Accounting services maintain track of revenue, spending, taxes, and other financial information for many sorts of companies and people. Accounting services are highly sought after for good reason. Professional accountants give customers with a comprehensive view of their finances, the adoption of tax minimization methods, and a variety of other financial advantages.
Table of Contents
Follow these ten steps to establish an accounting firm:
Plan your Accounting Company
Create a legal entity for your accounting firm.
Tax Registration for your Accounting Firm
Create a Business Bank Account and a Credit Card
Establish Accounting for Your Accounting Firm
Obtain the Required Permits and Licenses for Your Accounting Firm
Purchase Accounting Firm Insurance
Create a Brand for Your Accounting Firm
Create a website for your accounting firm.
Configure your Business Phone System
Starting a company entails more than just registering it with the state. We’ve put up this easy-to-follow guide on beginning your own accounting practise. These stages will guarantee that your new company is well-planned, correctly registered, and legally compliant.
STEP 1: Make a business plan.
A well-thought-out strategy is vital for entrepreneur success. It will assist you in mapping out the intricacies of your organisation and uncovering some unknowns. Consider the following crucial topics:
What are the initial and continuing expenses?
Who is your intended audience?
How much money may you charge your customers?
What will you call your company?
What are the expenses of starting an accounting firm?
Accounting services need the use of an office, computers, accounting software, high-speed Internet, desks, file cabinets, printers, insurance, and advertising funds. It is also important to get certification as a public accountant (CPA). CPA test costs are normally approximately $1,000.
What are an accounting firm’s continuous expenses?
A monthly office rent, utilities, high-speed Internet, staff wages, marketing expenditures, insurance, computer/software updates, and general office expenses must be paid by an accounting agency. The monthly office rent for an accounting firm is determined by the size of the premises as well as its location. In average, renting an office will cost you between $600 and $1,500 per month. It is also feasible to work from home or another property that you own. Utilities, including high-speed Internet, should cost at least $150 to $200 per month.
A receptionist will earn between $25,000 and $35,000. A marketing professional may expect to earn between $35,000 and $60,000 per year or more. If you do not wish to undertake the accounting job yourself, you will need to engage one or more accountants. These experts often earn between $40,000 and $80,000 per year.
Marketing should be budgeted for at least a few hundred dollars every month. You will need to update and upgrade computer hardware and software at some point. It is wise to set aside $100 to $200 every month for these unavoidable costs. This way, you’ll have money set up for replacements/upgrades when the time comes. Budget $100 to $200 each month for workplace sundries such as coffee, pizza parties, bottled water, staples, paper, ink toner, and so on.
Who is the intended audience?
A huge corporation is the perfect customer. Wealthy people and company owners with several sources of income are also potential customers.
How does an accounting company generate revenue?
Accounting firms generate money by charging their customers fees. Some operate on an hourly basis, while others take project work on a set charge. Other accounting services are compensated annually for the complete year’s worth of accounting labour.
How much money may you charge your customers?
The amount of money paid to customers varies depending on the size of their business, the extent of the service, the location in which you live, and a variety of other considerations. If you get a high-profile client with significant income, you can probably charge $125 to $350 per hour. If you are managing a single project, such as year-end taxes for an individual, you may charge anything from a few hundred dollars to a couple thousand dollars, depending on the project’s complexity.
How much profit can a law practise make?
If you are a one-man show, your first year or two earnings would most likely range between $30,000 and $75,000 per year. If you keep growing your firm, your earnings will ultimately exceed six figures. It is feasible to gain millions of dollars if you acquire a consistent customer base and develop across the area.
How can you increase the profitability of your company?
Request that customers suggest your services to their colleagues and friends. Seize the chance to work on side tasks like a rich client’s personal taxes. It is also feasible to supplement your income by offering accounting courses and educating people on accounting software.
What will you call your company?
Choosing the correct name is both crucial and difficult. If you don’t have have a name in mind, check out our How to Name a Business guide or use our Accounting Firm Name Generator to help you come up with one.
STEP TWO: Create a legal entity.
Sole proprietorship, partnership, limited liability company (LLC), and corporation are the most frequent business structure forms.
Creating a formal company organisation, such as an LLC or corporation, shields you from personal liability if your accounting firm is sued.
STEP 3: File your taxes
Before you can begin for business, you must register for a number of state and federal taxes.
To register for taxes, you will need to get an EIN. It’s really simple and completely free!
Taxes on Small Businesses
Depending on the business form you choose, you may have multiple choices for how your company is taxed. Some LLCs, for example, may benefit from being taxed as a S company (S corp).
These guides will teach you more about small company taxes:
Taxes on LLCs
LLC vs. sole proprietorship
Corporation vs. LLC
S Corp vs. LLC
How to Form a S Corporation
S Corporation vs. C Corporation
There may be state taxes that apply to your company. In our state sales tax guides, you may learn more about state sales taxes and franchise taxes.
STEP 4: Establish a company bank account and credit card
Personal asset protection requires the use of distinct business banking and credit accounts.
When you combine your personal and business accounts, your personal assets (your house, vehicle, and other possessions) are at danger if your company is sued. This is known as penetrating your company veil in business law.
Furthermore, understanding how to develop corporate credit may help you get credit cards and other financing in your company’s name (rather than your own), lower interest rates, larger lines of credit, and other benefits.
Establish a business bank account.
