Ready to take the leap into entrepreneurship and explore the exciting (and scary) world of owning your own accounting firm?

If you're unsure what it takes, let's discover how to start an accounting firm and realize your entrepreneurial dreams.

TL;DR: how to start an accounting firm

• Starting your own accounting firm offers unlimited growth, personal and professional fulfillment, independence and flexibility, and control over client relationships.
• To open an accounting firm, you need a relevant degree, public accountant certification and the right business structure.
• Accounting firms typically offer services such as accounting and bookkeeping, tax planning and preparation, financial analysis and consulting, audit and assurance, and business advisory and strategic planning.
• Best practices for growing your accounting firm include pricing your services, choosing scalable accounting software, attracting top talent, budgeting and financial management, automating internal processes, and marketing and client acquisition.

💡5 Ways to Make Your Accounting Process More Efficient

Should you start an accounting firm? … or stay in-house?

When you start your own accounting firm, it comes with the following benefits:

• Unlimited growth. As a business owner, you can set your own rates, take on more clients, hire employees and increase your earning potential. However, it’s not all roses, and you should be ready to have a somewhat unstable income as you switch to a self-employed model. 
• Personal and professional fulfillment. You have the freedom to choose the type of clients you work with, the services you offer and the overall direction of your firm, which leads to a greater sense of fulfillment and job satisfaction.
• Independence and flexibility in work. This one is a double-edged sword. On the one hand, you don’t have to stick to a 9 to 5 schedule and report to your boss. But on the other hand, managing your own business (especially in its early days) requires way more dedication than being an in-house employee. 
• Control over client relationships. You can build lasting relationships with your clients or opt out of projects that don't align with your values. This level of control allows you to shape your client base and work with clients who appreciate and value your expertise.

Being a business owner is challenging yet rewarding. But it’s clearly not for everyone. If you’re ready to take on the responsibilities and risks of starting your own accounting firm, let’s take a look at the requirements you should meet to open one.

3 requirements for opening an accounting firm

Before opening an accounting business, you need to meet these requirements. 

1. Educational and professional foundation

First, you need a relevant degree in accounting or finance—and you clearly have one if you’ve been an in-house accountant before deciding to build a firm. 

If you’re only considering enrolling in an accounting journey, you need to get at least a Bachelor's degree in accounting or—if you already have a non-accounting degree—apply for a postgraduate conversion program or a Master's degree in accounting.

Public accountant certification

‎You need to be a certified public accountant to build your own accounting business. 

CPA or CMA? You can choose from two types of certifications: a Certified Public Accountant (CPA) and a Certified Management Accountant (CMA).

Here’s what you need to know to make a decision:

• A CPA is a U.S. license, and a CMA is a globally recognized certification.
• To become a CPA, you must get a Bachelor’s degree in the relevant field, complete 150 credit hours of an undergraduate program, pass the CPA exam administered by the American Institute of Certified Public Accountants (AICPA) and gain 1-2 years of accounting work experience.
• Becoming a CMA requires a Bachelor's degree in business, accounting or economics, successfully passing a comprehensive two-part certification exam and gaining a minimum of two years of professional experience in management accounting or financial management.
• A CPA provides accounting and tax services.
• A CMA specializes in management and cost accounting.
• Both CMA and CPA exams have around a 50% pass rate.
• With an average salary of $75,000, a CMA usually earns more than a CPA ($68,724).

As an option, you can pursue both. Many accountants obtain multiple advanced certifications in the financial and accounting field. Acquiring additional certifications provides personal reassurance in uncertain times and expands your professional skillset, making your expertise more adaptable. By pursuing both the CPA license and CMA certification, you enhance your marketability and open doors to various career opportunities.

Note: Check the licensing and registration requirements specific to your jurisdiction. Research the requirements set by your local regulatory bodies or accounting associations to learn what kind of license and practice you need to obtain to operate an accounting firm. 

📌 5 accounting memes on the joys and struggles of your everyday CPA.

Business structure

Choosing the right business structure lays the foundation for your accounting firm's legal and operational framework. These are the four types of business structures popular among public accountants:

• Sole proprietorship—the simplest and most common business structure for small accounting firms. As a sole proprietor, you have complete control over your business and its finances, but you’re personally liable for any debts or liabilities.
• Partnership—a suitable option for those who plan to start an accounting firm with one or more partners. Partnerships offer shared responsibility and decision-making. 
• Limited Liability Company (LLC)—this business structure provides liability protection and flexibility. It separates your personal assets from the business's liabilities. As an owner, you are called a member and enjoy pass-through taxation, meaning the business's income is reported on your personal tax return.
• Corporation—forming a corporation offers more complex legal and tax structures. Corporations provide limited liability protection, potential tax advantages and the ability to raise capital through the sale of stocks. However, they also involve more administrative and compliance requirements.

