How to start an accounting firm: a step-by-step guide to running your own practice

It’s never been easier to start an accounting firm. With remote work now standard and technology automating routine tasks, many of the traditional barriers to entry no longer exist. 

All sorts of benefits come with running your own accounting practice, including the freedom to set your own schedule, choose your clients, and take the ceiling off your earnings. But going alone is not without its challenges.

In this article, we’ll guide you through the steps you need to take to establish a successful accounting business. We wrote this guide with the help of seasoned CPA, firm owner, and podcast host Erica Goode. 

A former audit professional at KPMG and Finance Director at Walgreens, Erica knows what it takes to start and run a successful accounting practice. She’s even written an ebook on this very subject, which you can download here. 

So if you’re ready to be your own boss, read on!

The benefits of owning an accounting firm

Before we dive into the steps you need to take to start a successful accounting firm, let’s first discuss why you’d want to do this in the first place. Below, we’ll explore some of the key benefits of going it alone. But first, here’s some sage advice from Erica Goode for anyone thinking about taking the plunge: 

If you’re struggling in your corporate day job, know that there are other paths for your accounting career path — ones where you can work less, still earn a good salary, and spend more time with family or doing whatever is important to you in your personal life.

Financial independence with unlimited earning potential

Working as an employee for an established accounting firm may bring in a steady income, but it’s hard to increase the amount you earn substantially. When you start your own business, you rip the ceiling off your earning potential. This is because you have the freedom to decide: 

• What services you’ll offer and at what prices
• How many clients you’ll serve
• How efficient and scalable your processes are

Essentially, being a firm owner gives you the potential to scale your income according to your ambitions. While it may take time to build a loyal client base, the sky’s the limit once your firm has some momentum.

Career flexibility and a work-life balance that suits you

Unlike many full-time accounting positions, owning your own firm means complete flexibility around when and where you work. You can create a working schedule that fits neatly around other areas of your life. This enables you to realize your financial and career goals without sacrificing your personal life or wellbeing.

What’s more, with modern accounting and practice management software, it’s never been easier to run a highly efficient accounting practice. With workflow automation and AI tools, you can scale your practice without having to work endless hours.

Take Erica Goode, for example. She managed to build a successful accounting firm while maintaining a 15-hour week. Here, she shares some tips on how you can do the same: 

The trick is focusing on high-value clients and tasks that make the biggest impact. I keep a small, selective client base and use automation for routine tasks, like reconciling accounts or scheduling meetings. I also create repeatable workflows for common tasks and use templates wherever I can. Over time, I’ve fine-tuned my processes so everything runs smoothly with less hands-on time.

The key to enjoying a healthy work-life balance as a firm owner is balancing client demands with personal time. Knowing where to draw the line can be tricky. Here’s how Erica approaches this issue: 

Setting boundaries is crucial. I have a strict quarterly, monthly and weekly planning process that keeps me focused on my and my client’s priorities. I’m also a ruthless calendar time-blocker. If it’s not on my calendar, it doesn’t happen. If it is, I get it done. Plus, I’ve learned to say “no” to work that’s not a good fit or will overload me.

Autonomy in decision-making

Becoming an accounting firm owner gives you complete autonomy over the decision-making process. You can take everything you’ve learned from your accounting career so far and make smart decisions relating to: 

• The type of firm you want to run
• What your ideal client looks like
• Corporate branding and marketing
• Internal processes and workflows
• The type of technology you want to use

In other words, you get to implement your vision and build a business that aligns with your long-term goals. 

The opportunity to build something meaningful

Meaning is an often underestimated factor in a successful and happy career. Sure, most people work to pay the bills. But for work to be rewarding and engaging, you have to feel like you’re doing something meaningful. Running your own firm is inherently meaningful because it enables you to: 

• Build something from the ground up and watch it grow
• Infuse the business with your own personality and values
• Leverage your skills to help clients and serve your local community

The opportunity to learn new skills and empower yourself

Starting and growing an accounting firm forces you to learn new skills. In addition to becoming a more experienced accountant, you’ll learn entirely new skills that foster personal and professional growth. For example, you may learn how to: 

• Build an online presence and generate leads through digital marketing
• Navigate the legal and regulatory formalities of running a business 
• Recruit, train, and lead a growing team of professionals
• Nurture long-lasting client relationships

In addition to being a talented accountant, you’ll become a well-rounded entrepreneur. You’ll become more resilient and confident in your own abilities, making it easier to adapt to future challenges and opportunities.

