The Ultimate Guide to Starting an Accounting Practice

So, you’ve been in the accounting industry for a handful of years and have grown tired of working for someone else. Have you ever considered hanging your shingle and starting your own accounting practice? Here, we’ll walk you through all the essential steps to launch a successful accounting practice, including the important questions to ask yourself, business requirements, valuable resources, and more.

Thinking about starting a bookkeeping business instead? Explore our comprehensive guide to get started!

What are the benefits of opening your own accounting firm?

Not every accounting professional sets out with the goal of starting an accounting firm. Many can and have led long and successful careers, by joining an already-established firm. And while this could be the case for you, owning your own accounting firm does have its own share of substantial rewards.

If you find you are a more independently driven person, starting your own firm could be a perfect choice. After all, as the owner, you become your own boss. You call the shots in terms of what you want your firm to do, and how you wish to serve your clients.

This also means you have a lot more freedom regarding work hours and location.

Another big benefit to opening your own accounting firm is the financial rewards. Since you’re not being employed by anyone else, you stand to take home the lion’s share of the profits your business would make. And you’ll have the freedom to make key decisions as far as how to invest that money into your business.

What are the Risks of Starting an Accounting Practice

Opening a new business is an incredibly risky endeavor that requires dedication and commitment to have any chance of success. You’ll be subjecting yourself to a great deal of stress as you manage several aspects of the business on your own (at least until you have enough revenue to begin hiring other staff to assist you). Sit down and truly ask yourself, “Is this what I really want to do with my career?”

If you’re not entirely sure, you can benefit greatly from working for another firm for several years to get the necessary experience you’ll need. Sharpen your accounting skills in an environment where you are a pivotal part of the machine, rather than the primary driver of the business. You can use this experience to inform your decision of starting your own accounting practice.

How to Start an Accounting Firm: Step-by-Step Guide

If you’re certain that opening your own accounting firm is the path you want to take, this section will give you an overview of the steps you’ll need to take to get your business off the ground.

Step 1 - Create a Business Plan

Your business plan is your go-to playbook that defines what you hope to accomplish with your firm and what will be required to get it off the ground. This written plan will also be essential when pitching your upcoming accounting firm to prospective investors (if desired).

This plan should include the following:

• Your target clients: This is perhaps the most important step, as you’ll need to do research on your target market/clients to decide what services you’ll provide and where you’ll be operating.

• A demonstration of your credentials: This can include successful cases working for other firms, your CPA certification, and anything that shows that you’ll provide a competitive advantage for your clients.

• A financial estimate: This needs to include not only your estimated cost of services, but also the costs for marketing, costs for employees, and any other overhead costs. If you’re uncertain about what to put here, do some local research on how much it costs to start an accounting firm in your area.

Aside from a written business plan, this is the stage where you’ll want to knock out other requirements to open an accounting firm. These include acquiring a Federal Tax ID for your new business, operation licenses, as well as a business bank account and business insurance. You’ll also want to ensure that you’re well aware of any laws and regulations of running your business in your area—especially any related to the type of accounting you intend to practice.

Step 2 - Choose Your Business Structure

Each structure—sole proprietorship, partnership, LLC, or corporation—offers distinct advantages and challenges. A sole proprietorship may work for individuals who want a simple setup, while an LLC provides personal liability protection and flexibility. Partnerships are ideal for shared ownership, and corporations can be beneficial for scaling but involve more compliance and tax complexities.

Also, consider the legal and tax implications of your choice. For instance, sole proprietors have personal liability for business debts, whereas LLCs and corporations separate personal and business liabilities. Registering your business with state and federal authorities is also a key step, as is ensuring compliance with ongoing financial regulations. Additionally, you’ll want to obtain the necessary business licenses and consult with legal or financial professionals to make the best decision for your firm’s future.

If your accounting firm anticipates profitability and has a small group of owners, electing S corporation status can offer significant tax advantages by allowing income to pass through to shareholders and potentially reducing self-employment taxes on distributions. This can make it an attractive option for firms aiming to balance tax efficiency with liability protection.

Step 3 - Address Financial Aspects

Estimate your costs, like office space, accounting software, marketing, and hiring. If you’re working with a tight budget, consider funding options like self-financing, business loans, or partnering with investors.

Planning ahead will help you cover day-to-day expenses while investing in growth opportunities like technology or hiring.

You can also money on operational costs by attending free CPE webinars from CPACharge.

Step 4 - Build Your Client Base

One of the most common recommendations amongst seasoned accounting professionals is to acquire clients through word of mouth. Speak to any customers you’ve worked with before, whether it be through a previous accounting practice or through any other business venture, and see if they know anyone who is in need of the services you’re providing. If they had a positive experience working with you before, there’s a good chance they’d be happy to send you more business from their friends or family. Best of all, word-of-mouth marketing often doesn’t cost you a dime and can prove to be incredibly fast and lucrative if you get in touch with the right people.

