A Complete Guide to Starting An Accounting Firm

A Complete Guide to Starting An Accounting Firm - Verito Technologies

Starting an accounting firm is not just about number crunching but building a business that thrives on trust, accuracy, and professionalism. Every aspect demands attention and expertise, from understanding the legalities and regulations or mastering client management. 

While owning a CPA firm holds a unique allure for individuals with a passion for numbers and a drive for entrepreneurship, the story requires them to understand various facets in detail before joining the bandwagon. Indeed, you can get the following:

  • It offers the freedom to chart your professional course, allowing you to tailor your services to match your expertise and interests. 
  • The potential for substantial financial rewards is undeniable, with CPA firms often commanding high fees for their specialized services. 
  • Beyond financial gains, owning a CPA firm provides a platform for personal and professional growth. It enables you to cultivate lasting client relationships and establish your firm as a trusted advisor. 

However, it is the right beginning that matters a lot. Whether you’re a seasoned accountant looking to branch out on your own or someone with a dream of entrepreneurship, this guide is tailor-made to provide you with the essential insights and strategies to starting an accounting firm.

What are the Basic Requirements for Starting an Accounting Firm?

Starting an accounting firm requires careful consideration of several fundamental requirements, including the following:

  • Educational Background

A solid educational foundation in accounting or finance is paramount. Most accounting firms are founded by Certified Public Accountants (CPAs), which typically require a bachelor’s degree in accounting (or a related field) and passing the CPA exam. While not mandatory, having a CPA credential enhances your credibility and opens up opportunities for specialized services.

  • Professional Experience

Prior experience in the accounting field is invaluable. Working in accounting firms or corporate finance departments helps you gain hands-on experience, understand industry best practices, and build a network of contacts crucial for your firm’s success.

  • Business Plan

The next important step is crafting a comprehensive business plan that outlines your firm’s objectives, target market, service offerings, financial projections, and growth plans. A well-thought-out business plan serves as a roadmap for your firm’s development and securing financing if needed.

Choosing the proper legal structure for your accounting firm is crucial for tax implications, liability protection, and operational flexibility. Common options include sole proprietorship, Limited Liability Company (LLC), or corporation. Consulting with legal professionals can help you make an informed decision based on your specific circumstances.

  • Licensing and Certification

Depending on your jurisdiction, you may need to obtain various licenses and certifications to operate legally. This often includes a state CPA license, which requires meeting education, experience, and examination requirements set by the state board of accountancy. Additionally, registering your firm with relevant regulatory bodies and obtaining necessary permits ensures compliance with local regulations.

  • Technology and Infrastructure

You need to invest in the necessary technology and infrastructure to support your firm’s operations efficiently. This may include accounting software, client management systems, secure data storage solutions, and cloud hosting solutions.

Recommended Read: A Complete Guide to QuickBooks Accounting Software

  • Employer Identification Number and Tax ID Number

If you intend to hire accountants, HR staff, administrators, and other employees, it’s imperative to register as an employer and obtain a TIN. Acquiring these identifiers these days is now straightforward and you can complete it as part of your business registration procedure.

  • Financial Resources

Launching an accounting firm does require financial investment, the extent of which depends on the scale of your envisioned operation. While the exact amount varies, it’s essential to allocate funds for essentials such as office space, equipment, software subscriptions, and initial marketing efforts. 

What are the Steps to Start an Accounting Firm?

Here’s a seven-step process to starting an accounting firm:

  • Identify Your Niche

Determine the specialized services your firm will offer, such as tax preparation, auditing, forensic accounting, or consulting. Defining your niche allows you to target your marketing efforts effectively and stand out in the competitive market.

Select the appropriate legal structure for your accounting firm, such as sole proprietorship, partnership, or LLC. Consider factors like liability protection, tax implications, and administrative requirements when making this decision.

  • Register Your Business

Register your accounting firm with the relevant government agencies and obtain the necessary licenses and permits. This includes registering your business name, obtaining a Tax Identification Number (TIN), and complying with state and local regulations.

  • Establish Your Office

Set up your office space, whether physical or virtual, equipped with essential tools and resources. Ensure you have the necessary infrastructure, including computers, accounting software, Internet connectivity, and communication systems, to support your operations.

