Just because you pursued a career in accounting doesn’t mean you need to give up on your big professional dreams. One of the most exciting career moves an accountant can make is launching their own firm but is that the right choice for you? Read on to learn the most common advantages and disadvantages of running your own accountancy firm, which will help you make the right decision for your life and career.
Pros of Launching an Accounting Firm
You Choose Your Work
As an employed accountant or CPA, you are tasked with whatever jobs your employer throws your way. With some experience, you may be able to pass along tasks you do not relish to less senior members of your team, but for the most part, the clients you work with and the projects you complete are not under your control.
Yet, when you launch your own accounting firm, you gain control over yourself. You get to determine what type of clients your firm will work with. And you get to choose which projects and tasks to which you will contribute your accounting knowledge and skill.
You Control Your Team
Another consequence of the lack of control endured by employed accountants, accounting teams tend to be assembled by department management or worse: human resources. The result can be a group of mismatched workers who struggle to collaborate to due to varying skill sets, personalities, communication styles and more. While some employers may invite workers to offer feedback on prospective hires, most often, a team of accountants is expected to adapt to new members efficiently, which can be remarkably difficult in some circumstances.
As the owner of your accounting firm, you have the opportunity to create your team from scratch. You can choose the qualifications and attributes of each member of your team, ensuring easier collaboration and improved productivity. With greater control over hiring practices, you can allow your workers to feel more satisfaction from their work relationships. Perhaps improving retention and creating a sense of community in the workplace.
You Reap the Benefits
Accounting firms are notoriously some of the most profitable small businesses because almost everyone can benefit from the knowledge and skills of an accountant. According to Thomson Reuters, the average income per partner at a CPA firm is around $521,000, though larger firms tend to have even larger profits. As the firm’s owner, you could claim a partner’s salary and then some, whereas if you remain a regular employed CPA, your salary is likely to cap out around $149,403. It is difficult to ignore the significant rise in potential earnings over your lifetime as the founder of an accountancy firm.
In addition to the financial rewards, you benefit from the prestige generated by a successful new business. You can establish yourself as an entrepreneur and business owner within your community. Which can provide additional perks, like a broader business network and improved relationships.
Cons of Your Own Accountancy Firm
You Suffer the Financial Burden
One of the most pressing concerns for any type of entrepreneur is the cost of launching a new business. As the founder of an accountancy firm, you shoulder the financial burden not only of funding the business. During its startup phase but keeping the organization running into the future. If you are unwilling to take on this significant liability, business ownership might not be right for you.
Of course, there are ways to mitigate the financial risks of launching an accountancy firm. You can procure various types of loans to cover startup and operating costs, and you can acquire professional liability insurance to cover your firm in the event of certain types of lawsuits.
You Manage the Administrative Overhead
If you enjoy being an accountant and performing duties closely associated with accounting. You may not relish a pivot into accounting firm ownership. Which typically replaces accounting-related tasks with roles more closely aligned with business administration. When you gain control over aspects of an accounting business like the clients you take on and the employees you hire. You also tend to gain responsibilities associated with managing customers and staff.
Conclusion
Launching your own accounting firm is difficult, and not every accountant is well-suited to the career move. If you are uninterested in building a business from the ground up, you might consider purchasing an existing accounting firm in your area or you might find other ways to climb the accounting career ladder without becoming an entrepreneur.