Top Six Pitfalls of Starting Your Own Accounting Firm
If you've been in the business for a few years, and you've established your position in tax preparation or financial advising, you may be getting the itch to start your own firm.
Owning your own accounting firm can be an incredibly rewarding experience with an impressive side of perks. However, before you make the jump into starting your own business, there are several key issues to be aware of. I've compiled six common pitfalls that accountants should avoid when starting their own firm. By avoiding these mistakes, your firm should be off to a great and promising start.
1. Failing to market yourself
Working for a large CPA firm does not guarantee a huge client base once you start your own firm. Many new business owner CPAs do not realize this. One way to put yourself out there is to be the lowest bidder on public bid work. When you get the job, perform above and beyond the client's expectations. If you do this, you give yourself opportunity to be recognized by local organizations, and you open the door for positive word-of-mouth advertising. You may not make the big bucks off those original projects, but the outcome will be worth it.
|Start Up In Practice Guide 2015
The best advice will come from those who have been there already, so we asked our readers for their best practice tips and compiled them for your reference.
When starting your own firm, be sure to:
- Market yourself
- Hold yourself to high standards
- Make sure you're doing it for the right reasons
- Select your target market
- Seek the help of advisers when needed
- Hire the right employees
2. Cutting corners when preparing clients' taxes
As an accountant, it's important to set an honorable example for your clients, particularly when dealing with tax preparation. Never advise clients against reporting cash sales or other ethically questionable methods of avoiding taxes. Giving clients the green light in cutting corners may simultaneously give them the green light in taking advantage of you or your services. When you hold yourself to high standards, your customers will do the same.
3. Going in for the wrong reasons
Admittedly, there are lots of perks to owning your own business, including control over your schedule, ability to pocket profits, and having control over the future and direction of your business. However, be sure that you're not blindly opening your own firm to receive perks that also come with grueling and time-consuming work. According to the Dun & Bradstreet 19th Annual Small Business Survey, 27 percent of people go into business because they're tired of working for others. While this is an acceptable reason, be sure that you aren't simply bitter toward an old boss or tired of your nine-to-five schedule. Undoubtedly, running your own firm comes with challenges that shouldn't be overlooked.
4. Not selecting a target
When you start your own firm, it's important to decide what type of clients you'd like to obtain. Many accountants make the mistake of showing off all of their specialties and services to anyone who will listen. Granted, you should make clients aware of all your skills, but be sure to develop a specialty or set of strengths. Then decide what segment you'd like to target.
Do you excel at tax preparation? Consider targeting young adults who will need tax preparation services for the first time. Then, on your website, include an exhaustive list of your skills and services so that other potential customers can learn about your business.
5. Avoiding the help of other advisers
Accountants often act as advisers for business owners, homeowners, and real estate property managers. However, that doesn't mean that CPAs don't need their own set of advisers. When opening your own firm, develop a team of advisers who can give you advice and steer you in the right direction with your business. Potential advisers could include other accountants, small business owners, information technology (IT) professionals, bankers, attorneys, etc. Realize which areas you excel in and which areas you could use professional guidance, then seek out those resources.
6. Not hiring the right team
Your employees are an incredibly integral ingredient to the success or failure of your business. Employees should share your common goal, work hard, and believe in the future of your firm. Whether it's a secretary or college intern, selecting the right employee is crucial. The key to a good hire is having a large pool of potential candidates. You can never over-advertise a job opening; the more good candidates who apply, the better chance you stand of finding a suitable employee. Be picky and analyze candidates' rÃ©sumÃ©s, handshakes, clothing, communication skills, etc.
Bert Doerhoff is a CPA and founder of Accubiz, a firm providing accounting services out of Jefferson City, Missouri. Accubiz was chosen for the first-ever National Client Service Accounting Firm of the Year Award by the National Association of Small Business Accountants. Doerhoff specializes in small business accounting and wealth management....