It takes a lot of effort to start an accounting firm, just like any other small business. Accounting firms are ranked as the most profitable small business that a person could start today by industry and consulting firms.
Consider these questions when you start a business:
- Would you rather be a cog or an owner of a business? There is no right answer, only a preference. You’ll get the profits from your firm and not just your salary if you go out on your own. You become an owner.
- What is the purpose of my business? Determining your business purpose, while perhaps a little esoteric at first, is vital. Why am I doing it? What is my purpose? This is not a philosophical exercise. Knowing the reason you are starting a business can help you determine your target market.
- Want to be agile and on the cutting edge? Small businesses are more flexible and have greater abilities to innovate. Running your own business allows you to make decisions that will help your company be unique and profitable. This includes adopting new technologies, discovering new software, or implementing other efficiency-creating tools.
- Do you need to incorporate your business? A sole proprietorship may not be necessary for some people, especially if their work focuses on less complex tasks like basic tax preparation. As an LLC you can limit your risk and protect yourself from liability. Your business owns assets, which are distinct from your personal assets. It is harder to distinguish between personal and business assets when a company is not incorporated.
Do you want to start an accounting firm in Indiana, USA?
Indiana is home to some of the most beautiful natural attractions in the United States. Indiana has affordable housing, low living costs and a vibrant music and art scene.
Indiana is a great choice for anyone who wants to live in an area that offers high levels of safety and protection. Indiana is an excellent choice for those who want to live in a more livable state. Consider getting errors and omissions insurance Indiana to protect yourself from unexpected risks.
What are the prerequisites to opening an accounting firm? What is required?
It’s no different than starting a small business. While there are some accounting-specific requirements to consider, you should always remember that your business is the priority.
Decide on your goal, purpose and target market. It will also influence other decisions such as the type of services you offer, the demographic you are targeting, the location of your company, and whether you choose a physical location or a virtual one.
After you have chosen a location, and set your goals, the next step is to think about the nuts and bolts involved in owning a small business.
You will need to:
- Get your Employer Identification Number and Tax ID number
- Investigate employment laws
- Calculate startup costs
- Create a pricing structure to be used for services
- Choose the legal structure for your business: S-Corporation, L-Corporation, LLC, Partnership, LLP
- Consider business insurance
- Create a business account
- Create internal policies and rules
- Hire Employees
You’ll also need to consider the daily needs of running a small business. This includes managing risks, performing basic administrative tasks and deciding how and where to meet your clients.
Do I need a new EIN number from the federal government?
Most accounting firms require an Employer Identification number (EIN) to operate. , the IRS website offers a detailed explanation on who needs an EIN. If you are planning to hire employees, or will in the near future, you’ll need an EIN.
Even if the website doesn’t say it’s a requirement, or you don’t believe you need one, most businesses would be better off getting an EIN.
The online process can be done quickly, easily, and for free.
I am not a Certified Public Accountant. Do I need to be a CPA in order to open an Accounting Firm?
All CPAs are accountants but not all accountants also are CPAs. Education, experience and opportunities are some of the differences between CPAs and accountants. The answer comes back to “What services would you like to offer?”
Accounting firms can perform almost all the services that a CPA can, with the exception of audits and assurance. If that’s your goal or your target audience, it would be wise to consider the steps required to become a CPA.
If you want to concentrate on the many other services that accounting firms offer, this credential is not necessary to begin. While there are some exceptions by state regarding what a CPA can or cannot do, it is not a prerequisite for opening an accounting firm.
If you wish to be called a “CPA Firm”, you must have a CPA.
Can accountants from home work?
Starting an accounting firm offers flexibility. The simple answer is yes, many accountants work from home.
Virtual or home offices are subject to the same regulations as physical locations. A firm that does not have a physical location is not at a disadvantage.
Working from home has never been easier. Modern technology and software solutions help you bring all the essential aspects of your workday into a dedicated space (usually online). Thomson Reuters, for example, offers its CS Pro Suite tax and accounting software as online hosted solutions. It also designed its Onvio product so that it runs entirely in the cloud.
Important: An accounting firm needs a separate EFIN for each location they work in. If you work from a home-based office and have a physical address, you will need an EFIN.
How much work you do at home will determine the answer. For more information, contact the IRS.
What should I know if I want to start a home-based business in accounting?
Accounting firms do not need to be located in a physical location to function successfully. Like the traditional brick-and-mortar approach, a virtual or home-based business has its own unique challenges and opportunities. It’s important to consider the unique opportunities and challenges of a home-based enterprise.
- Shared workspaces. Co-working spaces are available across the nation. Many of them offer both a professional space for professionals and clients to meet. These spaces are usually charged a monthly fee, but the benefits are worth it. They are also cheaper than renting or buying office space.
- Low cost. Many new businesses struggle with overhead. While you are building your client base, it is important to keep costs down. It allows you to make a profit sooner and adjust your menu of services to attract customers with lower prices.
- Zones and liability issues. When you meet with clients at your home, zoning and liability can be an issue. It’s crucial to understand the liability laws if a client is injured in your home office or outside.
- Zoning law. The majority of cities and counties have regulations on zoning. Be sure to check and follow any laws in order to make sure your home-based company is not operating illegally.
- Transform limitations into unique possibilities. It can be a challenge to not have a physical office space, but it can also be viewed as an advantage. Consider visiting your clients on-site. It not only solves space issues, but it also sends a clear message to your client that you offer a high level of service.
What are the main services provided by accounting firms?
This question can often be answered by looking again at your goals and market. What are the main services that this population needs? What can you do to better serve them? While many accounting services are dictated by your client’s business and the particulars of their situation, there are some standards that most firms provide, including:
- Assurance services
It’s important to look at the newest and most popular services, which are driving more business for accounting firms.
You can gain more clients by taking cues from larger firms and anticipating trends that may trickle down to independent and smaller businesses.