A step-by-step guide to starting an accounting firm

Starting your own business can be incredibly daunting, to the point where many people file the idea in a folder marked “pipe dreams”. But with careful planning and consideration, you can turn that dream into a reality. 

In this section, we’ll outline key steps to take when starting your own accounting firm. But before we dive in, let’s hear from someone who has been there and done it. Erica Goode started her own accounting firm, Erica Goode, CPA, back in 2018. Her firm specializes in providing fractional CFO and accounting services to consultants. Here’s her advice for anyone thinking about going it alone:

My biggest piece of advice is to focus on what makes you different. Know what services you’re best at and how you can stand out. Building strong client relationships from the start is key. Also, get the right tools and software to help automate as much as possible. That way, you’re not spending all your time on manual tasks like bookkeeping or invoicing — freeing you up to focus on higher-value work.

1. Assess your qualifications and skills

Before you dive into starting a business, it’s worth ensuring that you have the right qualifications and experience. Typically, this means a bachelor’s degree in accounting, finance, or a related field as a baseline. In addition, you can prove your expertise with CPA (certified public accountant) or CMA (certified management accountant) certification. 

If you don’t have the prerequisite accounting certifications to make starting your own business a viable option, don’t give up! Put a plan in place to get the qualifications you need under your belt, and then move forward from there.

In addition to qualifications, it’s worth assessing your hard and soft skills too. Running a business requires organization skills, time management, resilience, and adaptability to name a few. 

2. Develop a business plan

Another critical step before jumping into the deep end is to develop a business plan. To help you define your strategy and set ambitious goals, you’ll need to answer some important questions.  

What sort of services do I plan to provide? 

Do you want to offer broad accounting services, or will you focus specifically on more narrow service offerings, such as tax filing? Spreading the net wide and offering everything can be tempting, but a narrow service offering can be more appealing to clients with specific needs.  

What does my ideal client look like, and how do I acquire them?

Spend some time thinking about your “ideal client” — i.e. the type of person you want to attract and work with. Some accounting businesses work primarily with solopreneurs and small-business owners, while others may target high-net-worth individuals or clients with international tax issues. 

What does the competition look like?

To develop a successful business plan, you need to understand what the competition looks like. What do competitor websites look like? How much do they charge for their services? What unique selling points do they have — and how can you offer something better?

What technology can I use to streamline and automate key processes?

Technology will play a vital role in the success of your business, so it makes sense to think about the type of software you want to use and the extent to which you will embrace things like automation and AI. 

What are my short and long-term business objectives?

Think about what you want to achieve over different time frames, and how you will measure success. You can look at metrics such as turnover, profit, or number of clients, and set goals over six months, one year, and multiple years, for example.

3. Choose a niche 

While choosing the services you want to offer should be part of your business plan, it deserves its own section. If you have experience and expertise in a specialist area of accounting, you may want to consider targeting a particular niche. Choosing a niche can bring several benefits:

• You get to position yourself as an expert in a narrow field of accounting 
• Over time, you become an authority in your niche 
• You can charge more for specialist services than general ones

When Erica Goode started her firm, not only did she focus primarily on a particular service type — fractional CFO and accounting services — but she also focused on a specific type of client: solo consultants. 

Niching was a game-changer for me. By focusing on a specific industry, I became an expert in that area, which made it easier to attract clients who needed exactly what I offered. It also allowed me to charge higher rates because I understood their unique needs. For new firms, niching can really help you stand out in a crowded market. It narrows down your competition and helps you build a stronger brand.

So how do you go about choosing an accounting niche? Here’s Erica’s advice: 

Start by looking at your own strengths and experience. Think about industries where you’ve worked before or where you have a natural interest. Then, do some research—what are their pain points? Is there enough demand for your services? Don’t be paralyzed by picking the perfect niche. You can always change directions later. Just choose something to start.

When choosing a niche, consider looking at emerging accounting trends that look set to grow significantly in the coming years, such as:

• Cryptocurrency taxation
• Sustainability and green accounting 
• Fractional accounting and CFO services

Alternatively, you can look at more traditional niches. For example, you can focus on particular industries or business types that have unique challenges and requirements, such as: 

• The healthcare industry
• The real estate industry
• Tech startups and SaaS businesses
• Tax planning for high-net-worth individuals

4. Secure financing

Starting an accounting business involves an initial investment to get things off the ground, with plenty of one-off or recurring purchases to budget for, including: 

• Business registration and license fees
• Professional certification
• Software licenses
• Hardware (computer, monitors, etc.)
• Home office equipment and furniture
• Website building and hosting

Once you have a solid understanding of the costs involved in getting started, you can look into different financing options. 

