How to start an accounting firm in Australia: a comprehensive guide

Starting an accounting practice might seem like a daunting challenge, but in fact, it has never been easier. With the rise of cloud software, remote work, and workflow automation, accountants can set up truly efficient and scalable businesses from the comfort of their own homes. 

At the same time, modern accounting practices are no longer restricted by geography, enabling them to attract and serve clients nationwide or even globally. No wonder the number of accounting businesses in Australia has been on the rise in recent years, reaching almost 36,500 in 2024. 

If you like the idea of starting your own practice, chances are you’ve got a lot of questions about the process and what’s involved. Fear not — we’re here to help. In this article, we’ll guide you through the benefits, requirements, and steps involved in setting up your own accounting business. 

Why start an accounting practice in Australia?

There are tons of reasons to go it alone and set up your own accounting practice in Australia. In this section, we’ll look at three of the biggest.

The demand for accountants is outstripping supply

The growing number of accounting practices in Australia reflects the growing demand for accounting services. In our digital-first world, more people are choosing to start businesses, and those businesses and people need accountants. Despite a slower growth rate than previous years, the total number of businesses in Australia still grew by almost 20,000 during the 2022/23 financial year. 

Despite the growing number of accounting firms, the demand for accountants in Australia is severely outstripping the supply. In other words, there simply aren’t enough accountants to service the nation’s needs. This makes starting a new accounting practice a tempting business proposition.

Technological advancements make running a business easier than ever

Starting your own accounting practice is so much easier today than it was five or ten years ago because of the growing role that technology plays. Today, forward-thinking accountants can use accounting and practice management software to automate large parts of their accounting workflows, enabling them to serve more clients while increasing the quality and accuracy of their service. And they can do all this from any location. 

At the same time, AI tools such as ChatGPT can act as digital assistants, handling all manner of jobs. Sales and marketing automation software makes it easier than ever to engage and convert new clients, while analytics tools provide accounting businesses with valuable insights, enabling them to squeeze more value out of their business decisions. 

Taking charge of your destiny is inherently rewarding

Sure, starting an accounting business is fraught with challenges and uncertainty. But for those brave enough to give it a shot, the personal rewards can be immense. First of all, being the captain of your own ship is intrinsically rewarding in a way that working for someone else can never be. What’s more, becoming a business owner rips the ceiling off your earning potential. The sky’s the limit — in theory, at least. 

Then there’s the personal satisfaction that comes with learning new skills — from business management to digital marketing, SEO, and much more. Running a business is a huge learning curve, but it leads to a broader skill set and more professional growth.

What are the legal and professional requirements for accountants in Australia?

Starting a business is a serious undertaking, requiring accountants to meet the relevant legal and professional requirements. In this section, we’ll guide you through the necessities for setting up shop in Australia. 

Registering with the Australian Securities and Investments Commission 

For your new business to formally exist and be legally able to operate, you first need to register it with the Australian Securities and Investments Commission (ASIC) — the official government regulator for companies and financial services. 

Registering your business with ASIC involves several steps, including: 

• Deciding what your company will be called (you can check name availability here), how the business will be governed, and who (if anyone) will hold key positions
• Obtaining an Australian Financial Services (AFS) licence — if you intend to provide financial advice via your business
• Completing the online registration process

Obtaining an Australian Business Number

You’ll also need to register for an Australian Business Number (ABN) from the Australian government’s Business Registration Service. An ABN enables you to interact with various government departments via a single identification number.

While you are only legally required to register for an ABN if your business has an annual turnover of at least AU$75,000, it makes sense to get one anyway as soon as you can. Registering is completely free and usually takes just a few minutes to complete.

Gaining your Professional Practice Certificate

To operate as an accountant in Australia, you’ll also need to hold a Professional Practice Certificate (PPC). The PPC certifies that you have met the professional standards required to practise publicly.

You can register for your PPC through relevant professional accounting bodies, such as the Institute of Public Accountants (IPA), CPA Australia, or Chartered Accountants Australia and New Zealand (CA ANZ). 

