Anyone start or know someone who has started a practice?

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  • #169253
    HazeEastwood
    Participant

    Has anyone here started a small practice or know someone who has? I am seriously considering starting a small practice on the side and just interested to get some feed back on things such as bill rates etc.

    FAR-81
    BEC-84
    AUD-91
    REG-89

Viewing 5 replies - 1 through 5 (of 5 total)
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  • #338451
    jelly
    Participant

    Yes. I have 4 clients on the side, 2 of which I've worked while I was finishing up my accounting courses; they are pretty light, and I charge a flat fee b/c I've known them for so long. The 3rd I've worked with for about a year, and the 4th is a referral from the 3rd; both of these have relatively the same hourly fixed rates with a weekly/monthly/annual limitation, so it's somewhat fixed. The 3rd has a lot of infrastructure issues that I've been slowly ironing out and is coming together, the 4th is a little bit more together while we work out who does what.

    With fixed rates or fixed fees, it's easy to eat hours for messy clients, so definitely investigate the company's balance sheet as well as accounting staff turnover history (and the general mental disposition of management). Also peek into how well the company risk manages government-related matters such as unemployment claims, insurance coverages, timely tax filings, as well as customer and creditor lawsuits.

    Depending on what state you are in, your side job can preclude you from collecting unemployment if you need to apply b/c your day job disappears; check with your local labor department. If you set up as an S-corp, keep in mind of the federal election deadlines.

    My initial investment has been a few thousand dollars, but minimally spent for federal and state filing fees, gen liab insurance, domain name, online fax account. It's just me paying bills and light compilation work after my 9-5, so I've been able to get some pretty decent rates for general liability insurance through the AICPA insurance programs (www.cpai.com). As an S-corp, I W2 myself each quarter during payroll submissions and my own wages are okay, nothing to brag about; a lot of my former personal costs have been shifted to the company, including licensing and AICPA and state society yearly membership fees, replacing an aging laptop and printer, setting up pre-tax transit benefits.

    Couldn't pass again!

    #338452
    HazeEastwood
    Participant

    Jelly, what kind of services do you provide? I was thinking about outsourcing some accounting wok. I have a background in manufacturing accounting and tax preparation. No audit experience so I couldn't do that. I have some experience with payroll so I was thinking of that as well. I have no idea what a fair bill rate is for any of those services are tho. How did you find out what your bill rate should be?

    FAR-81
    BEC-84
    AUD-91
    REG-89

    #338453
    jelly
    Participant

    No audits or reviews. Only compilations, some tax work, and risk management/advisory. I'm a bit niche b/c 3/4 clients are non-profits, so they tend to be short on infrastructure, knowledge, and compliance.

    Compilations: Receivables/payables, monthly reconciliations, internal and external reporting for budgets, grants, planning.

    Tax: Compliance with deductible donations, sales tax, payroll (mostly review work b/c it's outsourced but I can do amendeds and correct ADP/Paychex/Primepay's work), research (annual health care deduction, income tax treatment of foreign nationals, etc).

    Risk management: Internal controls documentation, year-end audit support; worker classification, insurance coverage for events and operations.

    Consider what someone at your level makes as an annual salary and convert it to an hourly rate by dividing by 2,000 hours; then bump it up at what you think is a fair percentage (b/c now you're paying for SE, WC, liability insurance) and compare it to what your local bookkeepers are charging. If you're licensed, have insurance, and know when/how to do journal entries, then you definitely have to charge more per hour than just an hourly bookkeeper, b/c chances are you will invest a lot of initial time learning how things are set up, and then correcting a lot of previous work.

    Keep in mind that there's a certain economy of scale for outsourcing payroll when it starts to become >2 employees. That economy of scale starts to drop off at some point in the hundreds or thousands for small to mini-mid-size companies.

    Couldn't pass again!

    #338454
    HazeEastwood
    Participant

    Jelly, what part of the country are you in? Are you doing this practice part time or full time? If part time is it so involved that you don't have much time for anything else?

    FAR-81
    BEC-84
    AUD-91
    REG-89

    #338455
    jelly
    Participant

    I'm in NYC. My first 2 clients I've been doing work for about 6 years already, since my accounting school days; it's quite light, except for quarter end and annual reporting and filing. The 3rd's about a year old, and is somewhat intensive, but I bring a lot of stuff home and work on my own time. The 4th is just started up this year, and is a few days a month.

    I would say it was pretty bad this Jan-March, b/c of the year-end for closing, payroll deadlines, grant reports and applications, and just dealing with it for 5 companies (my own too). I also studied and took a standardized test in Q1, which made everything extra murderous. Right now, it's mostly audit prep work (I scheduled it for very late) and reviewing audit schedules. From May and on, it'll mostly be quarterly reporting.

    Couldn't pass again!

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