For those who have worked in accounting and went as far as getting a professional qualification such as a CPA, it is no less than a dream to have your accounting firm. Who doesn’t like the idea of having their name displayed outside the welcoming office in shiny polished letters? Owning your firm also means you get to be your boss. You get to choose your clients and decide the kinds of funds you want to work with.
However, while all of this sounds incredibly attractive, there are certain steps you need to take before you’re ready to launch yourself out there. It would help if you had a framework of what it takes to start your firm. To initiate your accounting practice, you need certain entrepreneurial skills and extreme dedication to the craft. After all, convincing clients to look towards you and handle their money matters takes some serious craftsmanship. However, to get you started, we have curated a list of what you need as you open your CPA firm. Here’s all that you need to know:
1. Figure Out Your Target Market
You need to figure out what the purpose of your accounting firm is. What your target demographic looks like and what services you wish to provide them. It would help if you also decided where you’ll open your accounting firm and what platform to boost its virtual location. These fine details give the basics to determine how to start a CPA firm. Therefore, when you can answer these questions, you’re ready to establish yourself and work on building a client base properly. After all, you can’t think about opening a firm when you have no idea what it looks like and what the prime location for your firm should be.
2. Obtain an Employer Identification Number (EIN)
In most cases and a technical case such as this one, you should have an employer identification number. It is because it helps the IRS look you up online as well as legitimize your business. If clients also want to cross-reference you, they know that you have the legal framework to run this operation. The IRS website is highly transparent with the process. They can inform you if your case requires an EIN or you get an exemption. Even if you have an exemption, it’s best to register yourself. The process is swift and free, so why not make your business more legit?
3. Determine the Initial Costs
You will need to lay down capital before you can run your business. It would help if you estimated how much money to purchase a physical property and the cost to get all the necessary office supplies. In addition, you will need to know how much the electricity, water, and upkeep cost, how much you have right away, and whether you’ll need loans. Costing is a delicate process. Always make a list of possible expenses you will have and how you want to tackle them. Initially, you need to put down more money than necessary to ensure your CPA firm is steady and on solid ground. You will also need to factor in employee costs to get an influx of clients right away.
4. Have a Pricing List
At your CPA firm, you will provide clients with many services such as auditing, tax filing, and even consultation with your clients. CPAs are responsible for preparing taxpayers to go before the IRS to assure that they’re paying all the appropriate amount of money. Since all the services you will provide are about accounting, you need to have a price list to ensure you’re charging adequately for every service. You don’t want to undervalue the work you do, nor do you want to overcharge than necessary. You want to have a pricing list that cohorts with the market rates but has a minimal margin for profit. Once your firm takes off successfully, only then should you look towards increasing prices.
5. Look Into Business Insurance
Business insurance is essential because it protects businesses from any loss that can occur during the business. There are different types of insurance, such as property damage, legal liabilities, and employee risks. You need to figure out which coverage best suits your firm.
The last thing you want is during any event of a loss. You end up paying a hefty price to guard your client information as well as sensitive account information. Since most of the work you’ll be doing will be online, you should also look into cyber laws.
6. Hire Employees
The last step of your firm’s setup is hiring employees. Now that you have an office and you have an idea of what perks and benefits you can offer employees, you are in a position to negotiate. First, figure out how qualified you want your employees to be. Are you looking for people with only a bachelor’s experience or people who hold a master’s degree with experience? Then you need to figure out how many employees you want in your office and the ratio of genders. You may also need to decide how many employees per department and what their salaries will look like. It will help you shortlist and decide your employment base in a much faster and effective manner. Once you get the employees you want, start working with them right away.
As you start your accounting firm, there are some factors you need to be aware of. Always start by finding out what the purpose of your CPA firm is and how you plan on achieving it. What is the legal framework of your company, and how do you plan on making it happen? As soon as you can answer these questions, you should have no trouble starting your firm, getting insured, and hiring employees for a successful accounting venture.