January 25, 2022 at 10:31 pm #3309571
Hello Fellow Ninjas!
I am a CPA living and licensed in NY. I hear and read stories everywhere about accountants running side hustles with tax/bookkeeping clients. To be honest, I do not like tax or bookkeeping at all and love audit. My long term goal is to run my own firm someday. Whether as a sole practitioner, sole proprietor with employees, or a partnership with employees, I do not know yet. I currently work at a CPA firm as an audit manager. I cannot afford to quit my job now or for the next few years, but if at all possible, I would like to take steps in the right direction now. I would not be able to do much during busy season, but I am certain that I can during non-busy season.
Am I allowed to issue audited/reviewed financial statements for nonprofits and private companies (no SEC work) on the side? I know there are rules/ethics about not stealing clients or poaching if I ever left, which I totally understand and I would never do. I would purchase all my own software and all that. I would make sure that I do not do so on company time or use their resources, etc. I just mean, legally and ethically, am I allowed to do it.
My aim for the first year or two would not be to make a large profit, but rather to get my feet wet, so to speak, and to breakeven or if I am lucky make a small profit. What are the major start up costs and what is the estimated amount of billings needed to just break even for each of the first few years? Some things I think of are probably some sort of lawyer to help with the early setup, state filing fees for setting up the LLC/LLP, liability insurance, audit software, computer, backup software/cloud, phone service (i.e google voice, etc), video chat service (zoom, etc), cloud storage (dropbox, etc). There are other expenses as I scale and time goes by such as peer review, but I am trying to only think of the first year or two just to get started.
Is this something that anybody has done or known somebody to do? How did it turn out? Any advice?
I really appreciate all the help.
Thank you all!January 26, 2022 at 8:56 am #3309574MookieParticipant
So I actually just started a side hustle as well!
As far as ethically, no there is nothing wrong with wanting to branch out on your own, as long as you did not sign a Non-compete with the firm you are working for currently. If you did you may need to talk to an attorney on how you could work around it.
For attest services, you would need an approved firm with your state though. Check with your state board to on what needs to be done to get your firm up and running. For me in Louisiana, I had to file a firm permit application with them and pay the appropriate fees. This is also where you would opt in or out of peer review (I do not provide any attest services so I was able to opt out, fortunately).
As far as the LLC is concerned, you are competent enough to set up the LLC on your own as a CPA if you want to save costs there. Just google what it takes in NY to get things moving. I dont know about NY specifically, but in LA most of this can be done online. If at some point you would need to hire a registered agent for the company, you could do that in the future. I did not see the point given how small I am right now, so I just used myself.
As far as start up costs, budget for what it will take to get you off the ground and a small cushion. Its more important to get started and seize every opportunity available while you can. Its easier to steer a moving ship. Dont fall victim to “analysis paralysis.” I've been there. You cant account for every detail or expense that might come your way. You are fortunate enough to have a stable job, use it. Fund the startup as it needs the money rather than try to prepare for every situation.
This sounds like a great idea! Excited for you! Remember, its ok to grow slow too! Its a marathon not a sprint.January 26, 2022 at 4:22 pm #3309577
@ Mookie – Thank you so much! Great advice. I will look into setting up the LLC. Yes, I think that the most important thing is just getting started. As long as I work hard and do the right thing, the rest will take care of itself.January 26, 2022 at 7:19 pm #3309583TncincyParticipant
This is so exciting!!! I am glad you made the post and the response is spot on. I think that’s what I have been dealing with, “ Analysis Paralysis”. I’ve had my bookkeeping and tax business over 25 years and I have been struggling with the making time to take the exam, no this is not a pity party response, but the reason I want the CPA is to upgrade my business to more services. To hear the encouragement to get started and everything will take of itself is very re-assuring. I hope the advice is taken.
I am currently studying for Far. Hopefully I will have good news in March.January 27, 2022 at 9:23 am #3309592
@ Tncincy – Wow! Very impressive and inspirational. Go for it! You will get it. Thanks and best of luck!January 28, 2022 at 6:03 pm #3309613MickParticipant
Keep in mind that f you offer attest services you’re subject to peer review. I’m a little fuzzy on this but you may need to get a firm permit as well.
Make sure to do all your research before going into the side hustle.February 13, 2022 at 8:44 am #3309880SeattleCPAParticipant
First, do you need to use a PLLC in NY? Check this out because it looks like you do: https://www.nysscpa.org/news/publications/the-trusted-professional/article/choice-of-entity BTW I would think you do…
Second, it is pretty uneconomical to do “one” of something. You need some scale to pay the fixed costs. We're a tax firm, but anything we can only do a time or two a year? That's a losing proposition…
Side Business – Issuing Financial Statements While Working At a CPA Firm
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