How to Start Your Accounting Firm in 4 Easy Steps

Tips for Starting your Accounting Firm

I would like to encourage those of you that are considering starting your accounting firm now or sometime in the future. Those that are young without experience or others that may have had setbacks and a harder start. Never give up!

Speaking from a challenging personal background, I spent most of my high school years surfing and absent from school.  My dismal grades at graduation suggested anything but a career as a CPA. However, with my father’s help, I was able to get accepted to a small liberal arts college in Wisconsin under the condition that I earn good grades in the first year of study. I helped to pay for my education by building log cabins with my Dad during breaks and in the summer months. While attending college in Wisconsin, two professors – one accounting and the other philosophy – inspired me and literally changed my thinking and my life. I am so grateful for their help.

I transferred at the beginning of my third year and graduated from Stetson University in 1972 with a Bachelors in Business Administration and respectable grades. However, I had no clue as to what type of work I should seek and was not prepared for reality.

From Pots and Pans to Accounting…

My family wouldn’t support me, so I needed a job right away. My father had been in sales, so I tried to secure a position selling life insurance. The insurance company personnel tests suggested the accounting profession – too introspective for sales they said. Feeling rebuffed, I knuckled down and accepted a straight commission job selling pots and pans door-to-door – no pride in that. Not surprisingly, a few years later this single experience gave me the courage to start my own accounting firm.

I ditched the sales job several months later and moved to Florida. In trying to figure out what to do with my life, I remembered enjoying the accounting courses taken in college. After spending the better part of a day at the state employment agency, I followed up on a lead for a bookkeeping job and secured a position as an entry level bookkeeper.  Over the next twelve month period, I learned the basics of monthly bookkeeping, tax preparation, general ledger accounting and financial statement presentation. I also learned to efficiently use an adding machine. During my first week I was instructed to add the phone book – a humiliating, finger strengthening exercise. I also learned to survive in an office where everyone chain smoked all day – myself included. Times have certainly changed. Kicking the habit eight years later was more difficult for me than passing the CPA exam.

I started looking in the paper and found a better paying, albeit, short-term position working for a construction company as the assistant to the controller. During this time, I began attending night school to get the additional courses necessary for a major in accounting. Several months after starting work, the construction company controller suggested I consider public accounting and offered to set me up with an interview that led to employment at a large CPA firm in Miami. This was a big break and I was very grateful for his advice and connections. I commuted over 100 miles a day to my new position as entry level auditor without the benefit of an air conditioned car.  It was quite a trick to arrive in a suit each morning looking “neat and pressed” during the summer months of South Florida.

My First Job at a CPA Firm

I received a hailstorm of derogatory comments from my peers during my first months at the CPA firm when they realized I had not completed my accounting degree. Why was I allowed to work there? In fact, I had only completed 4 of the 10 or so required courses. This continuous and palpable air of resentment vaporized when I passed the accounting exam one year later at my first sitting in November 1974 – a full three day affair at the time.

I accepted my dream position soon after as a staff accountant working for one of the Big 8 accounting firms. They would not have taken me on except that I achieved a 4.0 grade point average in my accounting major while working a full time job.

At the time, the Big 8 (now Big 4) preferred to hire students directly from school with no prior work experience. However, I had successfully sold pots and pans for several months – door-to-door – and knew that creativity and persistence could make a difference in what people think of you. I wouldn’t give up and kept calling until ultimately the HR person gave up and offered me the position – $13,000 a year seemed like a lot of money at the time.

Step 1 – Become Technically Proficient

This is the first and most important step in starting your own practice. I was fortunate to acquire some great educational benefits and experience before I went on my own. You must have something great to offer and be excited about it in order to succeed in a profession.  Mediocrity is the first step towards failure.

It goes without saying, short and sweet, you must become technically proficient and confident in your physical and mental skills before even thinking about starting your own firm. Study, engage your skills, and expose yourself to as many situations as possible before going out on your own. Take extra college courses and develop a specialty. Read technical literature and become a “library of information” that colleagues can draw from. Proficiency with the numeric keypad and learning to accurately type at least 30 words a minute is also essential….and much more common today than when I started.

Mentors are very important. Look for a mentor and associate with individuals that are equally smart, or better yet, smarter than you.