First up, if you have enough savings, you can fund your business yourself. Alternatively, you can apply for a bank or small-business loan. This is a sensible option for most, but it’s important to pay close attention to the interest rates and terms applied.

Alternatively, you can look for external investors to provide the capital you need to get started. This can be successful in giving your business a financial boost, but it comes at the price of giving up some of the ownership and autonomy that make running your own business so rewarding.

5. Choose a business structure

The type of business structure you choose will have different legal and tax implications, so it’s important to do your own research. Let’s take a look at the available options.

Sole proprietorship

If you are starting out on your own, sole proprietorship makes a lot of sense. It’s the simplest and easiest type of business to set up and all profits are considered personal income, so you pay income tax instead of corporate tax. 

On the downside, sole proprietorships offer no liability protection — so you are personally responsible for any debts or losses. Legally speaking, there’s no separation between you and your business. So if your business struggles, your personal assets — including your home and savings — are put at risk.

Pros: 

• Easy and inexpensive to set up
• Simplified tax reporting

Cons: 

• Unlimited personal liability
• Harder to raise capital
• Limited growth potential as a solo firm   

Partnership

If you are going into business with other people, a partnership gives you shared ownership rights and responsibility. This structure also gives your business access to more capital and broader expertise. 

On the flip side, you give up some of your autonomy and decision-making power. 

From a tax perspective, partnerships are “pass-through entities”. This means the business itself doesn’t pay any tax. Rather, any profits or losses are passed through to partners, who then report their share via a personal income tax return. 

There are three types of partnerships: 

• General partnership (GP). All partners equally share the profits, liabilities, and responsibilities of running the business. Each partner is personally liable for any business debts or legal actions.  
• Limited partnership (LP): Consists of general partners who manage the business and limited partners who provide capital but are not involved in the day-to-day running of the business. Limited partners have liability protection, general partners don’t.
• Limited liability partnership (LLP). Similar to a GP in terms of how the partnership is run, but all partners have liability protection. 

Pros: 

• Relatively simple from a tax perspective
• Access to more capital and diverse expertise
• Shared responsibility can be beneficial in terms of workload 

Cons: 

• General partners are liable for business debts
• Shared ownership may result in disagreements and disputes
• Profits are shared, which may limit your earnings

LLC (limited liability company)

LLCs offer you personal liability protection, so you are not personally responsible for paying any debts if the company struggles financially. 

An LLC is taxed as a sole proprietorship if it has a single owner and as a partnership if it has multiple owners. That said, you can choose to have your LLC taxed as a corporation, which can bring additional tax advantages (more on that later). 

Pros: 

• Limited personal liability
• Flexible tax options
• Simpler to maintain than corporations

Cons: 

• More expensive and complex to set up than a sole proprietorship
• Some states impose additional fees or taxes on LLCs

C-Corporation 

A C-Corp is the standard corporate form for large businesses. C-Corps offer liability protection to business owners and are taxed as separate legal entities. This means that any profits are taxed at the corporate level first, and then shareholders pay taxes again on any dividends they receive — a form of double taxation. 

One benefit of this structure, however, is increased flexibility in terms of raising capital, issuing stock, and offering employee benefits. That said, the C-Corp structure is really for larger, well-established firms, not new ones. 

Pros: 

• Full liability protection
• The option to raise capital by issuing stock
• No limits on shareholders, making it an ideal choice for larger firms 

Cons: 

• Complex to set up and maintain 
• Double taxation — first at the corporate level, then at the shareholder level
• Higher administrative costs and more stringent regulatory obligations

S-Corporation

Like C-Corps, S-Corps are separate legal entities and provide liability protection for owners. Where they differ, however, is how they are taxed. S-Corps are taxed as pass-through entities. This means that business income is passed through to the owners, who report it as personal income tax. 

Another major difference is that the S-Corp structure is only available to smaller businesses with no more than 100 shareholders, all of whom must be US citizens or residents. S-Corps also have limited options for issuing stock. 

