So, you’re ready to strike out on your own. Maybe you just graduated with your accounting degree. Perhaps you’ve worked for years for another company, gaining experience. Either way, there are some things you should know about starting your own accounting business. Here are some things to keep in mind.
EFIN
The IRS assigns an electric filing identification number (EFIN) to every firm that has passed a suitability test and applied with the IRS to be an authorized electronic file tax preparer. Once you’re approved, you’ll get a letter in the mail with your unique EFIN.
The filing and suitability test can take over a month, so apply well before your grand opening to be ready to do business. This number is owned by the firm rather than individual tax preparers. List the IRS’s first point of contact and anyone with a legal stake in the company on the application.
EIN
The employer’s identification number identifies your business as an entity with the IRS. You need it to apply for the EFIN and get a business bank account. You’ll use this number when creating your own tax documents, including employment records, w-2s, 10-99s, and more.
Setup
Next, you need an office space, whether that’s in your home, on the go, or in a brick-and-mortar building. Here are some basic needs to think about:
- A computer with professional tax software for tax preparers
- A scanner/copier that allows you to keep copies of client paperwork or send documents through encrypted communication
- A printer
- Register your business name with the Secretary of State
- Your business address and phone number
- A business bank account
- Either hard copies of all the normal tax documents or the ability to print them as needed from tax business software
- Electronic or hard copy filing system that is both secure and makes it easy to find what you need when you need it
Clients
When finding clients for your business, it makes sense to seek out people who already know your reputation or skill in the business. However, if you have worked for another company, make certain you don’t violate any non-competition clauses in your previous contract.
The first clients will be the hardest to acquire. After that, positive word of mouth will help you advertise your services. Your first steps include:
- A professional website that has robust security, a client portal, and a secure method to take online or electronic payments
- A social media page on the platform most frequented by your desired clientele
- Regular content on your site and social media to help build your internet presence
- Incentivized referral program
- An organized list of services with flat prices, hourly rates, or retainer fees
- An ad strategy to make people aware of your grand opening and draw people into your office
Employees
If you hire new talent, you must build a positive work culture and a synergistic approach to managing your resources. The best boss knows their people’s strengths and how to allocate those resources to benefit the company and the employees. Leadership and business management courses and books could prove helpful here. You can also vary the type of positions you offer:
- You can hire full-time tax preparers or secretarial staff.
- You can hire temps during tax season if you’re not ready for full-time employees during your slow season.
- Outsourcing individual projects like web design, site management, or marketing also makes sense if they would take you away from income-producing activities.
- Choose professional tax software that can automate mundane tasks so paid employees can focus on more complex activities.
Expansion
It’s exciting when your business takes off. Consider expanding the practice into new locations or hiring more talent to handle increased traffic at your current location. There are many questions to consider when deciding how to grow your business, such as:
- Do you need more space or more streamlined processes so you’re more productive and effective at your current location?
- Could you be more productive by upgrading equipment?
- Could you accomplish more by investing in employee education so they can perform more duties for your office? Investing in your employees has the added benefit of creating loyalty in the office and reducing turnover.
- If you’re ready to scale up, does that mean multiple offices or a larger office to accommodate more staff? A change of location can open new opportunities. Still, it also means you have to retarget your advertising and gain recognition in a new community while strengthening your current book of business so they don’t shop for another firm.
- Do you have the staff to open another location and know they can operate with the same quality?
- Do you really need more customers to increase your income? Perhaps you could expand your services and increase the average income per client rather than adding more customers.
A business is a huge responsibility, but it can be rewarding for those who have the will to see it through. Hopefully, this article helps you make the decision that best fits your practice.