I was most fortunate to have several mentors take me under their wing. Respecting their anonymity, no names will be mentioned. However, one particular CPA – call her “Sandy Bell” – taught me about organization and “to do” lists. Until then, I had unsuccessfully tried to remember long lists of important tasks by memory. Sandy instilled in me the need to be very thorough in my work approach and strive for excellence. I really admired and respected her.

There were many others, each with their own special gift that left lasting impressions on me. For example, observing the care other senior auditors took when preparing work papers encouraged me to improve my penmanship and structure my thoughts before writing them down. During that period, personal computers did not exist, so good penmanship was very important.

Step 2 – How to Attract New Clients

Gratitude for the knowledge and experience gained was not enough. Working ridiculous, 80 plus hour weeks for several years, getting mono, and making the partners lots of money gave me the motivation to start my own practice. But I had no clients or contacts – except for the ones I worked on at the firm.

My only previous experience in getting business was an attempt to moonlight when working as a bookkeeper. I tried soliciting my own clients by handing out business cards and flyers to local strip mall businesses – “Mr. Balance Sheet” – Accounting advice at a modest price” – was the tagline. This effort proved unsuccessful. I wonder why?

It was unethical to solicit the clients of my employer, but I had a suspicion that some of them might join me later if I went out on my own. Outside of that there were a few family friends that were willing to take us on. At this point, I had decided that a partner was necessary to launch the firm. I didn’t have the extra $1,000 in funds necessary to lease the copier – a necessity at the time.

After pooling our funds, vacation, severance pay and the few clients, we signed an inexpensive one-room lease for one year in a four story building in downtown Fort Lauderdale, Florida. Initially, the building tenants became my canvassing ground. I looked for opportunity everywhere and spoke with anyone that would listen.

Business trickled in, some from the phone-book, some from elevator conversations. In the first year, we grossed a little over $40,000 and each netted about a $15,000 salary…..we also played a lot of tennis.

Today, social media is so much more helpful in getting started, but it doesn’t replace the handshake, or the smile. Getting a face-to-face encounter with your prospect is the best way to create a memory. Join the chamber of commerce, or a meetup.com group in your area where you can get together with other people that are interested in the same thing as you.

Believe it or not, many people are actively searching for a good accountant and can’t find one! Hone your talents and skills and show up for meetings. Listen and ask questions – that’s right “LISTEN”. Then, offer intelligent comments that are on topic. Don’t drone on about your skills and qualifications; instead, focus on your prospects interests and needs. Get them talking. The topic doesn’t need to have any connection with taxes or accounting. Just express an intelligent opinion and be friendly. The appropriate time to disclose your occupation is when you introduce yourself, but keep it short.

This attitude of “offering up” with joy attracts people to you, and before you know it they will ask you if you are taking on work – but, most likely, not at the first or second meeting. You may want to begin part of this process before you leave your current employment.

Step 3 – How to Fire Your Clients

When you first start out, the tendency is strong to take on any client that comes your way. We did this and ended up with some good and some undesirable clients. Just like people everywhere, there is the dishonest client, non-paying client, sloppy client, generous and appreciative client, demanding client that pays and the demanding client that doesn’t pay.

Motivated by fear of being unable to pay our bills, we wasted quite a bit of time and energy on undesirable clients.  Frankly, the fees made from this type of client was more than offset by the stress created and extra time wasted working in a dysfunctional relationship. Do you really want to represent a dishonest client during an IRS audit? If so, you will have to repeatedly practice the phrase “I’ll get back to you on that”.

Don’t get me wrong, it’s impossible not to have some irritating and questionable clients. It’s unrealistic to think that you can avoid basic human nature – some folks have very successful “cloaking devices”. However, establish a profile of the type of client you want and the ones you won’t accept. When a client reveals undesirable traits, remove yourself from the relationship as quickly as possible….whether it costs you some money or not.

It is also very helpful to develop a close relationship with a good lawyer. It can be someone you meet on the tennis court, golf course or any venue for that matter. When you’re in a spot, you need someone to check your thinking and help you determine the proper course of action.

Step 4 – Where Do I Go From Here?

Now that you are skilled and proficient, have attracted and weeded out certain clients, you have achieved “lift off” and are starting your accounting firm. You’re in the saddle now and riding the horse, but you may not know how to rein him in or point him in the right direction. This is where developing successful practice management skills become so important. But for now, good luck in your endeavors.