Pros: 

• Liability protection for business owners
• Pass-through taxation — avoids double taxation
• A more sensible choice than C-Corp for most accounting practices

Cons: 

• Limits on the number of shareholders
• More administrative paperwork and formalities than other structures
• Cannot issue different classes of stock

6. Register your business and obtain licenses and permits

To legally operate your business, you’ll need to register it with the relevant authorities and obtain the necessary business licenses. The exact steps for this will differ depending on your location and the type of business structure you choose, but here are some general steps you may need to follow to ensure compliance at the federal, state, and local levels:

General requirements

• Choose a business name. You can use this search tool to check whether a name is already registered. 
• Open a business bank account. This is optional (but recommended) for sole proprietorships but mandatory for partnerships and corporations.

Federal requirements

• Employer Identification Number (EIN). If you’re planning to hire employees or operate as a partnership or corporation, you’ll need to apply for an EIN. This is a number used to identify your business for tax purposes. You can apply for an EIN from the IRS here.
• Circular 230. To ensure compliance with IRS regulations, you’ll need to familiarize yourself with the US Treasury Department’s Circular 230, a publication that establishes rules for professionals who practice before the IRS.
• Preparer Tax Identification Number (PTIN). If you plan to prepare tax returns, you’ll need to apply for a PTIN. You can apply for a PTIN from the IRS here.

State requirements

• CPA license. To provide certain services, such as external audits or representation in front of the IRS, you’ll need a CPA license from a professional accounting body such as the American Institute of Certified Public Accountants (AICPA). If you already have a CPA license, you’ll need to maintain it by meeting the requirements for continuous professional education. 
• State-specific licenses. According to the National Association of State Boards of Accountancy (NASBA), every accounting firm in the US must register with the board of accountancy in their particular state. This process can vary from state to state, so make sure to check with your state’s board for specific requirements. 

Local requirements

• General business permits. Local governments often require businesses to obtain specific licenses or permits to operate legally within their jurisdictions. The requirements will vary from place to place, so check with your local government to understand your specific obligations.
• Zoning approvals. If you plan to run your firm from a home office or commercial office space, you may need to check that the location complies with local zoning laws. Some places require specific zoning approvals — particularly if clients will be visiting your office.
• Building permits. If you plan to renovate or reconstruct a building or apartment to create office space, you may need to apply for a building permit from the local building authority.

7. Set up your business location

You’ll need to decide whether you want to have a physical office location or operate as a virtual firm from the comfort of your own home (or anywhere else!). 

With the advent of cloud software, it’s no longer necessary to have a brick-and-mortar business, and you’ll save a lot of money by going fully virtual. Going virtual also allows you to serve a broader client base as you aren’t limited by geographical constraints.

8. Invest in technology and tools

Technology is key to an efficient and profitable business, so it’s important that you research the options and choose wisely. The more you can hand over repetitive manual tasks to software, the more clients you’ll be able to take on — and the more money you’ll make!

Key software to choose

So what do you need to build a winning tech stack? First of all, you’ll need to invest in accounting or tax software, such as QuickBooks, Xero, or Sage. Then, we recommend getting comprehensive practice management software that combines all the tools you need to run your firm efficiently. 

TaxDome, for example, provides a central hub for managing your clients, tasks, workflows, and documents, replacing the need for multiple standalone apps. Then there are AI tools you can use, such as ChatGPT, to speed up all manner of different processes. 

Data security and cybersecurity

As an accounting firm owner, you have a duty to ensure that your client’s personal and financial data is always secure. Here are some best practices and tools for safeguarding your business and client data: 

• Secure client portals. Practice management software such as TaxDome offers secure client portals that encrypt data during transfer. This enables clients to exchange communications and documents with you in a secure environment. 
• Virtual private networks (VPNs). VPNs enable secure connections to your accounting systems when working remotely. They encrypt your data and mask your IP address, protecting you from potential hackers. 
• Regular security audits and updates. Schedule regular security checks using professional third parties when necessary. Ensure that all of your software and operating systems are regularly updated to include the latest security patches. 
• Antivirus software. Choose robust antivirus software that can detect and nullify malware, spyware, and ransomware threats. Popular choices include McAfee, Norton, and AVG.  
• Firewalls. Make sure you have a firewall installed to monitor network traffic and block any unauthorized access. 
• Secure cloud storage. Use practice management software with unlimited storage and industry-leading security features — like TaxDome. 

You’ll also need to ensure compliance with relevant data protection regulations, such as GDPR and HIPAA. Accounting and practice management software often comes with built-in compliance features, but make sure you have a solid understanding of your obligations. If you have a team, make sure you provide appropriate security and compliance training.

9. Market your business

Once your business is up and running, you need to get the word out and drum up interest. There are all sorts of strategies you can use to market your business, but we’ll list some of the most proven methods below. 

