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How to start an accounting business
Navigate your way through opening an accounting business with these key steps.
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To launch an accounting firm, you'll need a little more than a knack for numbers. From understanding your target market, setting business goals and ensuring the right legal documents are in place, we've outlined the best steps to take for a successful venture.
What is an accounting business?
An accounting business takes care of other people's finances, whether they be business or personal. Accountants are trained in summarising, analysing and reporting annual income and expenses to help businesses track and manage their money effectively.
Equip yourself with key industry skills
It takes a certain type of person to become a highly skilled accountant. You'll need to be able to summarise and analyse financial data effectively while creating comprehensive and user-friendly reports for clients. While you will need to undergo training to become an accountant, you'll also need to possess these additional skills:
- Strong writing skills
- Clear communication
- Critical thinking
- Systems analysis
- Time management
- Organisational skills
- Sharp eye for detail
Enrol in the right courses and get the best qualifications
The very first step in opening your own accounting business is to make sure you're qualified for the job. Here's a quick overview of the qualifications you'll need...
Qualify in accounting
The first step is to gain a diploma, bachelor's or master's degree in accounting, allowing you to apply for your practising licence.
A bachelor degree is the preferred option, as this will allow you to apply for entry to Australia's top professional accounting bodies.
A Bachelor in Accounting takes between 3 or 4 years of full-time study to complete and will cost around $11,000 per year, depending on the institution that you choose. To make your life a little easier, there are numerous online accounting courses that you can complete from the comfort of your own home.
If you already have an undergraduate degree under your belt, you could opt for the 2-year Master of Professional Accounting which will set you back around $14,000 per year of full-time study.
Become a member of a professional accounting body
The Institute of Public Accountants (IPA), Chartered Accountants Australia and New Zealand (CA ANZ) and CPA Australia regulate the Australian accounting industry. With a Diploma or an Advanced Diploma of Accounting, you can apply for entry to the IPA. For CPA and CA ANZ accreditation, you will need a Bachelor of Accounting degree.
Apply for your licence
You will need a Professional Practice Certificate (PPC) before you start offering accounting services to the general public. You can usually apply for this through the board you're registered with, but you will need professional indemnity insurance to do so.
Here's a list of websites that offer accounting courses:
Name your business
Choosing a name for your business can be a key factor in its success. Here's a quick step-by-step guide on choosing a name that reflects the services you provide while staying relevant:
- Find your niche. Will you specialise in tax accounting only or branch out into auditing or investment services?
- Brainstorm names. Write down a list of possible names that reflect your company and its services.
- Shortlist your ideas. Analyse your list of names and choose options that are catchy, easy to say and spell, and are memorable.
- Research competitors. Make sure there aren't any competitors with the same or similar sounding name.
- Market research. Find people who work in the industry or potential customers and ask for their feedback on your chosen name.
- Domain names. Make sure the name you pick has a domain available for your website.
Choose a business structure
To transform your business idea into a legal entity, you'll need to register for an Australian Business Number (ABN). This is a unique number that will identify your business to the government. You can use it on an invoice, on tax payments to claim goods and services tax (GST) or to get an Australian domain name.
To do this, you'll need to know how you'd like to structure your business. Depending on the size of your business and how you see it developing in the future, you may want to consider one of the following structures:
- Sole Trader. As a Sole Trader, you'll be operating the business alone. While you'll be able to enjoy taking full control of business operations, you'll also be entirely responsible for any debts your company incurs.
- Partnership. If you're thinking about opening an accounting business with a friend, then you'll need to register as a Partnership. This will give you and your partner equal control over the business and its finances.
- Company. Companies are more complicated and costly structures to set up, but are ideal for those who want to open up a large accountancy firm. Typically, a company is owned by multiple shareholders and the financial burden is split between them.
It's worth noting that you can change your business structure later down the line as it grows and evolves. If you're still unsure how to register your business, you may want to seek advice from a small business lawyer.
Create a business plan
Although a business plan isn't a legal requirement to open a business, it can be a useful tool. Understanding your market, gaining insights into future finances and setting goals are all benefits of writing a business plan.
