How to Start Your Own Accounting Firm

Western CPE Staff

The opportunity has rarely been better. According to the U.S. Bureau of Labor Statistics, employment of accountants and auditors is projected to grow 5% from 2024 to 2034 — faster than the average for all occupations — with roughly 124,200 openings expected each year, many driven by retirements. Recent tax law changes, including the One Big Beautiful Bill Act of 2025, have further pushed business owners to seek expert guidance. Practitioners willing to launch their own practice are entering a market that genuinely needs them.

That said, opening a firm is not simple. The decisions you make—legal structure, niche, pricing, and infrastructure—will shape your practice for years. The framework below covers the basics of what firm owners need to know to set up their practice for success on day one.

Decide What Kind of Firm You Are Building

Before any paperwork, decide what your firm will do and who it will serve. The CPA license remains the most valuable credential in the profession, and it determines the scope of what you can legally offer.

CPAs can perform audits, reviews, and other attest services in addition to bookkeeping, tax, and advisory work.
Non-CPAs can build profitable practices focused on bookkeeping, payroll, tax preparation, and advisory services, but cannot issue audit or assurance opinions.
Some practitioners pair a non-CPA principal with a CPA partner to extend the firm’s service lines.

Whichever path you choose, document your scope clearly. Prospective clients should understand exactly what you can and cannot deliver before signing an engagement letter.

Build the Legal Foundation

Choose an entity. Common choices include the LLC and S corporation, both of which provide liability protection and pass-through taxation. Sole proprietorships are simpler but leave personal assets exposed. Partnerships work for multi-owner setups, with LLP variants reducing risk.
Register with your state. This usually includes a Secretary of State filing, a state-issued firm permit (required in many states for firms offering accounting services), and any applicable local business licenses.
Obtain an EIN. The IRS issues these online at no cost. You will need one to open business bank accounts, run payroll, and file business returns.
Secure insurance. Professional liability coverage is non-negotiable. Add general liability and cyber liability if you handle sensitive client data digitally.
Open a dedicated business bank account. Commingling personal and business finances creates audit risk and bookkeeping headaches that compound as the firm grows.

State requirements vary in ways that materially affect setup. Per NASBA, every accounting firm must register with the board in the state where its professionals practice, and the steps differ across jurisdictions. California, for example, requires the number of licensed CPA partners to exceed the number of unlicensed owners. Virginia requires every CPA firm to designate an active in-state CPA as the principal licensee. Many states also impose firm-name restrictions and require peer-review enrollment for firms providing attest services. Confirm your State Board of Accountancy’s specific rules before filing entity paperwork.

Plan Your Finances Honestly

Startup costs vary widely depending on whether you operate virtually or lease office space, hire support staff, or stay solo. Common line items to budget for include:

Entity formation and state registration fees
Professional liability and general business insurance premiums
Tax preparation, bookkeeping, and practice management software subscriptions
A professional website, domain, and basic marketing expenses
A laptop, printer, scanner, and secure document storage
Office lease, utilities, and furniture if not working from a home office

Beyond initial setup, SCORE, a Small Business Administration (SBA) resource partner, recommends most small businesses maintain three to six months of operating expenses in reserve. For a new firm, that buffer absorbs slow client acquisition, the lag between invoicing and payment, and the seasonality of tax-season revenue. If self-funding is tight, SBA-backed loans, a business line of credit, or outside investors are options. Loans require personal guarantees; equity dilutes control.

Choose Your Niche

Generalist firms struggle to differentiate in a crowded market. Specialization lets you market efficiently, develop deeper expertise, and command premium rates. Some promising niches include:

Tax preparation
Forensic accounting
Estate, trust, and retirement planning
International tax compliance
Audit and assurance
Business advisory and financial strategy

Select one or two adjacent niches you understand or are interested in. The clients you already enjoy serving are usually a strong signal of where you will thrive.

Build Your Service Menu and Pricing

The profession is moving away from hourly billing. The Ignition 2025 U.S. Accounting and Tax Pricing Benchmark, which surveyed 219 U.S. firms, found that only 3% charge hourly for tax preparation, hourly billing for CFO and controller services has dropped to roughly 10%, and a strong majority of firms use fixed-fee or value-based pricing for bookkeeping and accounting.

For new firms, that means designing fixed-fee packages from the outset rather than retrofitting them later. Consider tiered packages so clients can self-select. Research what comparable firms in your market charge, but price for the value you deliver rather than the time you spend. Establish a minimum engagement fee to protect margins from low-value work.

Invest in the Right Technology

Modern firms run on cloud-based systems. The core stack typically includes:

Tax preparation software
General ledger and bookkeeping software such as QuickBooks Online or Xero
Practice management or workflow software
Secure document portals and e-signature tools
A payment processor that handles ACH and card transactions

AI tools that automate data entry, reconciliations, and document review can meaningfully expand a small firm’s capacity without immediate hiring.

Find Your First Clients

Referrals from former colleagues, accountants in other specialties, and adjacent professionals — attorneys, financial planners, insurance agents — typically generate the strongest early pipeline. Supplement those relationships with:

A professional website that clearly states who you serve and how
A claimed and optimized Google Business Profile for local search visibility
A LinkedIn presence featuring consistent, useful content
Active participation in one or two industry-specific communities your niche frequents

Resist the temptation to spread thin. Two consistent activities will outperform six sporadic ones.

Stay Sharp

Tax law shifts constantly, and accounting standards evolve alongside it. Beyond meeting your state’s continuing education requirements, build a habit of ongoing professional development—particularly in advisory areas where margins are highest. Western CPE offers courses and certificate programs designed to help practitioners deepen expertise in tax, advisory, and specialized practice areas.

Common Mistakes to Avoid

Underpricing early engagements. Discounts attract price-shoppers who leave when something cheaper appears, and they signal low value to better-fit prospects.
Saying yes to every prospect. A firm without an ideal-client filter ends up with mismatched work and shrinking margins.
Delaying systems work. Documenting workflows feels like a luxury at five clients and an emergency at fifty.
Ignoring cash flow. Profit and cash are not the same. Many firms book strong margins yet run thin during slow billing months.

Starting an accounting firm rewards careful preparation. Get the foundation right—entity, niche, pricing, and technology—and the practice you build will compound year after year.

If you’re looking to get more from your CPE, we’ve got a few courses that’ll help prepare you to run your own accounting firm: