How to Start an Accounting Firm?

So, you’re thinking of starting your own accounting firm? It’s an exciting move — but, of course, there are a lot of questions. How do you set up a firm? What legal things do you need to tick off? How do you actually get clients? And, is it really worth all that hassle?

The good news? If you’re a qualified accountant and have the right mindset, starting your own accounting practice could be one of the most rewarding (and lucrative) career choices you will ever make. But, like any other business, you will not succeed by accident; it takes planning, strategy, and a good handle on the process itself.

In this guide, we are going to take you through all the essential steps for setting up an accounting firm; the legal considerations, and marketing, and growing your business.

Why Start an Accounting Firm?

Before we get into the how-to, it’s worth thinking about the reasons for starting an accounting firm. There are three valuable benefits of going down this pathway:

• Independence: You will be your own boss. You can decide how to structure your business and how you want to work.
• Financial Potential: You can scale your income by building a client base and later on hiring similar people to assist you to provide services.
• Specialisation Possibilities: You can focus on tax advisory, audit, small business accounting, management consulting, etc.
• Client Relationships: Foster relationships with clients that last a lifetime, and become a trusted advisor.

If you have the appropriate qualifications, experience, and have the entrepreneurial mindset, starting your own firm can be a very rewarding step.

Step 1: Evaluate Your Qualifications and Experience

Before starting an accounting firm, you will want to ensure that you have the necessary professional qualifications. In most areas, you would be required to be a CPA, CA, ACCA, CIMA, or some other recognised professional qualification.

Ask yourself:

• Do you have relevant qualifications?
• Do you meet local regulatory requirements?
• Do you have practical experience in tax, bookkeeping, audit or advisory services?

If you are still developing your qualifications, it may be better to gain further experience as an employee before starting your own firm.

Step 2: Conduct Market Research

It is important to understand your target market. Before you start your firm, you will want to complete some market research to understand the demand for accounting services for your area or chosen niche. Things to think about:

• The level of competition – How many other firms compete locally?
• Your target market – Will you be have individuals, small businesses, startups or larger corporations?
• Industry gaps – Are there services that will be in demand that are not being provided?

By identifying your niche area, you can give yourself a competitive advantage. You could be in the following niche areas:

• Tax services for small businesses
• Bookkeeping for freelancers
• Financial advisory for startups
  
• Audit services for charities or non-profits
  
• Virtual CFO services for growing companies

The more clear you can make your market positioning, the more easily you can attract clients.

Step 3: Create a Business Plan

Having a business plan that is properly thought out provides you with a sense of direction and clarity. A business plan can be simple, just a summary of your key intent for your accounting firm.

Potential Key Parts:

• Business Name and Structure: Select a memorable and professional name, together with a business structure (sole proprietor, partnership, limited company, etc.).
• Service offered: Outline your services.
• Target Market: Identify your ideal clients and market segment.
• Pricing Strategy: Outline your pricing plans (hourly, package fees, retainer, etc.).
• Marketing Plan: Explain how you will get clients and keep clients.
• Financial Projections: Estimate your startup costs, ongoing costs, and revenue projections.
• Goals and Milestones: Identify realistic goals for growth.

Your business plan is a roadmap for success and a tool for funding, if you are seeking financing.

Step 4: Register Your Business and Meet Legal Requirements

In order to operate legally, you must register your accounting firm and comply with applicable legislative requirements. The requirements are different depending on where you live (country and region), but can include:

Business Registration:

• Just as you are asked to register your business with a name.
• Obtain a business license, if applicable.
• Decide on your legal structure (sole trader, partnership, LLP, limited company, etc.).

Professional Registration:

• Join your relevant professional organization (such as ACCA, ICAEW, CPA, etc.).
• Ensure you meet the qualifications and Continuing Professional Development (CPD) requirements.

Insurance:

• Professional Indemnity Insurance (usually mandatory for accounting companies).
• Public liability insurance if clients come to your office.

Compliance Requirements:

• Understand the anti-money laundering (AML) rules.
• Determine if you will need to register with your local financial regulator.
• Understand GDPR or your local data protection requirements.

You should also talk to a business adviser or legal professional to make sure you are complying.