Here are a few elements to include:
- Business description. Explain what your business does and how it makes money.
- Product description. Analyse the services your business is offering and how it compares to your competitors.
- Market research. Define the type of customer you're targeting and how you'll attract them to your accounting business.
- Sales. Define your marketing strategy and how you'll grow your customer base.
- Finances. Talk through the costs of opening your accounting business and name your rates, as well as your sales projections for the future.
- Future. Set realistic goals for the future and explain how you'll meet them.
Consider financing your business
When it comes to starting an accounting business, you will need to invest a certain amount of money. Luckily, there are a number of financing options available, ranging from personal loans to small business loans.
The table below shows a number of personal loan providers. Be sure you're able to afford the repayment plan, along with any added fees or charges, prior to applying for any type of loan.
Set yourself up with useful equipment and software
If you're setting up your accounting business from home, a large part of your initial investments will go into buying the right equipment and software to run your business. We've put together a list of essentials.
Furniture
You'll want to invest in some quality office furniture if you're launching your company from home or providing work areas for your employees. Basic accounting office furniture includes desks, office chairs, bookshelves and filing cabinets.
Computer and printer
A computer or laptop is essential to running your accounting business. It will help you keep a log of customer's records, and organise and analyse financial data.
Accounting software
To make your life easier, you may want to invest in accounting software such as QuickBooks or Xero. Both can assist with forecasting and analysing data, helping to reduce human error in the long run.
Website
To add credibility to your accounting business, you may want to invest in building a website. To do this, you'll also need a web host and domain name.
Organise the legal side of your business
As is the case with any new business, it's important to understand your legal rights and obligations before setting up shop. A good place to start is thinking about the legal documents that you need to get in place. You can do this yourself using online templates or contact a lawyer to do it for you.
Here's a list of a few essential legal documents you'll need to have in place to start your accounting business:
- Employment Agreement. You'll need to put an Employment Agreement in place for every member of staff you hire. This will outline an employee's rights and obligations in your company, along with their duties, holiday time and remuneration.
- Website Disclaimer. You should include a Website Disclaimer on your site to protect your company from legal liability.
- Privacy Policy. A Privacy Policy outlines how you'll collect and store your customer's private data. This could be anything from their name to their credit card details.
Get access to legal services and documents online
Does your company belong in this list?
Set your rates
Generally, accountants charge for their time in two ways: They either provide clients with a fixed-rate fee for the project, or they decide on an hourly fee and bill their client at the end of the project.
Choosing how much to charge clients can be tricky, especially when you're first setting up in the industry. It's worth spending some time researching how other accounting businesses in your area charge their clients. This will give you a general idea of how to price your services and how to stay competitive.
Ready to get set up with Square?
Accept payments from your customers in person and online with Square's card readers, payment terminals, digital invoicing and e-commerce tools.Find your first customers
Marketing is an essential tool when it comes to starting an accounting business. To kick-start your marketing, consider printing business cards and flyers to hand out in your local area. You could also consider buying a magnetic sign to advertise on your car.
Social media channels like Instagram, Facebook and Twitter, along with email marketing, are effective methods to promote your services to a broader audience.
Online marketplaces also offer an excellent opportunity for selling your services. Airtasker, hipages and Oneflare are just a few examples of this hassle-free service. These types of websites help you to gain access to potential markets and maximise sales.
Online business directories are also useful assets to add to a small business's marketing plan. They are comprehensive and can help you reach new customers.
Frequently asked questions
What are the different types of accounting fields?
There are various types of accounting available, including auditing, tax accounting, managerial accounting, cost accounting and fiduciary accounting.
Can you start an accounting business from home?
Yes. In fact, many new accounting businesses choose to work from home to cut down costs while they find their feet. Most of an accountant's work takes place online or with clients, all of which can be done from the comfort of your own home.
How much do self-employed accountants earn?
According to PayScale, an accountant can earn between $58,000 and $80,000 annually. When you're self-employed and set your own rates, you have the potential to earn this and more.
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