So, you’re thinking of starting a CPA firm? That’s great! Starting an accounting firm can be extremely rewarding. No more limits to pay raises. No more answering to a boss. Plus, you’ll have the time to build your own product and discover your potential market. Basically, business owners are only limited by what they can deliver. However, opening an accounting firm calls for hard work, determination, and persistence. If you’re in for the challenge, here are the steps to starting a CPA firm.
Consider the Requirements
To open a CPA firm, you’ll need to meet some strict requirements set by your state’s accountancy board. First, you must obtain a CPA license, then you’ll apply to your state’s board of accountancy to register the firm. To get a license, you’ll need to pass the Uniform CPA exam and meet the minimum experience required by your state for licensure.
Requirements for sitting the CPA exam vary by state but there are several consistencies across the board. Most states will require a bachelor’s degree, or 120 college credit hours to be eligible. If you already have the CPA license, starting a CPA firm shouldn’t be hard.
Develop a Business Plan
Much like any other business, starting a CPA firm will require you to craft a comprehensive business plan. An ideal business plan should include your business goals, target audience, services you intend to offer, business structure, pricing strategy, and projected costs and revenue. The American Institute of Certified Public Accountants (AICPA) provides pricing information for public accountants starting a new firm.
Choose Your Legal Business Structure
Next, you will need to determine if the business will be a sole proprietorship, partnership, C Corporation, S Corporation, or any other limited liability company. Note that your choice of business structure will have both legal and tax implications.
Register for Taxes
After that, you’ll need to register for a variety of state and federal taxes before you can launch your business. If you operate a corporation or intend to have employees in the future, you must obtain the Employer Identification Number (EIN). The EIN identifies your entity for tax filing and reporting purposes. Keep in mind that most banks will ask for EIN before they can open any company accounts.
Open a Business Bank Account
Opening a business bank account is essential for asset protection. When your personal and business accounts are mixed, you subject your personal assets (car, house, etc.) to risk in the event the company is used. Moreover, learning how to build your business credit can help you secure credit cards and other financings in your business’s name.
Obtain Necessary Permits and Licenses
As mentioned earlier, to register a CPA firm, CPAs are required to have a license. Additionally, you may need to obtain a business permit and other licenses as required by your state or municipality. Common permits you might need include a general business operation license, a signage permit, or a county permit. The nature of the permits you’ll need will vary by state and the nature of your business.
Define & Market Your Brand
Lastly, you’ll want to advertise your brand to establish a footing in the market. Look for ways to communicate your brand message to potential clients, starting with creating a business website. You may also want to consider finding a partner. With another CPA, it’s easier to expand the services of your firm.
Now that you know what it takes to start a CPA firm, why not go ahead and start one?