain aspect of your industry, such as the financial elements of succession planning.
This could jumpstart your word-of-mouth marketing and attract clients right away.
What? Determine your services
You can decide to specialize in small business accounting or personal tax accounting. You can also decide if you want to offer a full range of accounting services or if you want to specialize in something like taxes.
How much should you charge for accounting services?
Accounting services run anywhere from $100 to $500 per hour, but as a CPA you should be able to begin with a rate of $150 or $200. Once you have an office, after you pay rent, payroll, and overhead, your profit margin should be around 20%.
Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.
Who? Identify your target market
Your target market depends on whether you plan to specialize in personal tax accounting or small business accounting, or another element of accounting. If you specialize in businesses, you can find small business owners on LinkedIn.
Where? Choose your business premises
In the early stages, you may want to run your business from home to keep costs low. But as your business grows, you’ll likely need to hire workers for various roles and other accountants, so you’ll need to rent out an office. Find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices.
When choosing a commercial space, you may want to follow these rules of thumb:
Central location accessible via public transport
Ventilated and spacious, with good natural light
Flexible lease that can be extended as your business grows
Ready-to-use space with no major renovations or repairs needed
Step 3: Brainstorm an Accounting Business Name
Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.
Here are some ideas for brainstorming your business name:
Short, unique, and catchy names tend to stand out
Names that are easy to say and spell tend to do better
Name should be relevant to your product or service offerings
Ask around — family, friends, colleagues, social media — for suggestions
Including keywords, such as “accounting” or “CPA”, boosts SEO
Name should allow for expansion, for ex: “Accounting Solutions Group” over “Small Business Accounting Solutions”
Avoid location-based names that might hinder future expansion
Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these.
Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that set your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.
Step 4: Create an Accounting Firm Business Plan
Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:
Executive Summary: Outline the goals and strategies of your accounting firm, emphasizing its commitment to providing professional accounting, tax, and financial consulting services.
Business Overview: Describe your firm’s focus on offering a range of accounting services, including bookkeeping, tax preparation, financial auditing, and business consulting.
Product and Services: Detail the services offered, such as financial statement preparation, tax planning and compliance, payroll services, and business advisory services.
Market Analysis: Assess the demand for accounting services, identifying target clients like small businesses, corporations, or individual taxpayers.
Competitive Analysis: Compare your firm to other accounting firms in the area, focusing on your strengths like specialized expertise, personalized service, or technology integration.
Sales and Marketing: Outline your strategy for attracting clients, using tactics like networking events, digital marketing, or partnerships with legal and financial professionals.
Management Team: Highlight the qualifications and experience of your team, especially in accounting, tax law, and financial planning.
Operations Plan: Describe the operational process, including client onboarding, service delivery, and ongoing client management.
Financial Plan: Provide an overview of financial aspects, covering startup costs, billing rates, and projected income.
Appendix: Include supplementary documents such as resumes of team members, client testimonials, or detailed market research to support your business plan.
If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.
Step 5: Register Your Business
Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.
Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!
Choose where to register your company
Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you’re planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to accounting firms.
If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.
Choose your business structure
Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your accounting firm will shape your taxes, personal liability, and business registration requirements, so choose wisely.
Here are the main options:
Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.
We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.
The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.
Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.
It is important to consult an accountant or other professional to help you with your taxes to ensure you’re completing them correctly.
Step 7: Fund your Business
Securing financing is your next step and there are plenty of ways to raise capital:
Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
Venture capital: Venture capital investors take an ownership stake in exchange for funds, so keep in mind that you’d be sacrificing some control over your business. This is generally only available for businesses with high growth potential.
Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
Personal: Self-fund your business via your savings or the sale of property or other assets.
Bank and SBA loans are probably the best options, other than friends and family, for funding an accounting firm. If your firm is successful and you’re poised for high growth, you may be able to attract venture capital or angel investors.
Step 8: Apply for Accounting Business Licenses and Permits
Starting an accounting business requires obtaining a number of licenses and permits from local, state, and federal governments. To start an accounting firm, you need to have a CPA license and register with your state accountancy board.
Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits.
You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more.
Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your accounting business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.
Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.
Step 10: Get Business Insurance
Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.
Here are some types of insurance to consider:
General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
Business Property: Provides coverage for your equipment and supplies.
Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
Worker’s compensation: Provides compensation to employees injured on the job.
Property: Covers your physical space, whether it is a cart, storefront, or office.
Commercial auto: Protection for your company-owned vehicle.
Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.
As opening day nears, prepare for launch by reviewing and improving some key elements of your business.
Essential software and tools
Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.
You may want to use industry-specific software, such as Karbon, canopy, or Jetpack, to manage your workflows, client data, documents, budgets, and reporting.
If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.
Develop your website
Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.
You can create your own website using services like WordPress, Wix, or Squarespace. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.
