New and inexperienced entrepreneurs are often interested in buying a business that is relatively easy to start and manage. While it is never truly easy to start and grow a successful business, there are some businesses that are somewhat easier to start than others. Opening an accounting business may be relatively easy – but what kind of business is it, why is it somewhat easier to start than others, and how to make your success successful?
Accounting vs Accounting
First, let’s talk about some differences between bookkeeping and bookkeeping as these terms are sometimes used interchangeably.
Accountants and bookkeepers play a role in managing the finances of an organization. But accounting is more focused on transactions and administrative elements whereas accounting is more focused on a higher level of strategic analysis of an organization’s finances.
For example, an accountant typically records and categorizes the day-to-day payments and expenses associated with a business accordingly. They will send invoices and receive payments from clients, practice bank reconciliations, prepare monthly statements and financial statements, process payrolls, and submit year-end tax filings for review.
An accountant, in contrast, typically corrects records, analyzes costs, makes financial decisions on behalf of the business, advises decision makers, audits and verifies the finance department, and formally files tax returns.
One of the reasons why starting an accounting business is easier than starting an accounting business is because it requires less knowledge and experience.
How to Start an Accounting Business
So what are the steps to start an accounting business?
You don’t have to be officially certified public accountant (CPB) to start an accounting business, but you will need at least some education or experience in the field. You don’t need to be a math genius or have years of experience to start your own accounting firm, but you should be very familiar with whatever software platform you plan to use, you should understand the basics of financial reporting, and you should have at least some experience work with accountants. If you choose to become officially certified as a CPB, you will likely receive more recognition and find new clients more easily.
There are already plenty of accounting firms out there, so if you want to be successful, you need to pick a niche. What types of clients are you looking for? How is your business different from others already on the market? How are you going to reach out to the most important target demographics?
You will answer these and many other questions when writing a formal business plan. Your business plan will become the guiding document for your entire business. So it’s important to take the time to think about elements such as your organization’s strengths, weaknesses, threats, and opportunities.
Even though it is relatively inexpensive to start an accounting business, you will still have some upfront costs. How are you going to pay for them? Saving money, getting a loan, or getting financing from an investor are just some of your options.
At this point, you will be ready to purchase the essentials. You will need a computer and internet connection, as well as accounting software. You can also invest in a website, initial marketing and advertising, and accessories such as business cards.
You will need to officially start and register your business. Depending on what type of business structure you want to use, this process can be very simple or somewhat complex and time consuming. Many accountants choose to form a limited liability company (LLC) because of its simplicity and liability protection.
What services do you offer and how much do you charge for those services? This is one of the most important strategic decisions you are going to make for your business as it will determine your profitability and competitiveness. Try to find a balance by incentivizing customers with low prices while still making a profit for yourself.
At this point, you’ll be ready to start looking for your first client. There are many marketing and advertising strategies that you can use to promote your business. You can see faster initial results thanks to active networking.