Jun 26 2024 /

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

How to start an accounting firm: a step-by-step guide - Banner

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

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 by following the steps outlined in this guide, you have all the information you need to take that first step and make it 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.  

Will I target a niche market?

If you have the experience and expertise, you may want to consider targeting niche industries, such as real estate, healthcare, or hospitality, all of which have specific accounting requirements. Alternatively, you can specialize in areas with high growth potential, such as cryptocurrency tax. 

Narrowing down your focus means you’ll be targeting a smaller cohort of clients, but you have a better chance of becoming a leader in that particular niche. 

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 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. 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.

4. 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. 


If you are going into business with other people, a partnership gives you shared ownership rights and responsibility. It also gives your business access to more capital and expertise. On the flip side, you are jointly responsible for any losses incurred by the business, even if you were not directly responsible for them. You also give up some of your autonomy and decision-making power.

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. As an owner, any profit is considered part of your personal income and taxed accordingly.


Corporations provide the most liability protection, but they are more complex to set up and maintain. If you are just venturing into the world of business ownership, it might be best to go with a simpler structure. You can always incorporate your business later.

5. Register your business and obtain licenses

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’ll need to follow:

  • Choose a name for your business — you can use this search tool to check whether a name is already registered
  • Apply for an Employer Identification Number (EIN) — if you are a sole proprietor with no employees, you can skip this step
  • Apply for a business license 
  • Register your business with state agencies
  • Open a business bank account (optional in some cases, but still recommended)

You’ll also need to make sure you have any necessary licenses and qualifications to legally operate as an accountant. 

6. 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.

7. 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!

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. 

Want to see how TaxDome can be the operating system for your accounting firm?

Book a demo

To protect your clients’ data, you’ll also need to look into cyber security tools, including a VPN and internet security software. Then there are AI tools you can use, such as ChatGPT, to speed up all manner of different processes. 

8. 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 let people know that your business exists, but we’ll list some of the most proven ones below:

  • Build a website: focus on a clean and professional design, and explain in simple terms who you are and what you offer
  • Leverage SEO: by including appropriate keywords, publishing regular blog posts, and ensuring that your content is authoritative and useful, you’ll boost your website’s ranking in search engines, which helps drive traffic
  • Social media: drive engagement by posting useful, industry-specific content on LinkedIn, Instagram, Facebook, and even YouTube 
  • Networking: get yourself to as many industry events and accounting conferences as possible and spread the word

An infographic showing the steps you can take to start an accounting firm.

Common challenges and solutions

In this section, we’ll explore some of the major hurdles you may come across when starting your own 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 clearly communicate your services and costs, 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, webistes, 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.

The benefits of owning an accounting firm

As you can see, owning an accounting firm is not without its challenges. But if run diligently and with genuine passion and care, the benefits vastly outweigh the drawbacks. Here are just some of the advantages that come with running your own firm:

  • Financial independence with unlimited earning potential
  • Career flexibility and a work-life balance that suits you
  • Autonomy in decision-making
  • The opportunity to build something meaningful
  • The opportunity to learn new skills and empower yourself


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.

Nicholas Edwards

As a content writer for TaxDome, Nicholas helps communicate how technology can transform and enhance everyday accounting processes. He enjoys simplifying complex ideas and writing content that’s accessible and useful.

Ebook CTA

Thank you! The eBook has been sent to your email. Enjoy your copy.

There was an error processing your request. Please try again later.

Looking to boost your firm's profitability and efficiency?

Download our eBook to get the answers

Please enter a valid email address.

Choose your country and language