Academic journal article Journal of Accountancy

Start Your Own Practice: Shape Your Own Destiny and Provide Value to Clients

Academic journal article Journal of Accountancy

Start Your Own Practice: Shape Your Own Destiny and Provide Value to Clients

Article excerpt

EXECUTIVE SUMMARY

* A decade of declining enrollment in college accounting programs during the 1990s combined with passage of the Sarbanes-Oxley Act in 2002 and the new financial reporting and internal control demands on publicly traded companies have created a sellers' market for CPAs. That makes it a good time to take the plunge and launch a practice.

* Most start-up activities are the same as for any small business: Research your local market to assess the opportunities, decide which services to offer, choose the legal form your business will take, find and furnish an office, purchase the necessary insurance to protect against unexpected liabilities and attract clients.

* Regulation has intensified in a number of practice specialties. Depending on the specific services you intend to offer, take extra care to check with state and national rule-making bodies and professional associations such as the state societies and the AICPA to determine which requirements will apply to you or your firm.

* Accreditation as a CPA is the basic requirement in most states for setting up a practice, but some states and municipalities also require a business license, so check requirements carefully. CPAs who plan a home-based practice should check with the local zoning office to make sure they don't violate any laws.

* Deciding the legal form the practice will take-sole proprietorship, partnership, C corporation, S corporation or any type of limited liability entity--has many important consequences. Liability insurance is very important to practitioners who don't enjoy the protection from creditors that incorporation provides.

* CPAs need basic technology--a computer, printer, telephone, fax machine, perhaps a copier, and inevitably, good tax software--and an understanding of how programs work and how to integrate them.

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Launching your own CPA practice is one of the greatest professional challenges you'll ever undertake--and potentially one of the most rewarding. Fraught with hard work and long hours, it's nevertheless a chance to build a business, provide real value to clients who depend on you and, ultimately, shape your own destiny. This article explains how to identify opportunities in your local market, attract and retain profitable clients and attend to the myriad details--from furnishing an office to buying insurance--that accompany the launch of any small business.

The opportunity has seldom been better. A decade of declining enrollment in college accounting programs during the 1990s and the new financial reporting and internal control demands the Sarbanes-Oxley Act created for publicly traded companies have left CPAs in a seller's market. As industry, midtier accounting firms and the Big Four scramble to meet the new mandates, the needs of smaller businesses have, in many cases, taken a backseat--and those clients need help sooner rather than later.

"There's a lot of low-hanging fruit out there, including good clients some of the bigger firms don't want," says CPA Chris Echols of Montgomery, Ala., who purchased a solo practice and relaunched it as Chris Echols & Associates in December 2002. "With the shortage of accountants and the bigger firms gobbling them up at good salaries, you don't find as many people going out on their own."

WHY BUCK THE TREND?

CPAs who've made the leap to self-employment cite a variety of reasons. For Jonathan Tannenbaum of Levittown, N.Y., it was the culmination of a life-long dream of running his own business. For Jelena Black of La Palma, Calif., it was a chance to balance her profession and family on her own terms. For Robert Kober of Salisbury, Md., it was a way to inject new vigor into a career that had begun to seem mundane. "It isn't necessarily easier than working for someone else," says Echols, "but it is more rewarding. You're building something--for yourself and for your kids. …

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