How to start an accounting practice: A guide to building your own firm
If you’re thinking of starting your own accounting practice, then you dream of building your own legacy. The freedom, flexibility, and sense of accomplishment are definitely appealing.
But where do you begin?
This comprehensive checklist will guide you through every crucial step of launching your accounting firm from scratch, from the initial spark of an idea to welcoming your first client. Get ready to transform your accounting expertise into a thriving business!
Why start an accounting practice?
The decision to establish your own accounting practice can be an exciting and rewarding step in your career.
One of the biggest benefits is professional autonomy and flexibility. If you crave the freedom to set your own hours and steer the ship in the direction you want. You’ll get to build a practice that aligns with your values and goals. This level of control allows you to tailor your work style and schedule to achieve a healthy work-life balance down the road.
Free reign over who you take on as a client is a huge appeal to starting accountants. If your interests or expertise lie in specific industries, you can go after them and build your portfolio that way. As a practice owner, you’ll establish direct relationships with your clients, fostering deeper connections and a more fulfilling client service experience. This allows you to develop a strong understanding of their specific needs and provide personalised financial solutions.
Your practice can become a source of immense professional pride and endless earning potential. As the boss, you directly benefit from your hard work, and building a business can be a deeply rewarding experience. However, starting a practice also requires significant dedication and comes with its own set of challenges. It’s important to carefully consider your goals, resources, and risk tolerance before making this decision.
How to know if you’re ready to start your own accounting firm
Transitioning from employee to business owner requires a shift in mindset. You’ll be responsible for everything from client service and marketing to financial management and regulatory compliance. Are you prepared to wear these hats and thrive in a dynamic environment?
Before you start a business, make sure you check all these boxes:
You have the business know-how
While you’re an accounting expert, running a firm involves more than just crunching numbers. Developing a business plan, understanding legalities, and implementing effective marketing strategies are all essential skills. Consider if you possess these capabilities or are willing to invest in acquiring them.
You have the support of a strong network
Your professional network can be a goldmine for referrals and potential clients. Evaluate your existing connections with other professionals, business owners, and potential clients in your target market. Building a strong network takes time and effort, so assess your current standing and consider strategies to expand it.
You have the financial resources to start a business
Starting a practice requires upfront investment and ongoing operational costs. Do you have the necessary capital to cover expenses like software, marketing, and rent until your client base grows? Carefully assess your financial resources, business loan or business grant options, and develop a realistic budget.
You have a concrete vision for your practice
Every successful firm starts with a clear vision. Who are your ideal clients? What services will you offer? What kind of work environment do you want to cultivate? Having a defined vision will guide your decision-making and help you attract clients who align with your goals.
An accountant’s role is to empower individuals and businesses to achieve financial success. Do you find satisfaction in helping clients navigate complex financial situations and achieve their goals? This passion will be your fuel as you navigate the challenges and rewards of practice ownership.
Risks & considerations before building your practice
Just like any other business, owning an accounting business poses its own challenges, especially to newer accountants. Day-to-day operations and legalities can make up multiple full-time workloads, so it’s best to be prepared before you get started.
Here are some of the possible risks involved with starting your own firm:
Shifting mindsets from employee to practice owner
Transitioning from a collaborative work environment to practice ownership can feel isolating. Building a network of fellow practitioners or mentors can provide invaluable support and help you navigate the complexities of running your own business.
Ever-changing regulations and requirements
Business regulations are notorious for their constant twists and turns. Staying on top of these changes is a balancing act, especially while juggling client needs.
Implementing proper client management
As an eager new practice owner, you might be tempted to take on any client who walks through the door. However, carefully managing your client base and setting clear boundaries around the scope of your services is crucial to avoid burnout and ensure client satisfaction.
Startup costs and cash flow
Launching your practice requires a significant upfront investment. From the accounting software that keeps your numbers singing to the potential costs of office space, the initial expenses can add up quickly. Building a thriving client base takes time and dedication in a crowded marketplace, so be prepared for a period of careful budgeting and potentially longer hours as your practice takes root.
Protecting sensitive information
Accounting firms are prime targets for cybercriminals due to the sensitive client information they handle. Invest in robust cybersecurity best practices and measures and stay vigilant to protect your clients’ data integrity.