Build a professional website

Your website is the digital home of your business, so you want it to look clean and inviting. It should explain in simple terms: 

• Who you are
• What services you offer
• Why clients should choose you over any other accounting firm

Ensure that your website is well structured and easy to navigate, with well-placed calls to action (CTAs) for contacting you or scheduling an appointment. Here’s Erica’s website for inspiration: 

Optimize your website for search engines

It’s no good having a beautiful website if nobody ever visits it. To get your website seen, you need to ensure that it ranks highly when potential clients search for certain terms, or keywords, on Google. 

For example, if you want your website to appear on Google’s search results when someone types in “Tax accountant in Miami”, you’ll need to make sure this keyword is placed strategically throughout your website. You can also boost your website’s SEO by publishing regular blog posts and ensuring that your content is authoritative and useful. 

For a deeper understanding of how to leverage SEO in your accounting business, check out this article: SEO for accountants: 16 effective strategies to attract new clients.

Email marketing campaigns

Email marketing is a tried-and-tested way to engage leads and nurture existing clients. In fact, almost half of marketers (43%) say that email drives the highest ROI of all marketing channels. But to reach potential clients, you’ll first need to capture their email addresses. 

You can do this by creating a valuable piece of gated content — i.e. content that a lead can only access by entering their contact details. This content could be a free ebook, a checklist, or a template, for example. Once you’ve got an email list, you can craft personalized and relevant emails that provide real value. For example, your emails might: 

• Inform recipients about important tax regulation changes or deadlines
• Provide tips for financial management
• Highlight special offers for your services

Always remember to add a CTA, so the client can visit your website or book a call. And remember — your emails should be concise, engaging, and useful. 

Pay-per-click advertising (PPC)

PPC advertising enables you to place your website at the top of search results for specific keywords. As the name suggests, you only pay when someone clicks on your ad. 

PPC ads guarantee visibility for certain keywords in the short term, but due to their cost, they aren’t a long-term strategy. SEO, on the other hand, has the potential to drive a steady flow of organic traffic over the long term. Where SEO is necessary, PPC can be seen as an optional way to boost traffic when needed.

LinkedIn and other social media platforms

Social media content is a powerful tool for driving engagement. By posting regular updates, industry-specific insights, and other useful information, you can capture the attention of potential clients. 

There are plenty of different platforms to choose from, but as the only professional social network, LinkedIn is a must. LinkedIn is a great place to build a strong network and engage directly with industry leaders and your target audience.

Other networks bring their own advantages and formats. Instagram is ideal for highly visual posts, including infographics or short updates. YouTube is the premier site for video content. 

Networking at industry events

Despite our reliance on digital connections, you can’t beat meeting people face to face. Industry events and conferences are a great way to network with industry professionals, connect with potential clients, and get the word out about your accounting firm. 

If you really want to challenge yourself, you could boost your personal brand by giving conference talks or participating in panel discussions. 

Professional associations

Becoming a member of professional accounting bodies and associations is often a necessity for maintaining professional designations. It’s also a great way to expand your network. 

Membership in organizations such as AICPA provides access to exclusive events and educational resources. Professional bodies often have directories of registered members, where potential clients can look you up.

Local advertising

Once your business is up and running, local advertising can be an effective way to drum up interest. By placing ads in local newspapers, business directories, or magazines, you can familiarize the community with your brand and services. You could even consider advertising on local radio stations or sponsoring local events.

Beyond legacy advertising methods, you can boost visibility in your local community by creating a Google My Business profile. This free service from Google puts your business front and center on local search results and Google Maps. In addition to finding your business, potential clients can view opening hours, contact information, and even client reviews without even heading to your website. 

Here’s an example of local accounting firms in Miami that use Google My Business:

 10. Focus on client retention

It costs five to seven times more to acquire a new customer than to retain an existing one. In other words, once you’ve onboarded a new client, you need to do everything you can to retain them.

Ultimately, happy clients tend to be loyal clients. The key is to understand what the modern client expects from an accounting firm. Here are some ideas to help you build trust and nurture client relationships that last:

Personalized communication 

Where possible, tailor your interactions to meet individual clients’ needs. This means understanding their unique financial goals and providing personalized emails and messages that make them feel valued. 

Slick digital interactions

It should be easy for your clients to share documents or interact with your firm on any device. Choose practice management software like TaxDome, which offers a secure client portal and client mobile app where clients can manage all touchpoints with your firm. 

