7 Steps to start a CPA firm
If you believe the benefits outweigh the risks and you’re interested in starting a firm, review the following steps.
Outline your career ambitions
Starting a CPA firm is significantly more arduous than being under someone else’s shingle. It’s important that you ask yourself hard questions and answer honestly to determine if you’re ready to take a step into business ownership.
- Are you prepared to handle responsibilities like marketing, sales, administration, operations, and client work? If not, do you feel confident in hiring the right people to support you?
- Do you have sufficient experience to go out on your own and know how to resolve all of the potential client issues that might come up? Some experts recommend working as an accountant for at least five years before going out on your own, but ultimately, only you can judge your comfort with the job and your ability to serve clients on your own.
- What’s your long-term vision for your CPA firm? Do you plan to work in your practice for the next 30 years until retirement, or do you envision building a book of business to sell in 15 years and pursue another passion? Clarifying your “why” early on will help you set clear guardrails to achieve your ultimate goals.
Create a business plan
With your ambitions in mind, it’s time to dive in and do extensive research to help you create a detailed business plan. Your plan should include:
- Business specifics, like your name, mission, and vision
- Market data, including your target audience and the number of people that live in the market you plan to serve
- Competitor analysis, focusing on how you’ll differentiate yourself from others offering similar services in your area
- Your chosen specialty, whether it’s tax accounting, auditing, or financial analysis
- Pricing and projected income based on the number of clients you believe you can serve
- Marketing plans detailing how you’ll find, attract, and retain clients
- Whether you’ll acquire an existing business or start your own firm from scratch
Secure financing for your CPA firm
Starting a business comes with significant costs, and securing the right financing is essential to cover these startup expenses. Small business loans offer an accessible way to obtain the funds you need, and some lenders, like BHG Financial, can assess your income and personal credit score if your business has limited credit history.
BHG Financial specializes in loans tailored for specific business needs, including business acquisition loans—an ideal solution if you’re considering purchasing an established practice rather than building one from the ground up. BHG’s experienced loan specialists can help you navigate the options, answering any questions you have about which business loan type best suits your unique goals and financial needs.
Make your business official
To make your business official and meet legal requirements, you’ll need to consider:
- Setting up your legal entity: There are several structures to choose from. If you plan to be the only employee, a sole proprietorship or single-member limited liability company (LLC) might be suitable. If you plan to have partners or employees, a partnership, S corporation, or C corporation could be a better fit. Consulting a business or tax attorney can help you choose the best structure based on your current plans and future growth projections.
- Applying for an employer identification number (EIN)/Tax ID: You’ll need to get a unique EIN for your business, which you’ll use for business dealings like setting up a bank account, applying for a credit card, and filing taxes.
- Opening a business bank account and applying for a business credit card: You’ll likely want to open a separate bank account and credit card to differentiate between personal and business expenses and income. Doing so will make it significantly easier to manage your finances come tax time.
- Insuring your business against risks: Review insurance options to protect yourself, your employees, and your business. Insurance may include liability coverage, cyber insurance, and workers’ compensation.
- Finding the right technology: Beyond the tools needed to perform client work, you’ll also need software for booking meetings, collecting payments, and managing other aspects of your client relationships. You might handle these responsibilities yourself initially or outsource them to a part-time employee or contractor.
Decide where you’ll open your accounting business
If you plan to remain a single-employee business for the foreseeable future, you might choose to open your CPA firm from home. You can meet clients in shared meeting spaces like a local library or coffee shop for little to no cost. If you prefer a brick-and-mortar location and have the funds to support it, an experienced real estate agent can help you find the right space to meet your needs.
Think strategically about marketing efforts
Once you’ve laid the foundation for your business, from setting up the legal entity to deciding where you’ll work, it’s time to focus on how you’ll attract clients. Ensure you have a plan for your digital presence, which could include creating a website, managing social media channels, or using paid advertising. If marketing isn’t your strength, consider outsourcing these efforts to a third-party contractor or agency that can convey your message professionally and effectively.
Launch and iterate
With your business plan in place, set a launch date and start spreading the word. Begin by leveraging your personal network and word-of-mouth marketing. Once you land your first few clients, ask for referrals and testimonials to help attract new clients. A combination of word-of-mouth and digital marketing efforts can yield results in your first few months.
During those initial months, it’s essential to regularly assess your business’s performance. Monitor your lead generation from various marketing channels, track your expenses, and compare your earnings to your business plan projections. If progress is slower than expected, consider seeking guidance from a business coach or connecting with other local accountants for support.
Let BHG Financial support you in opening a CPA firm
Small business loans can be an integral part of your business success. With BHG Financial’s commercial loans, you may be able to borrow up to $500,0001,2 to support your goal of opening your own accounting firm. With repayment terms of up to 12 years1, you may be able to find an affordable monthly payment that fits within your proposed business budget. Learn more about BHG Financial’s small business loans and view your personalized loan estimate today.