Consider factors such as personal liability, tax implications, scalability and long-term goals when selecting a business structure. You may need to consult with a business attorney or a certified public accountant to get guidance tailored to your specific situation.

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5 Services to offer as an accounting firm

Accounting firms typically provide the following range of services:

1. Accounting & bookkeeping services

A CPA may offer a wide range of accounting and bookkeeping services to help businesses organize their financial information. From meticulous record-keeping to accurate financial statement generation, customers expect their accounting firm to add financial clarity to their operations. 

You’ll need to maintain records, track your clients’ income and expenses, reconcile accounts and generate financial statements to ensure the financial health and stability of your clients' businesses.

💡 ‎Ditch the spreadsheet with these top AI Accounting Software

2. Tax planning & preparation

One core service that accounting firms provide is strategic tax planning and preparation. As a CPA, you have the expertise to navigate the complexities of the tax code and help your clients minimize their tax liabilities while remaining compliant with regulations. 

By analyzing their financial data, identifying deductions and developing tailored tax strategies, you can help your clients optimize their tax savings and achieve financial efficiency.

3. Financial analysis & consulting

Beyond the numbers, accounting firms offer financial analysis and consulting services to help businesses make informed decisions and drive growth. This is where the CMA certification will come in handy.

You can help your clients manage cash flow and optimize financial resources by analyzing their financial statements, conducting ratio analysis, assessing key performance indicators and benchmarking against industry standards. 

4. Audit & assurance services

Audit and assurance services include a review of your client’s financial documents to certify their compliance and validity. It’s a common task for CPAs. 

This type of service may come in various forms, from risk assessment to business performance management. 

⚡ ‎With Scribe's free CPA Documentation Generator, you can build optimized, efficient process documentation — from financial procedures to regulatory compliances and internal audits — in seconds.

5. Business advisory and strategic planning

If you have the CMA certification, you can offer strategic planning services to your clients. You can assist them with financial forecasting, cost analysis, budgeting and identifying opportunities for growth and efficiency improvements.

6 best practices for growing your accounting firm

Here’s the guidance on your next steps after you’ve obtained the necessary certifications and specified the services you’ll be providing.

1. Pricing your accounting services

How do you price your accounting services? Start with choosing the pricing model:

• Fixed. With the fixed pricing model, you set a predetermined price for specific services or packages. This model provides transparency to clients as they know upfront what they will be charged. However, when the scope of work varies significantly between clients, you’ll need to adjust the fixed price accordingly.
• Value-based. This model focuses on the value your services bring to clients rather than the time or effort spent. To set fees, you need to assess your services' impact on your clients' businesses and set prices accordingly. This model is the most challenging one as it requires a deep understanding of the value your clients derive from your expertise, but it’s also the most rewarding one—the sky’s the limit, especially with high-ticket clients. 
• Monthly retainer. The monthly retainer model involves charging clients a fixed fee on a recurring basis, typically monthly. This model suits clients who require ongoing accounting services or prefer predictable costs. Clients can access your services throughout the month with a retainer, allowing for more proactive support and advice. However, you need to carefully assess the level of effort and services included in the retainer to ensure it aligns with your pricing and delivers value to both you and the client.
• Hourly billing. This is the most popular pricing model in the accounting world. A lot of public accountants charge an hourly rate regardless of the complexity of the tasks. While it makes estimating your monthly income easier, it’s not the most transparent model from the client's perspective. 

Once you have chosen the pricing model, take these steps to determine the actual pricing:

• Calculate overhead expenses, staff salaries, software subscriptions, taxes, and other direct or indirect costs.
• Research the market rates for accounting services in your area or industry.
• Consider the specific needs and requirements of your target clients.
• Decide on the profit margin you want to achieve.

Consider offering pricing options to different clients or conducting pilot projects to test and adjust your pricing strategy.

2. Choosing scalable accounting software

Selecting the right accounting technology is crucial for the success and growth of your accounting firm. Your software should also assist the growing demands of your business as your client base expands and your workload increases.

When selecting accounting software, consider opting for a cloud-based option. Cloud-based platforms offer enhanced accessibility, allowing you and your team to securely access financial data from anywhere at any time. Additionally, cloud-based software usually offers automatic backups, data security measures and seamless software updates, saving you time and effort in maintenance and ensuring the safety of your clients' information.

Tools like QuickBooks Online and Freshbooks are affordable options for freelance accountants and small businesses, offering simple but robust finance management features.

🎓 ‎Check out our list of the best accounting software for small businesses.

