[Anonymous]

I recently completed my CPA and received my license. This is also my first tax season. I will have completed 100-125 basic-intermediate individual returns this season.

Is it too early to think about venturing out on my own? There is a small practice that just has 99% individual returns available in my local area that is for sale. Is it worth considering buying the practice prior to next tax season? I would of course meet with the seller and grill them tremendously to make sure the client base was not outside my capabilities.

I have always been eager to work for myself, and would prefer to focus on tax work with maybe some small amount of bookkeeping throughout the year. I have worked on audits one of which I did 75% of the work. Not quite my cup of tea. I enjoyed it, but I like tax work a bit more.

I need thoughts, opinions, etc.!!!

[Missy]

Working for yourself can be very rewarding but there's quite a bit of risk as well. Make sure you do careful research, and know everything from what health insurance would cost if you need coverage to what the expected client retention will be (some will not stick around with new ownership, some will.) I'm too risk averse to think going solo after one year is a good idea but people do it and succeed.

Licensed Massachusetts Non Reporting CPA since 2012
Finance/Admin/HR Manager

[Anonymous]

Sure, I get that, and I have done the research and numbers. The current Income vs Expenses of the practice for sale is a net income of about $140,000. That is after paying CPE, Software, rent, utilities, etc.

So my take home after SE tax and income tax would theoretically be around $85,000. That's obviously assuming all clients stay, but if even 25% move on, then I would still be earning significantly more than I am now.

It just irks me to see how much I am paid now for a return vs how much the client is charged….feels like I am missing out on a lot of dough. Which I know the firm has expenses that come out of the full fee, but there is still a very large discrepancy.

[EuroAddict]

“It just irks me to see how much I am paid now for a return vs how much the client is charged….feels like I am missing out on a lot of dough. Which I know the firm has expenses that come out of the full fee, but there is still a very large discrepancy.”

They also incorporate their experience into the pricing. I personally wouldn't feel comfortable going out on my own without even having one busy season done.

Remember, being a CPA is not just 1040 returns. It's to provide your client guidance on tax issues, business planning, 401k etc etc etc.

-----------------------------
BEC - 77, 03/2015 (first try)
FAR - 79, 05/2015 (second try)
REG - 83, 12/2015 (first try)
AUD - 84, 03/2015 (first try)

I got 99 problems but the CPA ain't one.

[Stilgoin]

I’m going to tell you the same thing I told my husband when he bought his business- go for it. What have you got to lose? Worst case scenario- you don’t make it and have to get another job to pay off your loan. You are a CPA and that is completely doable. Best case- you have a fulfilling career and a successful business. Just know it takes a LOT of work.

And btw, my husband listened to me and has a VERY successful business he has owned for 20+ years. 😉
Good luck!

B | 62, 78
A | 73, 67, 79
R | 82
F | 59, 59, Waiting

Ethics | 93

"Success is not final, failure is not fatal: it is the courage to continue that counts."
~Winston Churchill

“In a world full of critics, be an encourager."

[Anonymous]

@EuroAddict – I know that experience comes into the pricing and obviously they have a lot more than me. That is why I would seek to serve simply returns at first. Anything over my head and I would admit that it is over my head and either seek guidance from another firm (of course paying for their guidance), or I would refer them to a more experienced firm. Also I would have ONE busy season under my belt. I started at the end of last year and would not jump ship until later in this year.

@stilgoin – thanks for the motivation, I can sit here and stew about it, or go for it. Can't succeed unless you try, right? I'm still not sure if I will do it, just trying to get a feel for whether or not I am completely crazy!

[Stilgoin]

@Eager Something else to consider……….one of our questions in Audit is if you have a client who presents an issue you are not knowledgable about, should you refuse the client or take the client and go make yourself knowledgable on the issue? Obviously, nothing can be presented to you that you cannot go study on your own. You can always outsource professional help (as you mentioned – which is the right attitude). We have done that many times in our own business, but after the first few years, experience trumps outsourcing. You will make mistakes, but if you are diligent about doing things the way they should be done according to the standards of our profession, you absolutely have the tools you need to succeed. Also, the key to being successful is standing by your work and fixing your mistakes. Our business is not to know everything, but to be able to learn what you need to in order to serve your clients as a CPA. You have an accounting degree and are a licensed CPA because the AICPA feels like you have the capability to be a professional in this business.

You should have the confidence in yourself that the AICPA and your university has in you.

~You have proved your worth- now go forth and use your knowledge. I am a little intense about entrepreneurship, but I would be very poor if we had not taken a leap. Lol

B | 62, 78
A | 73, 67, 79
R | 82
F | 59, 59, Waiting

Ethics | 93

"Success is not final, failure is not fatal: it is the courage to continue that counts."
~Winston Churchill

“In a world full of critics, be an encourager."

[EuroAddict]

@stillgoin – What kind of experience did your husband have before starting his own biz?

-----------------------------
BEC - 77, 03/2015 (first try)
FAR - 79, 05/2015 (second try)
REG - 83, 12/2015 (first try)
AUD - 84, 03/2015 (first try)

I got 99 problems but the CPA ain't one.