Proactive problem-solving

Advise your clients about upcoming regulatory changes or tax deadlines. Anticipate issues they may have, and offer tailored solutions to help avoid them. Provide detailed instructions for processes that require their input. 

Exceeding expectations

Go above and beyond to deliver not only outstanding services but also an incredible client experience. Think of ways you can differentiate yourself from other firms — whether that’s through seamless onboarding, fast response times, or valuable education materials.  

Encourage client feedback

Demonstrate your commitment to continuous improvement by using client feedback surveys. Ask specific questions about areas you could improve — and implement changes accordingly. This shows you care about providing the best possible service.

Pricing your accounting services

Determining how your services will be priced is a major decision that can directly impact how profitable and successful your business is. In this section, we’ll explore some common pricing models, their pros and cons, and how to determine and communicate your rates.

Hourly rates

Hourly rates ensure that you are compensated for the time you spend delivering a service. As a result, this pricing structure is suitable for unpredictable or complex projects where you can’t provide an accurate flat fee upfront. 

Pros: 

• Your fees reflect the time spent 
• No risk of undercharging if the scope of a project expands
• Clients have transparency in how fees are calculated

Cons: 

• Clients may be put off by not knowing how much they’ll pay in total
• Pressure to work faster if project scope creeps
• Potential issues around trust and efficiency

Fixed rates

This model involves charging a flat fee for services upfront. Because the fee is determined before you start working on the project, this pricing structure only works for services that are relatively straightforward and predictable. For example, income tax returns or monthly bookkeeping. 

Pros:

• Clients appreciate the clarity and predictability of costs
• You can improve your profit margins by increasing efficiency
• Fewer issues relating to trust 

Cons:

• You may end up undercharging if a service or project is more complex than expected
• Potential disagreements with the client if the scope of the service shifts

Value-based pricing

An alternative to the more traditional hourly and fixed-rate structures, value-based pricing sets fees based on the value your services bring to the client. Naturally, this fee structure only works for services that lead to tangible financial benefits for the client, such as tax planning or advisory.

Pros: 

• Align what you charge with client outcomes
• Focuses on tangible results rather than time or effort
• Enables greater earning potential

Cons: 

• It can be difficult to determine and communicate the value of some services
• Not as easy to benchmark your fees against industry standards
• Relatively high risk — you could potentially work for nothing

How to determine competitive rates

To determine how much to charge for your services, you’ll need to do some thorough market research. Look at what competitors are charging for similar services in your area. Find firms that are similar to yours, led by accountants with similar qualifications and experience. 

Next, you’ll need to decide whether you want to match your competitor’s pricing or undercut them. If you feel you offer something uniquely valuable, you can even choose to charge more than direct competitors — but this is risky for a new firm without an established client base. 

When determining your rates, consider factors such as:

• Experience and expertise. If you have specialist expertise or extensive experience, you can charge higher rates. Likewise, CPAs command higher fees than regular accountants.
• Service complexity. The more complex your services, the higher hourly or fixed rates you can charge. 
• Geographic location. Firms in cities and affluent suburbs charge more than those in rural areas. Prices also vary greatly from state to state. 
• Client size. Larger businesses with more intricate needs may be willing to pay extra than small businesses with relatively simple needs.

How to present your prices to clients

When presenting your pricing to clients, transparency and clarity are essential. The more upfront and straightforward you can be, the more clients are likely to trust you. Here are some best practices for presenting your prices to clients:

• Be as transparent as possible. Clearly explain what is included in each service and what additional charges may apply. If possible, explain how your rates are calculated. 
• Make pricing accessible. Present your pricing on your website where possible. Clients shouldn’t have to contact you to find out how much you charge.
• Create tiered packages. Offer service packages at different pricing levels. Bundle services together at a slight discount to drive interest.
• Use professional proposals. Leverage software like TaxDome to send professional proposals, including information about your services and price lists.

Running a home-based accounting firm

Thanks to modern cloud-based software, you can run an accounting practice from the comfort of your own home. This is an especially appealing option for accountants looking to avoid busy commutes or formal office spaces. It provides comfort and flexibility to your working life while saving the money spent on traditional overheads. 

On the flip side, running a business from home can also be uniquely challenging. It can be difficult to separate personal and professional activities. Then there are all manner of distractions, which can lead to productivity issues. 

In this section, we’ll explore some of the legal and practical factors to consider. 