All three professional accounting bodies have their own requirements that members must meet to be eligible for the PPC, but these generally include:

• Completing the Public Practice Program
• Having a minimum number of years of public practice experience
• Having professional indemnity insurance

We recommend checking the professional body you are a member of for specific details.

Starting an accounting practice in Australia: main steps to follow

We’ve already touched on the formalities of starting an accounting practice in Australia. But beyond the legal requirements, what do you need to have in place before you can open your business to the world? In this section, we’ll cover some key steps to consider.

1. Build a comprehensive business plan

Before you start a business, you need a detailed business plan. Without this, you’re moving into the complex world of business ownership without answering fundamental questions about what you hope to achieve and how. To create a comprehensive business plan, here are some important questions to ask:

• How will you structure the business? Will you be registered as a sole trader, a partnership, or a company? (More on this later)
• What services will you offer? Will you focus on general accounting and tax services, or will you try to corner the market by offering more specialised services?
• What will your ideal client look like? Will you serve businesses or individuals? 
• How will you attract new clients? What is your plan for digital marketing?
• Where will you be located? Will you rent office space or work from home?
• How will you get the business off the ground? Do you need to secure a loan or investment?
• What are your financial goals, and how will you measure success?

Answering these questions will help you understand what you need to do to move forward with your business, stay focused, and achieve your goals. 

2. Understand your financial needs and resources

Before you can launch your business, you need to ensure that you have the financial resources to get it off the ground and cover any shortfalls while you build a client base. Before you can decide whether you need to secure a loan, credit, or investment, you’ll need an understanding of the costs involved. Here are some factors to consider:

• Startup costs: you’ll need to cover the cost of setting up your office or home office, including hardware, software, and furniture. There are also fees and costs associated with building a website, securing a domain, and marketing your new business. If you plan to hire staff or freelancers, you’ll also need to cover initial salaries and fees.
• Working capital: businesses take a while to get going, so you’ll need to have enough funds to cover operational expenses for at least six months, including rent, utilities, software licences, and salaries.
• Contingency fund: it’s a good idea to have an emergency fund that you can dip into in the event of an unexpected crisis, such as illness, damage to equipment, or a severe economic event that damages business.

3. Set up a business bank account

It’s important to keep business and personal funds separate, so setting up a business bank account is an essential step that enables you to:

• Track income, expenses, and tax obligations more effectively
• Access financial management tools and features that aren’t available on personal accounts
• Secure business financing more easily

4. Conduct detailed competitor research 

To understand how you can maximise your service offering and attract as many new clients as possible, it’s important to take a detailed look at your direct competitors. Here are some steps you can take:

• Identify competitors — look for accounting practices of a similar size, with similar services and target markets
• Analyse their service offering and pricing — what do they do well, and where could they do better? 
• Assess any gaps in the market you can fill — how can you undercut your competitors, improve on their offerings, or offer something they don’t?

5. Obtain the right qualifications

To be taken seriously as an accountant and prove you know what you’re doing, you’ll need to have the minimum qualifications and experience. Having the following will help you demonstrate your competence and credibility, as well as meet regulatory requirements:

• A degree in accounting or finance — this is generally considered a prerequisite for an accountant in Australia
• A Professional Practice Certificate — as mentioned previously, you’ll need a PPC to be able to legally provide public accounting services
• Certified Public Accountant (CPA) or Chartered Accountant (CA) status — while optional, becoming a CPA or CA differentiates you from the crowd, showing potential clients that you meet the rigorous standards and expertise required of these prestigious designations

What’s the best business structure for an accounting firm?

As we mentioned earlier, you’ll need to decide on a business structure before you go through the formalities of setting it up. Essentially, there are three viable options for a new accounting practice: registering as a sole proprietorship, a partnership, or a company. Let’s explore the pros and cons of each.

Sole proprietorship

The simplest form of business ownership, a sole proprietorship is a business owned and run by one person. When you set up a sole proprietorship, there’s no legal distinction between you (the owner) and the business.