Aside from finding referrals, you can also network with your peers. Attend conferences and industry events to meet with other accounting professionals in your field. There’s a good chance someone you’ll meet there will know a potential client or two that could be sent your way. Plus, there are always benefits to hearing about the latest trends and practices happening in the accounting world that could fuel the direction of your new business.

Finally, there’s always plenty of ground that can be covered with a solid digital marketing strategy. If the budget at the start does not allow you to in digital marketing, make sure that your new accounting firm (at the very least) has its dedicated website and a Google listing. If you don’t have one of these up and running, your business may as well be invisible to prospective clients searching for accounting services online.

Step 5 - Take Advantage of Technology

Technology has become a must for running a modern accounting practice, particularly in our current hybrid work environment—where both in-person and remote business dealings have become the norm. As you begin to research, the sheer number of accounting technology options can be daunting. It’s best to start with the essentials when starting your tax practice or any other kind of accounting business, and then branch out as you begin to learn about your technology needs.

For example, modern accounting practices can benefit from using a cloud-based practice management solution like CPACharge. This powerful solution has features such as client portals, online invoicing, document management systems, and more. Armed with a solid practice management solution, accounting professionals will have a robust set of tools that can help make their practice a success.

Aside from practice management, it’s also essential that you implement an online payment solution. These solutions let your clients securely pay invoices using a debit card, credit card, or eCheck.

Step 6 - Set Pricing Structures

If you have reviewed any other resource on the topic of “how to start your own accounting firm,” you have likely found that many new accounting businesses struggle with pricing services.

Start by researching what other firms in your area charge for similar services and, rather than setting competitive rates, find a balance that will carry your firm forward. While competitive rates are important, you don’t want to undervalue yourself.

Offering package deals or retainer options can also attract clients who prefer predictable, ongoing support.

Common Mistakes to Avoid

One of the biggest traps new accounting firms fall into is trying to serve everyone. It may feel like the right move as more clients often mean more money. But casting too wide a net may leave your services feeling generic—which could prevent you from standing out. The solution? Know your ideal client. Are you targeting small businesses, solo entrepreneurs, or tech startups? When you focus on a specific group, you can craft tailored solutions and build trust faster. You can’t be everyone’s accountant, but you can be the perfect accountant for the right people.

Next, always ensure exceptional client service. If prospects and/or current clients are left waiting for responses or struggling to understand your advice, they’ll look elsewhere. Building a great client experience doesn’t require a huge budget—just consistent communication, clear processes, and easy ways to share information. Whether it’s regular updates, accessible client portals, or friendly check-ins, the small things add up.

Lastly, don’t underestimate how much time administrative tasks can take, such as marketing, invoicing, and troubleshooting IT issues. Since these tasks can filll up your schedule quickly, it can lead to stress and burnout. The solution? Invest in tools that streamline repetitive tasks, like automated billing systems or practice management software. Don’t wait until you’re drowning—start with systems in place so you can focus on the work you’re passionate about.

Specialization in Accounting Services

Small accounting firms that are specialized can make themselves stand out. Many successful firms focus on niches such as small business accounting, tax preparation, or audits. Selecting a niche not only allows you to refine your expertise but also makes your marketing more targeted and effective.

As you grow, consider expanding your service offerings to meet evolving client needs. For example, financial planning or forensic accounting can complement core services and provide additional revenue streams. Clients often prefer working with firms that offer comprehensive solutions, so think about how you can add value without overextending yourself. Tailoring your branding and marketing to your chosen niche can also further establish your reputation as the go-to expert in that area.

Strategies for Marketing Accounting Services

Building a successful accounting practice isn’t just about being good with numbers—you also need to market your services effectively. Networking remains one of the best ways to find new clients. Attend local business events, join industry associations, and connect with other professionals who can refer work your way.

Your online presence is equally important. A professional website that clearly outlines your services and includes testimonials can help you make a strong first impression. Don’t forget to claim your Google Business Profile so potential clients can find you easily.

Another great option is social media. Platforms like LinkedIn can also be valuable for showcasing your expertise and engaging with your audience.

If you need marketing ideas for your accounting business, check out our expansive list and choose what works best.

How CPACharge Supports Accounting Practices

CPACharge is your partner in helping accounting firms grow. With CPACharge, you can accept a variety of payment methods, including credit cards, debit cards, and eChecks, all while maintaining the highest security standards. Faster payments mean improved cash flow, giving you the financial flexibility to grow your business.

Learn more about how CPACharge can help you kick-start your new accounting practice by scheduling a demo today!