Of course, you should also evaluate whether it aligns with your budget and provides a reasonable return on investment. Consider factors like subscription fees, additional user costs, and potential implementation or customization expenses. While cost is significant, prioritize value and the software's ability to meet your firm's long-term needs.

3. Attracting top talent

Already looking to expand your firm with accountants or assistants?

Here are a few tips to help you attract talented professionals to your young accounting firm:

• Clearly define job roles and responsibilities.
• Check out salary benchmarks and offer competitive compensation. 
• Start cultivating a strong employer brand.
• Hire like-minded people. 
• Develop a consistent onboarding process.

While your initial team may be small, creating a consistent onboarding experience is still important. Provide new hires with proper training, guidance and support to quickly integrate into the firm. Develop an onboarding checklist or plan that covers essential information, introduces key team members and provides an overview of the firm's policies and procedures.

Don’t have time to standardize and document your onboarding process? In the best practice #5, we’ll tell you how to do it on autopilot.

🎓 Check out these accounting manual samples for more info!

4. Budgeting & financial management

As an accountant, you hardly need financial management tips. However, the shoemaker's son always goes barefoot, you know. So it won’t hurt to remind you to:

• Create a detailed budget. Develop a comprehensive budget that includes all your expenses and revenue projections. Consider both fixed costs (e.g., rent, utilities) and variable costs (e.g., marketing, software subscriptions). 
• Monitor cash flow. Keep a close eye on your cash flow to ensure that you have enough funds to cover expenses and meet financial obligations. 
• Separate business and personal finances. Open a separate bank account and credit card for your business to maintain a clear separation between personal and business finances.
• Implement an effective invoicing system. Clearly outline your payment terms and follow up on outstanding invoices to minimize cash flow gaps. Use accounting software that automates invoicing and tracks payments.
• Optimize your tax strategy. Don’t forget to take advantage of available deductions and credits.

5. Automating internal processes

You’ll have too many things on your plate, especially before you optimize your processes and hire staff. So you must use automation as a co-pilot. 

The good news is most repetitive processes, from document management to client communication, can be automated. Here’s how.

Document management

Implement an accounting document management software or system to digitize and organize your client files, invoices, receipts and other important accounting documents. You can use Scribe to auto-generate documentation and accounting Standard Operating Procedures.

The tool captures any digital process and creates step-by-step guides that you can share with your clients or employees in a few clicks. 

Here’s what a Scribe on how to merge accounts in QuickBooks looks like:

✨ ‎Scribe tip: Need to train your team or clients on how to use QuickBooks? Try our free Quickbooks Training Generator to create professional, detailed training guides—in seconds!

Watch how Ignite Spot Accounting uses Scribe to document processes for Quickbooks and payroll tools for hundreds of clients:

‎Time & expense tracking

Use time-tracking software to accurately record the time spent on client projects and automate expense tracking. Clockify offers one of the most popular free time and expense trackers for small teams.

Payroll processing

Automate your payroll processes with payroll software to ensure accurate and timely payments to your employees. Tools like Gusto and Quickbooks Time can calculate salaries, deductions and tax withholdings, saving you from manual calculations and reducing the chances of errors (but you probably know that already).

Workflow management

Implement workflow management software or project management tools to assign tasks, track progress and collaborate effectively within your team. Tools like monday.com and ClickUp offer free plans for small businesses.

💡 ‎Check out our list of the 5 best accounting workflow software to start evaluating your options!

Client communications

Use customer relationship management (CRM) software to automate client communication. Most of all-in-one CRM systems offer email marketing tools to send personalized newsletters, updates and targeted campaigns to engage and nurture client relationships. 

6. Marketing & client acquisition

Marketing for an accounting firm is no easy task — you clearly don’t have the time and expertise to build social media following or manage a company blog. If you don’t have a customer base, consider the following client acquisition strategies:

• Explore local marketing strategies. Digital disruption still hasn’t delivered its full potential in the worlds of banking and financial services so it’s a good idea to tap into the power of local marketing.
• Build a website. A professional-looking website is a must. It shouldn’t be too complicated but must include content that showcases your expertise and educates visitors about your accounting services. Include an overview of your firm, your areas of specialization and the benefits of working with you.
• Invest in digital advertising. Twenty-seven percent of internet users aged 16 to 64 discover new brands, products and services via social media ads. It’s best to hire a professional if you don’t have experience in paid advertising.
• Referrals. Don’t hesitate to ask for referrals when you get your first clients. 

Automate accounting documentation with Scribe

‎Now that you know how to start an accounting firm, you can build a successful practice that thrives in today's competitive market with the right knowledge and resources.

Scribe, powered by ChatGPT, can help you streamline your workflow and enhance client experiences.

Try our free Accounting Manual Generator and get started today!