Leaving a career at a Big 4 (Deloitte, PwC, Ernst & Young, KPMG) or other prominent accounting firm to start your own CPA firm can be an exciting and rewarding entrepreneurial experience. Not only can it potentially provide you the freedom to design a working environment that best suits your wants and needs, but it could also provide a platform to grow your income and career far beyond the limits of what a larger corporate structure would have allowed.
In this comprehensive guide to starting your own accounting firm, we provide insights on how to successfully transition from employee to founder, how to establish and market your new business, which tools and technology you might consider to take your accounting practice to the next level, and more.
Table of Contents
- Opportunity Awaits: Why Should You Go Solo?
- Transitioning From Employee to Entrepreneur
- Establishing Your New Business
- Marketing Your Firm: How to Find New Clients
- Technology and Tools: How to Run a Modern Practice
- Harness Tax: A Trusted Partner for Your Journey
Opportunity Awaits: Why Should You Go Solo?
The tax industry is changing. It wasn’t long ago that, in order to succeed, your only option was to join a large firm that could provide you with the resources, training, pedigree, and clients necessary to make a good living. After years of hard work climbing the corporate ladder, you might be rewarded with the opportunity to become a partner, drastically transforming your compensation structure and your day-to-day responsibility. But that process can take around 10-15 years, and is incredibly competitive.
In recent years, however, through technological innovation, it’s become easier than ever to chart your own path to the top. Accounting professionals can now leverage online tools and services to build a career within the accounting profession that works for them, building equity in their own business along the way.
Entrepreneurship presents a unique set of challenges, and building a sustainable business requires careful planning and strategy. Let’s dive into the details.
Transitioning From Employee to Entrepreneur
One of the first questions you should ask yourself is what your primary motivation is for starting your own accounting practice. This could include a desire for increased autonomy, establishing a better work-life balance, a desire for higher income, getting into a new practice area, or even more control over which types of clients you serve without the intermediary of a larger firm. Whatever the case may be, establishing your motivations will not only help guide your business decisions, it will also fuel your perseverance during the challenging process of entrepreneurship.
Take, for example, Doug Waite, a Harness Tax Advisor and member of the LexTax team. Prior to starting his own firm, Doug worked for PwC. But after many years in a larger firm, he had a desire for more autonomy, and a growing interest in new specific areas of accounting, particularly equity compensation. So in 2012, he left to start his own firm, LexTax. Hundreds of clients later, in 2021, Doug transitioned LexTax onto the Harness Wealth platform, enabling him to run his business with more advanced technology, and with integrated support staff to help him scale.
Timing is Everything
Knowing when to leave your current role, and how to plan around that, can be rather tricky. If you are expecting a bonus or promotion, or if you are in the middle of a larger project or engagement, it may be worth it to stay until those milestones are met, but you should also ensure that the timing of your exit can be a clean one. Once you settle on a date, hold yourself accountable for providing appropriate notice to get the ball rolling.
But don’t get too eager to leave your current job. A transition to self-employment is one that requires significant mindset adjustments, and it could be beneficial to take time off and allow yourself to ease into your new way of working. To allow for this, it could be important to start saving some money for your new venture.
Building Your Financial Foundation
Any new business requires some amount of startup capital, and your own CPA firm is no exception. Though you may have relatively minimal overhead, you’ll still need to plan ahead for incorporation costs, software, and any other necessary or unexpected expenses that may come up along the way. You should work to save anywhere between 3 to 12 months of living expenses, depending on how long it might take for your new business to gain traction.
However, by joining Harness Tax, the need to build such a large financial cushion can potentially be minimized. While many of our accountants bring their own existing practices onto the platform, those who are earlier in their careers might find that joining Harness can provide the exact jump start that they need. Kelley Maddox, a Tax Manager on the Maddox Team, joined Harness Tax after starting his career with a prominent accounting firm in Atlanta, Georgia. He didn’t have a book of business of his own, but he knew he wanted the opportunity to build his own practice, and to get into more complex work. After just six months on the platform, Kelley’s client base grew to 70, and his accounting practice quickly gained the momentum it needed to succeed.
Maintaining Professional Relationships
Accounting is a service-based business that relies heavily on personal and professional relationships. As you prepare to set off on your own, start revisiting connections that may not be as strong as they once were, and start putting together a list of your professional connections, and ideas of mutually beneficial scenarios of how you might be able to help each other. If you’ve spent many many years at larger accounting firms, this may be relatively easy, but if you’re just starting out, your network might be on the smaller side, or more limited.