Pros:

• Simple to set up and control: sole proprietorships are easy and inexpensive to set up, with fewer regulatory requirements than other options. As the sole owner, you have full control over all business decisions.
• Simple taxation: any profits you make will be subject to individual income tax rates, making tax filing relatively simple. 

Cons: 

• Unlimited liability: as the owner of a sole proprietorship, you are personally liable for any debts or obligations relating to the business, potentially putting you at financial risk.
• Limited capital: raising funds can be a challenge as you’re relying either on personal savings or loans to get the business off the ground.
• Limited growth potential: given that a sole proprietorship is dependent on your resources and capacity, it may be harder to scale the business compared to other structures. 

Partnership

As the name suggests, a partnership is a business structure comprising two or more owners, who each share responsibility for the business’s successes or failures, with any profits or losses being distributed among the partners.

Pros:

• Shared responsibility: partnerships can be less daunting as the workload, responsibilities, and risks are shared among trusted partners.
• Combined resources and expertise: Multiple owners bring a diverse range of expertise, skills, and experience, as well as additional financial resources.

Cons: 

• Unlimited liability: like sole proprietors, partners are personally liable for any business debts and obligations. 
• Potential for disputes: the more people involved in running a business, the higher the potential for disagreements and disputes.
• Added complexity: setting up a partnership involves preparing a partnership agreement, which sets out the the terms, conditions, and responsibilities.

Company

Unlike the other two options we’ve discussed, a company forms a separate legal entity to those owning it. That means the company itself can incur debt without the owners being liable. As you’d expect, however, this structure is more complex to set up. 

Pros:

• Limited liability: as an owner, your personal funds remain safe, even if the company spirals into debt, providing you with protection against financial insecurity.
• Wider access to capital: it’s easier for companies to secure external financing than it is for sole proprietorships or partnerships.

Cons: 

• Greater complexity: companies are more complex to set up and maintain, with more stringent regulatory and reporting requirements.
• Higher costs: companies are also more expensive to set up and run compared to other structures.

What is the best accounting software for accounting firms?

In today’s digital-first world, the software you choose is a defining factor in how efficient your business is, how many clients you can take on, and the quality of service you will provide them.

While there are countless apps you can use to organise, streamline, and automate your accounting workflows, there are two crucial pieces of an accounting tech stack puzzle: accounting software and practice management software. 

Accounting software

Accounting software enables you to automate much of the actual accounting work your firm will engage in, such as:

• Bank reconciliation
• Bookkeeping 
• Payroll management
• Expense tracking
• Tax preparation and compliance
• Inventory management
• Cash flow management
• Financial reporting

We recommend choosing cloud-based accounting software, which enables you to access client accounts and get work done from any device, anywhere. Top examples include QuickBooks Online, Xero, and Sage Intacct. 

Practice management software

If accounting software handles the accounting side of your business, practice management software handles everything else. Take TaxDome, for example, which combines all the tools you need to manage your clients, teams, projects, documents, and workflows — all in one place. Here are just a fraction of the powerful features that TaxDome offers:

• Customisable workflow automation
• Customer relationship management (CRM)
• Document management with unlimited secure storage and e-signatures
• Team, task, and project management
• Proposals and engagement letters
• AI-powered reporting and analytics
• Synced email and secure chats

What’s more, these features are all available on any device, meaning you can run your firm from the palm of your hand. From the client side, TaxDome offers a secure client portal and top-rated client mobile app, where clients can manage all of their touchpoints with your practice — from uploading and e-signing documents to communicating with accountants and paying bills. 

To sum up

Starting an accounting business can seem like an overwhelming challenge, but with the right preparation and planning, it needn’t be. There are also tons of reasons why it’s not just possible but also a great idea — from increased demand for accounting services to personal satisfaction and professional growth. 

We hope you’ve found the information in this article useful. Of course, if you do decide to set up your own accounting practice, remember the crucial role that software such as TaxDome plays in building efficient workflows and an incredible client experience. 

To see how TaxDome can provide all the tools you need to run a highly efficient and profitable accounting business, request a demo today!