  • Develop Operational Processes

Create standardized procedures and workflows for client management, document handling, accounting practices, and communication protocols. Streamlining your operational processes ensures efficiency, accuracy, and client satisfaction.

  • Build Your Team

If you plan to expand beyond a solo practice, recruit and hire qualified professionals to join your team. Seek individuals with relevant education, experience, and certifications who complement your skills and align with your firm’s values.

  • Market Your Firm

Develop a marketing strategy to promote your accounting firm and attract clients. Utilize various marketing channels, including digital marketing, networking events, referral programs, and partnerships, to increase your firm’s visibility and credibility in the market.

Read More: Accounting Conferences in 2024: Complete List for CPAs/Accountants

What is the Estimated Cost of Starting an Accounting Firm?

Starting an accounting firm requires careful financial planning to cover various expenses involved in setting up and running the business. While the exact cost can vary based on factors such as location, scale of operations, and business model, below are the primary expenses to consider:

  • Professional fees

This includes fees for legal services, such as registering your business entity and drafting contracts, and fees for consulting with accountants or financial advisors during the planning phase.

  • Office Setup

It covers the costs associated with setting up your office space, including lease or rent payments, furniture, equipment (computers, printers, scanners), office supplies, and décor.

  • Technology and Software

This includes the cost of Software as a Service (SaaS) and cloud-based accounting solutions. These options typically entail lower initial costs compared to purchasing proprietary software outright. 

  • Marketing and Advertising

This covers the expenses for developing a professional website, business cards, brochures, and other marketing materials, as well as costs for online advertising, networking events, and promotional activities.

  • Professional Development

It caters to the budget for continuing education, certifications, and training programs to enhance your skills and stay updated with industry trends and regulations.

  • Employee Salaries and Benefits

If you plan to hire employees, consider the budget for salaries, benefits (health insurance, retirement plans), payroll taxes, and other employee-related expenses.

  • Operating Expenses

You also need to consider miscellaneous expenses such as utilities (electricity, water, Internet), postage and shipping, legal and accounting fees for ongoing compliance, and professional memberships.


Can you start an accounting firm without a CPA license?

Yes, you can start an accounting firm without a CPA license. However, it depends on the services you plan to offer and the legal requirements in your jurisdiction. While many accounting services, such as bookkeeping or tax preparation for individuals, do not require a CPA license, certain services like auditing or providing attestation services typically require a CPA license.

How much does it cost to start an accounting firm?

The cost of starting an accounting firm can vary widely depending on location, scale of operations, and business model. Generally, startup costs can range from a few thousand dollars to tens of thousands of dollars. Key expenses include professional fees for legal and consulting services, office setup costs, and technology/software expenses.

How to start an accounting firm with no experience?

Starting an accounting firm without prior experience is challenging but feasible. You can begin by:

  • Obtaining relevant education and training in accounting or finance
  • Seeking hands-on experience through internships or entry-level positions
  • Building a network of industry professionals for guidance and mentorship
  • Starting small by offering basic accounting services to individuals or small businesses
  • Focusing on delivering quality service and continuously improving your skills through ongoing learning and professional development

Will I need to get a new EIN from the federal government?

While starting a new accounting firm as a sole proprietorship or partnership, you may not need to obtain a new Employer Identification Number (EIN) from the federal government if you already have one for your personal taxes. However, if you’re establishing a new legal entity, such as a corporation or LLC, or if you’re hiring employees for your accounting firm, you will likely need to apply for a new EIN. Consult with legal and tax professionals to ensure compliance with federal regulations and determine the necessary steps for obtaining an EIN for your specific business structure.

Do I need a CPA to open an accounting firm If I’m not a Certified Public Accountant? 

No, you don’t necessarily need to be a CPA to open an accounting firm. While having a CPA license can enhance your credibility and allow you to offer a broader range of services, many accounting services, such as bookkeeping, tax preparation for individuals, or consulting, do not require a CPA license. However, if you plan to offer services like auditing or providing attestation services, a CPA license may be necessary.

What are the key services offered by accounting firms?

Accounting firms offer the following services tailored to meet the financial needs of individuals and businesses:

  1. Tax Preparation and Planning
  2. Auditing and Assurance
  3. Bookkeeping and Accounting
  4. Financial Consulting
  5. Payroll Services

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