Local zoning laws

As we discussed earlier, you may need to check zoning laws and requirements to ensure that your residence can legally be used for business purposes. Some jurisdictions may restrict certain types of business operations from home — especially if they involve regular visits from clients. Because each jurisdiction has its own zoning requirements, you’ll have to check the website of your local planning department. 

Insurance policies

Regular home insurance policies often aren’t adequate for all your needs as a business owner. To ensure that you are covered for all eventualities, we recommend looking into home-based business insurance. 

In addition to providing coverage for damaged property and expensive office equipment, home-based business insurance covers additional areas relating to your business, such as injuries or legal action. You should also look into: 

• General liability insurance
• Professional liability insurance
• Cyber liability insurance

Coworking spaces

Working from home 100% of the time isn’t for everyone. If you want a change of scene, coworking spaces offer a convenient alternative. 

In addition to providing a professional environment, reliable internet, and dedicated meeting rooms, coworking spaces are a great place to meet like-minded entrepreneurs and expand your network. We recommend looking for coworking spaces that offer day passes and flexible memberships. 

Virtual offices

A virtual office is a service that provides businesses with a physical address and other office-related services — but without the costs and hassle associated with hiring actual office space. Depending on the package, you might get: 

• A business address and mail-handling services
• Phone-answering services
• Meeting rooms as needed
• IT support

A virtual office is a cost-effective way to make your business feel more official while maintaining all the perks and flexibility that come with running an online firm. 

Common challenges and solutions

Starting an accounting firm can bring huge benefits, but it’s also full of challenges. Most aspects of running a business will be entirely new, which forces you out of your comfort zone. For Erica Goode, the sheer scale of the challenge seemed overwhelming at first. Taking things one step at a time helped:

Despite having a ton of public and corporate experience, I still felt unequipped to start my own firm. Getting over the fear and trusting my knowledge and experience was my biggest hurdle. Just starting and taking small steps slowly added to my confidence.

Below, we’ll explore some of the major hurdles you may come across when starting an accounting business — and what you can do to overcome them. 

Attracting and retaining clients

To attract accounting clients, you need to stand out from the crowd. This involves having a strong online presence, with an SEO-optimized website. You also need to communicate your services and costs clearly, highlighting the reasons why clients should choose you over any other firm.

Retaining clients is another challenge altogether, but ultimately it boils down to one thing: the client experience. Offer an outstanding service, clear communication, and seamless digital processes, and your clients will stick around.

Managing cash flow

When you’re just starting out in business, cash flow can be irregular at best, which can hamper your ability to invest and grow. There are several things you can do to mitigate the impact of irregular cash flow, including: 

• Creating a detailed budget to forecast income and expenses
• Use invoicing software to automate invoice sending and speed up payment
• Request some money upfront in the form of a deposit
• Consider lines of credit or small-business loans to cover shortfalls

Keeping updated on regulatory changes

Tax laws and industry standards are subject to change. As a business owner, the buck stops with you, so it’s imperative that you stay up to date with the latest regulations. Here’s how:

• Sign up for tax and accounting news alerts from official sources such as the IRS and AICPA
• Dive into popular accounting blogs, websites, and podcasts
• Prioritize continued professional development 
• Use accounting and practice management software that incorporates regulatory changes

Handling administrative tasks

Running an accounting business involves all sorts of repetitive admin tasks. When performed manually, these tasks can be a huge drain on your time and resources. This is where technology can help.

By choosing software that automates repetitive processes, you free yourself up to focus on growing your business. With the right practice management software, for example, you can automate entire accounting workflows, including all client communications, task management, document management, and invoicing.

Common mistakes new accounting firms make — and how to avoid them

Starting a new business is like entering an entirely new frontier — virtually everything is new. While mistakes are a natural part of the learning process, you can avoid some of the major issues new firms face by understanding them. Here are some common mistakes to be aware of, as well as some strategies to avoid them.

Underestimating startup costs

New firm owners often underestimate how much money it costs to get a business off the ground. There are all sorts of costs to consider, from business licenses to technology investments and office expenses. On top of that, you have to factor in lengthy periods where you have very little or no income. 

Underestimating startup costs can lead to cash flow problems, limited opportunities for growth, and a whole lot of stress. 

Solution:

• Create a detailed financial plan that includes all potential expenses
• Factor in periods with zero or low income 
• Focus on building highly efficient and scalable workflows
• Ensure that you secure sufficient capital or financing options 
• Maintain a contingency fund for unexpected costs

According to Erica Goode, it’s crucial to keep your practice lean and efficient from the start. By setting the right foundations, you can grow your business while keeping costs in check. Here’s how she did it: 

I kept things lean by being as automated as I can, where it makes sense for me. I use accounting software with built-in automations to handle most of the heavy lifting, which saves me tons of time. I also have one outsourced bookkeeper who’s non-US based. I avoided extra overhead — no fancy office space or full-time employees in the beginning. It was all about working smart and minimizing unnecessary costs.