Opening a business bank account is not only required when asking for business financing, but it also:
Separates your personal assets from the assets of your firm, which is required for personal asset protection.
It simplifies bookkeeping and tax reporting.
Create a net 30 account.
Net 30 accounts are used to develop and grow company credit while also increasing cash flow. Businesses use a net 30 account to purchase items and refund the whole debt within a 30-day period.
Many net 30 credit suppliers submit information to the main business credit agencies (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how firms establish business credit in order to be eligible for credit cards and other lines of credit.
Apply for a business credit card.
Obtaining a business credit card benefits you in the following ways:
Put all of your company’s costs in one location to separate personal and business spending.
Build your company’s credit history, which will be important for raising funds in the future.
STEP 5: Establish business accounting
Recording your numerous costs and sources of revenue is crucial to assessing your company’s financial status. Keeping precise and thorough accounting also makes yearly tax filing much easier.
Our LLC Expenses Cheat Sheet simplifies LLC accounting.
STEP 6: Obtain all required permissions and licences
Failure to get appropriate permissions and licences may result in significant penalties or possibly the closure of your firm.
Requirements for State and Local Business Licensing
Accounting licences are required in the majority of states. Certain state permissions and licences may be required to run an accounting firm. Visit the SBA’s reference to state licences and permits to learn more about licencing requirements in your state.
For additional information on local licences and permissions, please visit:
Check with the clerk’s office in your town, city, or county.
Contact one of the local organisations mentioned in the US Small Business Associations database of local business resources for help.
Occupancy Certificate
An accounting firm is often managed from an office. A Certificate of Occupancy is often required for businesses that operate from a physical site (CO). A certificate of occupancy certifies that all building rules, zoning laws, and government requirements have been satisfied.
If you intend to rent a space:
In most cases, it is the landlord’s obligation to get a CO.
Before signing a lease, be sure your landlord has or can receive a valid CO for an accounting company.
A new CO is often required after a big remodelling. If your location will be refurbished before opening, incorporate wording in your leasing agreement saying that lease payments would not begin until a valid CO is given.
If you intend to buy or create a location:
It is your responsibility to secure a valid CO from a local government entity.
Examine all building laws and zoning standards for your accounting firm’s location to verify compliance and the ability to acquire a CO.
CPA Qualification
You may need to be certified in order to perform accounting services (a Certified Public Accountant). This accreditation permits you to deliver services that would otherwise be prohibited if you did not have it.
Contract for Services
Make sure you draught a services agreement. The contract should specify the services you provide, how much you will charge, and what will happen in the event of a contingency—for example, would you be held liable if your customer is audited?
STEP 7: Obtain commercial insurance.
Insurance, like licences and permits, is required for your company to operate safely and legally. In the case of a covered loss, business insurance protects your company’s financial well-being.
There are several sorts of insurance plans designed for various types of companies with varying risks. If you are unaware about the hazards that your company may encounter, start with General Liability Insurance. This is the most popular coverage required by small companies, so it’s a good place to start for yours.
Workers’ Compensation Insurance is another important insurance product that many companies need. If your company will have workers, your state may require you to purchase Workers’ Compensation insurance.
STEP 8: Establish your brand
Your company’s brand is what it stands for, as well as how the public perceives it. A strong brand will help your company stand out from the crowd.
How to Market and Promote an Accounting Firm
Developing connections with local company owners and professionals is the most effective strategy to advertise an accounting firm. Participate at networking events and conferences. Join the National Association of Tax Professionals (NATP) and/or the American Institute of Certified Public Accountants (AICPA) to learn all you can about the field and remain current on developments. Advertise across the community using leaflets, pamphlets, press releases, radio advertisements, local TV commercials, regional magazine ads, town newspaper ads, and so on. Make sure your website appears professional and has an easy-to-use user interface. All website material should be search engine optimised (SEO) so that locals may locate your accounting firm while doing internet searches for accountants in the neighbourhood.
How to Keep Customers Returning
Begin by acquiring a licence to do business in your native state. This certification is required to attract and keep consumers. Distribute your marketing money over many channels. At networking gatherings, press the flesh. Take advantage of any chance to present yourself to business owners, investors, and anyone else you feel may want accounting services or has the capacity to make hiring choices. During tax season, when accounting services are in great demand, increase your marketing efforts. Match or surpass rivals’ rates, devise techniques to lower client spending, and explain financial facts in clear English to customers.
STEP 9: Create your company’s website.
After you’ve defined your brand and designed your logo, the next step is to build a website for your company.
While developing a website is an important step, some may be concerned that it is out of their grasp due to a lack of website-building skills. While this was a fair concern in 2015, online technology has made significant advances in recent years, making the lives of small company owners considerably easier.
The following are the primary reasons why you should not put off developing your website:
Every genuine company has a website, period. When it comes to bringing your company online, it doesn’t matter what size or sector it is.
Social media accounts, such as Facebook pages or LinkedIn company profiles, are not a substitute for your own business website.
STEP 10: Install your company phone system.
Getting a phone for your company is one of the finest methods to keep your personal and professional lives distinct and private. That isn’t the only advantage; it also helps you automate your company, provides it legitimacy, and makes it simpler for prospective clients to identify and contact you.
Entrepreneurs that wish to set up a company phone system may choose from a variety of options. We examined and ranked the best firms based on pricing, features, and simplicity of use. To choose the finest phone service for your small company, read our analysis of the Best Business Phone Systems 2022.