They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google.
Here are some powerful marketing strategies for your future business:
Specialized Content Creation: Develop and share informative content on platforms like LinkedIn or through newsletters, focusing on industry-specific updates, tax tips, and accounting best practices to showcase your expertise.
Local Sponsorships and Partnerships: Sponsor local events or partner with small businesses in your community to increase visibility and build trust among potential clients who value local connections.
Referral Programs: Establish a referral program to incentivize existing clients, business associates, and even employees to refer new clients, leveraging word-of-mouth marketing for client acquisition.
Educational Workshops: Host free workshops or webinars on accounting topics relevant to small businesses, demonstrating your knowledge and providing value while also showcasing your firm to potential clients.
Strategic Social Media Presence: Utilize social media platforms strategically, sharing industry insights, success stories, and engaging with your audience to build a community around your brand.
Client Testimonials and Case Studies: Showcase client testimonials and success stories on your marketing materials and website to build credibility and instill confidence in potential clients.
Online Advertising: Invest in targeted online advertising, such as Google Ads or social media ads, to reach your specific target audience and drive traffic to your firm.
Professional Networking Events: Attend industry-specific networking events, conferences, and seminars to connect with potential clients and build relationships with other professionals in related fields.
Optimize Online Profiles: Ensure your firm’s profiles on business directories, review sites, and social media platforms are complete, accurate, and compelling to make a positive first impression on potential clients.
Client Onboarding Experience: Prioritize an excellent client onboarding experience, providing clear communication, transparent pricing structures, and exceptional service to foster long-term client relationships and positive word-of-mouth referrals.
Focus on USPs
Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your accounting firm meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.
Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your accounting business could be:
Strategic accounting to grow your business
In a financial pinch? Fast and reliable tax help now!
Succession planning to ensure your business stands the test of time
You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running an accounting business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in accounting for years and can offer invaluable insight and industry connections.
The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in accounting. You’ll probably generate new customers or find companies with which you could establish a partnership.
Step 12: Build Your Team
If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for an accounting business include:
Accountants – perform accounting services
Office Manager – set appointments, customer service
General Manager – staff management, accounting
Marketing Lead – SEO strategies, social media, other marketing
At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.
Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.
Step 13: Run an Accounting Business – Start Making Money!
Accounting firms are the most profitable type of small business, and the US market is worth more than $140 billion and continues to grow. Accountants provide invaluable services that help small businesses, and thus the economy, grow. With your own accounting firm, you can provide that value while making a good living.
Even as a solopreneur with a home office, you can bring in six figures. The business is easily scalable if you are consistent with the quality of your services. Now that you know what’s involved in the business, fire up that computer and start planning the launch of your new accounting firm!
Accounting Business FAQs
How profitable is an accounting firm?
Accounting firms top the list of the most profitable small businesses. You can charge $200 an hour or more, so even if you work from home, you could see six-figure annual revenues relatively quickly.
How much can I charge for accounting services?
Accounting firms charge from $100 to $500 an hour or more, depending on services, reputation and location. Check your local market to see what rates are in your area so that you can be competitive.
Is it hard to run an accounting firm?
Running an accounting firm can be challenging, as it requires a high level of technical expertise, excellent organizational and time management skills, and the ability to manage staff and clients effectively.
How do I start a remote accounting firm?
To start a remote accounting firm, you will need to set up a virtual office with the necessary hardware, software, and communication tools to manage client accounts remotely. This may include cloud-based accounting software, document management systems, video conferencing platforms, and secure file sharing tools.
What makes accounting firms successful?
Several factors can contribute to the success of an accounting firm, including:
Providing high-quality services that meet or exceed client expectations
Building strong client relationships based on trust, communication, and responsiveness
Developing a reputation for expertise in a particular niche or industry
Hiring and retaining talented and motivated staff who are committed to delivering excellent service
Utilizing technology to improve efficiency, accuracy, and communication
Continuously learning and staying up-to-date with changes in industry regulations, trends, and best practices
Developing a strong brand and marketing strategy to differentiate the firm and attract new business.
How can I differentiate my accounting firm from competitors in the market?
To differentiate your accounting firm from competitors in the market, you can focus on providing specialized services or expertise in a particular niche or industry. You can also emphasize your firm’s commitment to delivering high-quality services and building strong client relationships through personalized attention and communication.
How to Start an Accounting Firm
Decide if the Business Is Right for You
Hone Your Idea
Brainstorm an Accounting Business Name
Create an Accounting Firm Business Plan
Register Your Business
Register for Taxes
Fund your Business
Apply for Accounting Business Licenses and Permits
Open a Business Bank Account
Get Business Insurance
Prepare to Launch
Build Your Team
Run an Accounting Business - Start Making Money!
Accounting Business FAQs
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