Inadequate marketing efforts

It’s easy to get wrapped up in the formalities of starting a business and overlook one of the most important factors in making it successful: marketing.

Some firm owners understand the need for marketing but fail to dedicate the required resources to it. This is understandable — marketing is a very different world to accounting. But you can’t run a successful firm if you don’t have clients, and marketing is how you attract them. 

Solution: 

• Develop a robust marketing strategy that spans content, SEO, social media, and local advertising
• Leverage AI tools such as ChatGPT to speed up digital marketing plans and content outlines — but don’t rely on them too heavily! 
• Take a client-focused approach to content creation that delivers real value
• Engage with your audience directly to build brand awareness and generate leads
• Tap into the freelance market to access marketing expertise on demand

Poor client relationship management

Strong client relationships are the backbone of a successful accounting firm. Happy, well-informed clients tend to stick around for the long term. That said, new firm owners may overlook this crucial factor in the day-to-day busyness of running a firm. Alternatively, they may be so hyper-focused on scaling their business that they neglect their existing clients in favor of chasing new ones. 

Solution:

• Focus on providing an outstanding client experience at all touch points with your firm — from onboarding to regular updates
• Leverage practice management platforms like TaxDome that automate client communication and provide secure client portals and mobile apps
• Scale your client base sustainably — don’t overstretch yourself by taking on more clients than you can handle

Neglecting regulatory requirements

In the rush to launch an accounting business, some owners fail to stay on top of ever-changing compliance requirements. Neglecting licensing and industry regulations can lead to penalties and damage your reputation. 

Solution:

• Stay up to date with the latest tax laws, accounting standards, and industry regulations
• Provide ongoing training for staff on regulatory compliance, data protection, and internal controls
• Maintain professional certifications, designations, and memberships

Overextending services without proper expertise

When designing your service offering, it can be tempting to offer anything and everything in an attempt to maximize your client base. But offering too many services can leave you stretched thin, resulting in mistakes, inefficiencies, and damaged client relationships. 

Solution:

• Focus on services that you have strong expertise and experience in
• Consider becoming a specialist in a niche area of accounting 
• Gain the necessary skills and qualifications before branching out into new areas of accounting
• Hire additional staff with specialist skills that complement your own

FAQs

Do I need to be a CPA to start an accounting firm?

To advertise yourself as an accountant and serve clients, you’d need to be qualified, and that means having a bachelor’s degree in accounting and at least some real-world experience. Having the CPA designation is certainly a huge advantage that will differentiate you from many other accountants, but depending on the services you want to offer, it might not be a necessity.

Can I start an accounting firm from home?

Yes, absolutely. Not only is running a fully virtual firm possible, but it’s also preferable in most cases. You save the time, hassle, and cost associated with finding and renting office space. With the right software, you can run an accounting firm from anywhere!

Do I need prior accounting experience to start my own firm?

Some accounting experience is necessary to run your own accounting firm. Without prior experience, you’re setting yourself up to fail and won’t be taken seriously by potential clients.

What are the best ways to find clients for a new accounting firm?

In today’s digital world, the best way is through an online presence. With an attractive website, SEO content, and regular social media posts, you can attract a steady stream of new clients.

How long does it typically take to start an accounting firm?

It depends on various factors, such as the company structure you choose and other formalities, but once you’ve registered your business, you should receive confirmation within a week. There’s a lot of planning that comes before that, however, and the more time you spend fine-tuning your strategy, the better set you’ll be.

Are there any specific insurance requirements for accounting firms?

Yes, you’ll need insurance policies that protect you against legal action from clients, including professional liability insurance, general liability insurance, and cyber liability insurance. Your exact requirements will depend on your business size and structure, so be sure to speak to a legal or insurance specialist.

To sum up

Starting your own accounting business can seem like a huge step into the unknown, but with the right experience, skills, and preparation, it could be one of the best decisions you make. We hope the steps in this article give you the information you need to decide whether running an accounting business is for you. 

One of the most important factors in running an efficient and profitable business is choosing the right technology. If you want to see first-hand how TaxDome can transform your accounting workflows and automate repetitive tasks, request a free demo today.