Starting your own practice

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  • #175885
    jgrfan1
    Member

    I was considering starting my own tax and accounting firm (if I am able to pass everything and get a license). It would be a one man shop to start. I don’t have any audit experience and I don’t plan to get any since my impression is you have to start at the bottom. So it would just be tax and accounting / bookkeeping.

    I have a full time job so this would be a second source of income. I have about 10 – 20 extra hours per week to dedicate to developing and running the business (more of course if the hourly rate is higher).

    My plan is to finish w/ the exams and then touch base with some other small firms / one man shows to see if they can provide useful insights. Then I am going to figuratively hang up a CPA shingle and start business development. Not sure what reasonable expectations for clients / revenue is for the first year or two. My initial thought is that 5% of my salary (from my primary job) by year two would be a big win.

    My dream of dreams would be that this works out very well and I can leave my initial job (big corp financial planning role) and be my own boss. Would really be great to have a successful family business that I could bring my kids / nephews into.

    Anyone tried this or have any thoughts / experiences?

    BEC - 5/2012 - 91
    AUD - 8/2012 - 89
    REG - 1/2013 - 90
    FAR - 5/2013 - 88
    Wife, 2 kids and a job

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  • #393505
    polar21
    Member

    I will be in the same boat in 3-5 years, although my background is a little different than yours. My background consists of 6 years working for a Big 4 doing governmental accounting/finance work. I am currently sitting for the exams and hope to finish this year. My plan is to go to the Tax side of my current company for two years to get the experience, and then jump out and do my own thing.

    In regards to setting up a shingle, I would look at buying a practice out (the owner retiring…) before I attempted any business development stuff. Most people are hesitant to leave their current accountants, no matter how crappy of a job they are doing. So, buying into an existing practice would get your foot in the door, a client base, and the ability to grow it from there.

    My situation is that a good friend of the family has a very successful tax practice and is looking to quasi retire in the next 3-5 years, which happens to fall in line with my 3-5 year plan

    #393506
    jgrfan1
    Member

    Thanks, I've considered that. That works well if you dive in to the new venture w/ both feet. Unless you pay cash for the business, you'll need to work full time at it in order to service the debt.

    When you buy a practice, what is a good rule of thumb for a reasonable price? Is it something like 3X prior year billings?

    I may buy a practice in the future but I think to start out I'm just going to see if I can build it from scratch. Even if no one changes accountants, there are new businesses potentially starting up every day that may someday need an accountant (meaning you don't necessarily have to steal clients from exising accountants).

    I used to work for KPMG in the DC office – DoD financial statements. Federal accounting is an abomination.

    BEC - 5/2012 - 91
    AUD - 8/2012 - 89
    REG - 1/2013 - 90
    FAR - 5/2013 - 88
    Wife, 2 kids and a job

    #393507
    polar21
    Member

    From what I have seen, established practices are selling for 1x the prior year revenue.

    #393508
    polar21
    Member

    And yes, governmental accounting is indeed an abomination. In fact, the two words should not even be mentioned in the same sentence…

Viewing 4 replies - 1 through 4 (of 4 total)
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