[Stilgoin]

@Euro He had several years experience repairing cars, but zero experience running a business. The first 5 or 6 years were tough, to say the least, but after many weekends, holidays and late nights, what we have accomplished is amazing. The willingness to learn new things every day and customer service has been key, but it was so scary in the beginning. You have to understand that when we started, we actually had to go to the library, order a book, go take a class, or call someone to get information because we did not have access to the internet. After the internet, our business exploded because of all the available resources. I guess that is why I encourage people to do things on their own so often, because access to information is so much easier than it used to be. 😉

B | 62, 78
A | 73, 67, 79
R | 82
F | 59, 59, Waiting

Ethics | 93

"Success is not final, failure is not fatal: it is the courage to continue that counts."
~Winston Churchill

“In a world full of critics, be an encourager."

[EuroAddict]

Several years experience is a lot more than one season.

-----------------------------
BEC - 77, 03/2015 (first try)
FAR - 79, 05/2015 (second try)
REG - 83, 12/2015 (first try)
AUD - 84, 03/2015 (first try)

I got 99 problems but the CPA ain't one.

[Anonymous]

Sheesh! Got one of you making me excited about the opportunity, and the other basically saying one busy season isn't good enough…….ugh…….

[EuroAddict]

lol – Does the biz of employees or is it a one man show?

For the revenue they make I am guessing it's not all just simple 1040. If so that's either a TON of returns or charging a good amount for each one.

-----------------------------
BEC - 77, 03/2015 (first try)
FAR - 79, 05/2015 (second try)
REG - 83, 12/2015 (first try)
AUD - 84, 03/2015 (first try)

I got 99 problems but the CPA ain't one.

[Stilgoin]

@Eager Lol There are always two sides, but I would not say 5 or 6 years of school should be discounted as experience.

And for a little perspective, Euro did not think a new accounting graduate would be able to do one person's tax return in another post on this forum. You have experience doing returns. What do you think? My view might be a little more realistic. If you feel you can handle it, then you probably can.

At this, I digress. I have to study. I’m sure you will make the best decision for you. Again, good luck!

B | 62, 78
A | 73, 67, 79
R | 82
F | 59, 59, Waiting

Ethics | 93

"Success is not final, failure is not fatal: it is the courage to continue that counts."
~Winston Churchill

“In a world full of critics, be an encourager."

[EuroAddict]

Correct 🙂 I did/do think that. I *think* the person didn't have a CPA either (could be mistaken).

Don't get me wrong, I'm not a negative Nancy here. I just believe if you're charging for something you should be well versed in it. Whether it's auto repair or tax returns.

You have to think of what you can offer the client. Why should they pay you a few hundred (minimum $400 at my current office) instead of filing it for free online? I believe that's where experience comes in.

-----------------------------
BEC - 77, 03/2015 (first try)
FAR - 79, 05/2015 (second try)
REG - 83, 12/2015 (first try)
AUD - 84, 03/2015 (first try)

I got 99 problems but the CPA ain't one.

[Missy]

I think you have a lot of homework to do before you even consider it if you're letting your emotions over it be affected by strangers on the intern but I also wanted to add you're assuming they'd even consider selling to someone with minimal experience, and won't necessarily hand over the keys just because you're able to make the purchase.

Licensed Massachusetts Non Reporting CPA since 2012
Finance/Admin/HR Manager

[Anonymous]

I'll give a balanced opinion:

I think some people could do it after a single busy season, and some people couldn't do it after 15. The difference is in how quickly a person learns and how well a person can solve problems on their own. Some people are so good at solving problems independently that they could almost be given a complex return, a copy of the IRC, and turned loose with no training, and still get it right. Others are better at following instructions than solving problems, so you could train them for 15 years and they'd still have trouble doing a simple itemized 1040. I've worked with people in both groups.

So, my advice to the OP would be to think seriously about the work you're currently doing. How often do you have to ask someone for help? How often do you need to get advice? How often do the people reviewing the returns you do need to make modifications to them? Etc. etc. When you break out on your own, hiring outside help is going to cost you more than you're making off the return, most of the time. So, you want to be able to do almost everything yourself. If questions are a once-a-month thing right now, you're probably in good shape. If they're once-a-day, I'd hang tight. If reviewers are modifying your returns due to errors at all, I'd be very very hesitant at stepping out on your own. When you're on your own, you have to catch all the errors, so if there's errors getting past you, I'd be heavily concerned.

If after analyzing along those lines, you decide that you're a problem-solver that can figure things out yourself and that already needs minimal advice and correction, then maybe you consider it. At that point, I'd want to get some numbers on total returns completed and level of complexity to determine if you'll have enough hours in your day to complete them. If you're thorough and accurate, but you take 3x as long to do a return as the guy who's selling, then you might only have time for a net profit of $30k take-home pay, instead of the $85k you're anticipating.

As mla brought up, they might have minimum experience requirements to sell; there's also considerations for getting a loan etc. But I'd think through the things I mentioned above before I even thought about going into debt to buy a practice. But, if the things above check out, then if they're willing to sell and you're able to get financing, and you want to go for it, maybe go for it.

Myself, if I ever hang out my own shingle, I think I'll build it from the ground up, cause my risk appetite isn't high enough to take on a huge loan for a intangible. 😐 But then, my risk appetite was barely enough to take out a car loan with full-coverage insurance. I hate loans. 😛 So, I'm not the one to ask about the loan aspect of it. 🙂

[Author]

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