An accounting business never lacks for potential customers. There are always new businesses getting started. Established businesses may want to make a change from their current accounting connection or get a second opinion on a tricky tax situation. Specializing in Tax Accounting is another area that is open to a CPA firm. Corporate taxes are complex and need the advice and professional knowledge that such a firm could provide. The point is that this niche area of the business world is one that is always vibrant and open to those with knowledge, drive and a very strong work ethic. How to break into this lucrative income business is not as easy as it is with other privately owned businesses. The requirements to start or own a professional accounting business are very high as to education and experience.
A knowledgeable person could start a bookkeeping service fairly easy these days as the software and computers have made it much easier than it was before computers. To get into professional accounting or tax planning takes education, experience and in most states passing the state’s exams for such a professional designation. If you like number crunching, have a penchant for detail and are willing to spend the time and money to gain the education and then the experience, this field may be your pathway to a business ownership.
How to get started
There are two obvious ways to gain ownership of an accounting firm. You can start an accounting practice from scratch or you can buy an existing firm. A hybrid way could be to buy into an existing firm with the plan to later buy the entire firm. There are advantages to both ways of entering the ownership of an accounting business. Starting one from scratch does not take a great deal of start-up capital, but there is no built in revenue source like there would be if an existing firm were purchased. This can be critical if the start-up owner is not good at acquiring new clients. A person starting from scratch should have at least some part time clients to give them some base customers. After that, the work of gaining clients one at a time is a battle that must be won and it is never ending during the first years of operation. The start-up owner must also have some capital to live on or another source of income while their business is getting off the ground.
Buying an existing accounting practice is going to cost quite a bit more than starting a business from the ground up. An existing business has established customers and an immediate cash flow that will help to carry the business into the future. The problem for the potential new owner is the business will have a price tag that is based on the annual income. The larger the cash flow, the higher the price will be for the accounting practice. The first rule when thinking about going into business for yourself is to seriously consider buying an existing business. If the buyer has the money, the advantages far outweigh the negatives of such a purchase. The immediate cash flow is a positive that makes buying an existing business a much better bet for success than a new start-up business.
Finding an existing business for sale is rather easy as the Internet is filled with brokers who specialize in buying and selling businesses. Many of these brokers have listings on their website. Find a couple in your area and see what they have to offer.
Other Accounting Business Possibilities
If a person likes accounting, but does not want to go the full route of becoming a CPA then there are other accounting business possibilities. A bookkeeping service can be started part time and slowly grow into a full time business. Every business needs their books kept up to date. It does not matter what kind of business it is, there is the consistent need for current bookkeeping. The owner of the business may not have the time to do the books, may not know how to do the accounting or just wants to hire out this aspect of his business. This opens the door to many businesses and can also be an arrangement with a CPA firm. The CPA firm may contract out the month-to-month bookkeeping to another company. They may just recommend another company to do the grunge bookkeeping work that is needed to run the business. The opportunity here is the business client needs the day-to-day bookkeeping done and does not want to do it for themselves. This fact opens the door to a bookkeeping service.
An offshoot of the bookkeeping service is a payroll service, which can be a very good income source for the small bookkeeping service. Every business has to pay its employees in a timely manner and with few errors. This service is a commonly contracted out part of running many businesses.
A third accounting business is a tax preparing service, sales tax service and employee income tax reporting. The tax preparation is an easy business to grow, as almost every body is a possible client. This means you can have individuals and businesses as clients. The individuals may be only once a year or four times a year. There are far more of these possible clients than there are businesses. This is a natural tie in for a bookkeeping service as the business client will have to report income and possible tax owed each year or maybe even four times a year.
All three of these accounting type businesses can be started on a small scale and grown over time. It is also possible to find a bookkeeping service that is for sale and has a ready clientele. Again it is about money to buy or time to build the business. The cash flow for a one-person office or with a part time assistant can be substantial once a client list is developed or purchased. This area of the accounting business lends itself to a weekend part time start-up. The other plus factor is that with the computer and the software that is now available any one with a knack for numbers and can read can get into these businesses. You can also jump start the business by buying out a going service with a good paying client list.
The other aspect of these niche areas is they do not take the formal education and meeting of state licensing requirements. The CPA exam for instance can take several years to pass.
Conclusions
If you have the education and can pass the CPA exams, then starting a CPA firm or buying one is a way to make a good living in a much needed business. The bookkeeping and the tax rules get more complicated each year. Clients have to be advised on how to meet these requirements. They need someone to do the work and it must be done right. Since they are experts at their business, they do not have the time or energy to study this area of their business. Consequently they hire it out to a firm or bring in a bookkeeper to help. All of these requirements make for a natural and lucrative arrangement for the accounting firm.
The same can be said for the bookkeeping service and it may be easier to get into, as the requirements are not as strict. The owner along with good software can do a great deal of the work needed by clients. Since the rules and regulations get more complicated each year, this area of business will do nothing but continue to be in demand.
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