The prospect of owning your own accounting firm is an exciting one, but it also comes with a dilemma for CPAs. The two options available for CPAs who want to own their own practice is either venture out on their own and build an accounting firm from the ground up, or buy an accounting firm that is already up-and-running. When making this decision it is important to weigh the pros and cons. Below, you’ll find a list of pros and cons when it comes to starting your own accounting firm.
PROS OF CREATING AN ACCOUNTING FIRM FROM SCRATCH
There are several advantages to building an accounting firm yourself from the ground up. Some of them are emotional, such as the pride of building something yourself, while others are more practical. These include:
- You can create relationships with your own clients from the very start.
- You are in control of all hiring decisions.
- It is exciting to start a business.
- You can create your own office space.
- You do not need a great deal of capital upfront.
CONS OF CREATING AN ACCOUNTING FIRM FROM SCRATCH
Although opening an accounting firm yourself is exciting, there are some downsides, as well. These may include:
- You will not have revenue coming in right away.
- You will have to find your clients (versus having an existing client base).
- In an attempt to secure clients quickly, you may take some you will regret later.
- You will be responsible for all of the ‘grunt work’ of starting a business, which is often boring and not profitable.
- You may feel a sense of isolation at first as you start on your own.
Pros of Purchasing an Accounting Firm
Although there are many benefits to starting a CPA practice, there are also some advantages to buying an accounting practice. These include:
- Revenue from an existing client base.
- Important systems are already in place so you can start conducting business immediately.
- You are not under pressure to secure clients right away.
- Trained employees are already present, so you can focus on work that is most important to you.
- Client relationships will already be established, and most of those clients are loyal and will stay with the business.
- The seller can advise on what does and does not work in the specific firm.
- Financing for acquisitions is much easier to secure than financing for a start-up.
- Tax benefits (depreciation and amortization of the assets purchased).
Cons of Purchasing an Accounting Firm
Before you buy an accounting firm, it is important to consider any disadvantages you may face. These may include:
- Debt service payments for the cost of the acquisition.
- If not done correctly, some clients and employees may leave.
- Until you are familiar with the systems in place, you may have to work longer hours than usual.
- You may find work that you need to eliminate from the practice.
- You may need to terminate certain employees.
Our Business Brokers in Washington Can Help You Buy An Accounting Firm
As you can see, there are pros and cons to each option for accountants looking to buy or start an accounting practice. Whether you purchase an accounting firm or start one from scratch will depend on many factors, including your own comfort level and preferences. If you decide that acquiring a CPA practice is ideal for you, Private Practice Transitions can help!
At Private Practice Transitions, our Washington business brokers can review your situation, listen to you, and help you find the best accounting firm for sale that fits you. If you are ready to own your own accounting firm, regardless of how you think you want to do it, call us at (253) 509-9224 to get the help you need.