When you join Harness Tax, you join a community of tax and accounting professionals from all over the country. Our Advisors come from an equally diverse mix of Big 4 firms, globally recognized accounting practices, and successful boutique firms. By joining a community of accounting professionals, you’ll be able to find the support you need, and build lasting relationships with expert advisors.
Establishing Your New Business
Once all the above preliminary steps are accounted for, it’s time to formalize your new accounting firm. Given your professional background within the industry, this might be the easiest step in your journey, so we’ll keep this section short and sweet, but here’s a checklist to help you along the way:
- Entity selection (LLC, S-Corp, C-Corp, Partnership, LLP)
- State licenses
- Employer Identification Number (EIN)
- Business bank account
- Physical mailing address
- Business insurance policy
Try not to cut corners in this process, as it could delay your ability to take on new clients. If you need any help with determining the best options for your new tax business, or want insights on how other Harness Tax Advisors structure their practices, don’t hesitate to book a call with our team.
Now that your new business is established, it’s time to get to work.
Marketing Your Firm: How to Find New Clients
Unless you’re already a partner in the firm you’re leaving, chances are you will not be able to bring a book of clients with you to your new accounting firm. This can present a significant challenge, as it will reset your income to zero. But there are many strategies to consider.
You could start by leveraging your network, or you could plan for more sophisticated customer acquisition strategies such as blogging, content marketing, or digital advertising. But the problem with all these tactics is that they require significant time, effort, and skill. The good news is that there is a solution that will meet you in the middle.
At Harness Tax, we maintain an Advisor Marketplace, a directory that is used to match clients with tax and accounting professionals on our platform. In other words, Harness Wealth does the heavy lifting of marketing to prospective clients through all the typical digital channels, and our online platform and team of support staff then go to work to get the best leads matched with you.
Kelley Maddox, who we introduced earlier, has found tremendous success through this business model. Since joining Harness in January 2023, Kelley has added over 70 clients to his book of business, far exceeding his expectations. “The team does a great job of making sure that a lead is going to be a good fit for me before setting up a call, and rarely do those deals not close”.
If you’re interested in growing your new accounting practice through the Harness Wealth Advisor Marketplace, schedule a call with our team today.
Technology and Tools: How to Run a Modern Practice
Getting clients in the door is one thing, but you still need to find the best technology and tools to manage your workload and client relationships.
Accounting is an industry that has long been associated with outdated systems and ways of doing business, with some accountants still choosing to file paper returns, but that doesn’t have to be the case for your new tax firm. From cloud-based client portals, customer relationship management (CRM) platforms, time-tracking, invoicing and payment platforms, and more, there are a number of ways in which you can quickly turn your new accounting firm into a modern small business.
While there are many technology options available, Harness Wealth aims to simplify this decision by serving as your one-stop shop for running the backend and client-facing technology of your tax firm. Our specialized tools and resources for IT infrastructure, operations, client success, and marketing take the guesswork out of what you need to run a successful business, so that you can focus on best serving your clients.
Harness Tax: A Trusted Partner for Your Journey
Starting your own accounting business is a complex journey, but you don’t have to go it alone. At Harness Wealth, we offer an out-of-the-box solution to starting your own practice quickly and easily. We offer a suite of online tools that make it easy for you and your clients to work together, and we offer the support staff needed to help you close more deals, better serve your clients, and scale your business.
Whether you’re looking to build a new tax firm from scratch, or you have an existing business and book of clients you’d like to bring onto the Harness Tax platform, we have options that work for you.
If you’d like to learn more about joining Harness Tax, schedule a call with us today.
This is a publication of Harness Tax, LLC. Tax services provided through Harness Tax LLC. Harness Tax LLC is affiliated with Harness Wealth Advisers LLC, collectively referred to as “Harness Wealth”. Harness Wealth Advisers LLC is an internet investment adviser registered with the Securities and Exchange Commission (“SEC”). Harness Wealth Advisers LLC solely acts as a paid promoter for unaffiliated registered investment advisers. Harness Wealth Advisers LLC’s registration as an investment adviser with the SEC does not imply a certain level of skill or training.
This document should not be considered tax or legal advice. It is provided for information purposes only. To the extent that the reader has any questions regarding the applicability of any specific topic discussed above, please consult a tax, legal and/or financial professional for advice specific to your individual circumstances.