When you know the risks, you can take proactive steps to mitigate them. If you include these considerations in your business plan, you can significantly increase your chances of navigating the exciting path of accountancy practice ownership.
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Starting an accounting firm in Australia: 10 steps that lead to success
So, you really want to start your own firm. Fantastic news! You’ll need to plan thoroughly and be dedicated to the execution. Follow our complete roadmap below.
How to start your accounting practice
1. Ensure you have the right qualifications and learn the standards
First, making sure you’re a registered member of a recognised professional accounting body like CPA Australia or CA ANZ is essential. These bodies have specific membership requirements, usually involving an accredited accounting degree and passing professional competency exams.
Once you’ve secured your registration, get to know the Accounting Professional and Ethical Standards Board’s (APESB) guidelines. These are fundamental accounting principles that can help you build trust and a strong reputation with your clients.
Remember, ongoing professional development (CPD) is mandatory in Australia, so staying current with the latest updates from the APESB is crucial. Completing CPD courses offered by your chosen professional body is a great way to meet these requirements.
2. Create an accountancy business plan
Crafting a compelling business plan sets the foundation for your accounting practice. While the core structure remains similar to most business plans, apply what you know about your company vision, the accounting services market, and how you’re going to get your clients.
Here are the essential parts of a business plan:
- Executive summary: A brief summary of your practice
- Company description: Details on the type of business structure, services, and target clientele
- Marketing analysis: Analysis of the Australian accounting industry landscape, your ideal client and their pain points, and your solutions
- Competitor analysis: Research on competitor activity, market trends, and potential growth opportunities
- Marketing plan: Strategies for how you’ll attract clients through marketing initiatives, networking, partnerships, and more
- Management team: Your own professional introduction, as well as other key team members involved in your practice
- Financial projections: Break down of startup costs, operational expenses, and projected revenue
- Growth strategy: Your long-term vision for your practice, including service offerings, recruitment, and other growth opportunities
- Conclusion: Your chance to leave a lasting impression and tie in your plan with your vision
3. Find out how much it costs to start up your firm
The cost of starting an accounting firm in Australia can vary depending on several factors. Fees associated with registering your business with ASIC (Australian Securities and Investments Commission) can be minimal (approximately $500) but may vary depending on your business structure. Professional indemnity insurance is mandatory to protect you and your clients from professional negligence claims, and this can cost a few thousand dollars annually.
You’ll also need to figure out your operational costs. The following items are the most common:
- Accounting software licenses or subscriptions
- Marketing and advertising
- Staff salaries
- Office space, if non-remote
- Technology and supplies (computers, printers, etc.)
- Continuing professional development
Since startup costs are variable, estimating a total cost is challenging, but a ballpark estimate could be between $5,000 and $15,000.
4. Register with the ASIC and obtain a Tax File Number (TFN) and Australian Business Number (ABN)
Once your business plan has been set, register your business with the ASIC. The process is relatively straightforward and can be done online. Simply follow the prompts with accurate information about your practice, then pay the registration fee. Once your application has been processed, you’ll get a confirmation email.
A TFN is a unique identifier for your business for tax purposes, while ABN is to register you for Goods and Services Tax (GST). You can apply for a TFN and ABN for free through the Australian Taxation Office (ATO) website.
5. Create a bank account for your practice
Before you open an account at your regular bank, consider other banks with a strong reputation for business banking services. You’ll want lower account fees, favourable interest rates, and online banking functionalities to support your practice.
Business transaction accounts are the most common option for managing the day-to-day finances of an accounting practice. You can also consider an interest-bearing account for savings you might accumulate, although interest rates for businesses tend to be lower than personal savings accounts.
If your accounting practice will have multiple signatories, settle signatory authority with the bank to control who gets to make transactions for the account.
Applying for a business bank account will require you to provide your firm’s business documents, such as proof of registration. Otherwise, the process is similar to personal accounts.
How to get your accounting firm running
6. Invest in the right software and tools
Selecting the right software and tools can make a huge impact on your practice’s efficiency, accuracy, and client satisfaction. You’ll want to assess your needs first before you commit to any providers. Consider the size and services of your practice and the type of clients that you’ll be dealing with.