Step 5: Hire Staff (When You Are Ready)

When your clients grow, you may need help. You can hire full time employees or perform work through subcontractors or freelance. This will help you grow your firm.

Possible roles are:

• Bookkeepers
• Junior accountants
• Tax specialists
• Admin assistants
• Marketing or sales support

You will need to comply with employment law, conduct training and remain ethical. Alternatively, you could outsource using freelancers or using virtual assistants to keep your overheads and cost of employment low.

Step 6: Price Your Services

Pricing your services is very important in whether your firm is profitable and competitive. You should research your industry for price benchmarks and set your pricing to resemble the value you bring to your clients.

Pricing Models include:

• Hourly Rate: This is the most traditional pricing model but it has its limitations in terms of growth.
• Fixed Fees: This is a common pricing model that works well for tax returns or bookkeeping services that recur on a monthly basis.
• Value-Based Pricing: Pricing based on the value that is delivered to the client, not the time to complete.
• Retainer arrangement: A monthly flat fee for ongoing service, making income predictable.

Be open about pricing and supply quotes that have enough detail to avoid any confusion or misunderstandings.

Step 7: Develop Your Brand and Market Your Firm

A reputation and visibility are the keys to gaining clients. You need to dedicate time to develop your brand as a professional.

Branding basics

• Memorable business name and logo
• A professional website that outlines your services, has contact information, includes information about you, and testimonials
• A Google Business Profile so you can be found locally
• Social media channels and marketing material that is consistent with your branding

Marketing tactics

• Attend local networking events and business meetings
• Build partnerships with allied professionals such as lawyers, or financial advisors
• Provide free workshops, webinars, or downloadables that showcase your expertise
• Build up your connect with potential clients on LinkedIn and other platforms
• Ask happy clients for referrals and online reviews.

In the beginning, word-of-mouth can be a valuable resource, alongside your personal network.

Step 8: Set Up Your Office and Technology

Next, you will need to build or set up a workspace and get all the basic tools for business. You can work virtually, out of your home, or build an office, depending on your business model and clients. Think about:

• Professional website and brand
• Accounting software that you can rely on (Xero, QuickBooks, Sage, etc).
• Tax software and compliance software
• Secure document management and client communication software
• High-speed Internet and IT security safeguards, particularly when working remotely
• CRM (Customer Relationship Management) system to manage leads and existing clients

When working remotely with clients, make sure you have secure portal technology for document processing and e-signature.

Step 9: Deliver Great Service

In accounting, trust is everything. The best marketing is to deliver quality, reliable service every time.

Best practice strategies:

• Stay up to date with changes to taxation legislation and accounting standards
• Communicate clearly, concisely, and promptly with your clients
• Deliver timely and accurate work
• Provide proactive financial advice, not just reactive services
• Confidentiality and security of data must always be your priority

Loyal and happy clients will stick with your accounting firm and refer your services to others.

Step 10: Plan your growth and improvement process

Once you are ready to operationalize you accounting firm, concentrate your efforts on delivering value to your clients while achieving growth in your business.

Growth opportunities:

• Add new services as your clients are asking for them
• Invest in staff training
• Where you can automate your tasks, they will lead to efficiencies
• Stay current with new technologies and applications
• Look to expand to different locations or markets
• Use client interviews to gather feedback to enable the firm to evolve your service delivery process.

Building an accounting firm takes time but with consistent, quality effort your brand and clientele will continue to grow. The accounting firms that succeed in the long run are the firms that continue to build their corporate memory and/or internal learning capacity, are ahead of the curve with respect to innovation happening in the profession, and regularly think and adapt to client’s future expectations.

Conclusion

For qualified motivated people starting their own accounting firm can be the bravest of brave but ultimately very achievable goal. Not only is it the opportunity to build a business on your own terms and make a difference for your clients, it is also the reward for hard work.

Success takes time; it takes time to build the appropriate level of qualifications, compliance, appropriate governance, clear business plans, service quality and levels and client knowledge. With time, commitment and appropriate mindset, your firm will grow within a growing competitive market.

Are you ready to take the plunge? Do not go without a plan, when you have a plan, stay focused, and remember building a reputable firm takes time – this is a marathon not a sprint.

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