Excellent firm payroll accounting software is at the core of every successful accountancy business. Invest in a trusted solution specifically designed for the Australian market. These programs handle core functions like bookkeeping, financial reporting, and payroll – for your firm and your clients.
Payroller is an easy-to-use accounting solution that simplifies the payroll process and ATO compliance. Accountants and bookkeeping professionals can manage their clients’ payroll and manage employees on their behalf through an agent portal.
In the event that you are not satisfied with your purchase, we offer a 30-day risk-free money-back guarantee. Get started with Payroller today!
7. Market your practice to reach potential clients
In today’s Australian business landscape, businesses need to focus on local marketing efforts while investing in online marketing strategies. Get your business listed in online directories where potential clients go to seek your experience. A Google My Business profile is a must-have, but make your presence known on local directories catering to accounting services. Media partnerships with local publications and business journals can also be an effective way to reach your target market.
Create a professional, informative website that outlines your services, client profile, and unique service proposition. Ensure that visitors can easily access your contact information and link to your practice’s social media profiles. AI website builders and similar tools make this easy and cheap for new business owners.
Establish yourself as a trusted thought leader by building content online as a subject-matter expert or joining networks and strategic partnerships to engage with your community and peers. Your local chamber of commerce can help you meet other professionals and potential clients or earn referrals.
Remember, building a successful marketing strategy takes time and effort. Implement tactics tailored to your practice, and make adjustments depending on your results.
8. Buckle in for recruitment and build your dream staff
If you plan on hiring staff to help with day-to-day operations, you’ll need to outline a clear hiring process and determine the skills and experience you need for each position. This can mean technical expertise, software proficiency, and client management skills.
Be aware that highly qualified accountants are in high demand in Australia, so you’ll face a fair amount of competition. Be aware of industry-standard salaries, and make sure you have enough HR resources to process the recruitment. The last thing you want is to rush through hiring and end up with employees who don’t fit your practice’s vision.
Several strategies exist to overcome these challenges, but many employers advocate for developing strong employer branding. Showcase your practice’s positive work culture, growth opportunities, flexible work arrangements, and commitment to professional development. Offering a fulfilling work environment in addition to a high salary can attract talent.
9. Study your competitors and their prices
Start your research online. Visit competitor websites to see what services they offer and how they present them. Do they showcase specific pricing structures or tiered packages? How do they position themselves and their services in the market? Many accounting firms are transparent about their services online, and some might even provide pricing information.
Expand your online search to social media. Follow your competitors on LinkedIn and Facebook. Pay attention to their posts and updates. They might mention specific services or special offers that could shed light on their pricing strategies. Publications and reports from organisations like CPA Australia or CA ANZ can also provide data on industry pricing trends.
You’ll want to be clever about how you gather some intel. If you have existing clients who have also explored your competitors, you could ethically inquire about their general experience (avoid directly asking about specific prices quoted). Their feedback might reveal general pricing ranges or how competitor pricing compares to the value you deliver. Attending industry events can also give you opportunities to that insight.
10. Stay updated with compliance rules and regulations
First, stay on the pulse of the many regulatory bodies related to your practice. Many of these institutions have email alerts for any new regulations and legislative changes. Trusted accounting news websites also regularly publish articles on compliance updates and best practices.
There are several other ways to keep yourself informed, such as dedicating a staff member to monitor compliance news or seeking expert advice. Still, frequent internal reviews to assess compliance will identify any gaps that need to be adjusted to fit new rules and requirements.
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Start your accounting practice with confidence and the right support
Congratulations! By following this comprehensive checklist, you’ve equipped yourself with the knowledge and roadmap to launch your very own accounting practice. Remember, building a successful firm takes dedication, patience, and a commitment to exceeding client expectations.
With enough planning, strategic execution, and passion for accounting, you’ll pave the way to turn your idea into a business that makes a real impact on your clients.
Don’t forget the power of automation! As your practice grows, consider implementing cloud-based solutions like Payroller to streamline payroll processing, saving you and your staff valuable time and minimising errors.
So, roll up your sleeves, unleash your entrepreneurial spirit, and get ready to embark on this exciting journey of building a thriving accounting practice!
Frequently asked questions about starting an accounting practice
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