If you have been in accounting business for some years, and you have refined your skills in financial advising or tax preparation, you may be toying with the idea of starting an accounting firm. There is also the influx of new business entities that prefer outsourcing accounting services from small accounting firms. Reason being, small firms can handle accounts for any business regardless of its size as they concentrate well, unlike the bigger firms that already have much work up their sleeves.
Owning your own business also comes with an incredibly gratifying experience coupled with a remarkable side of rewards. For this article, we explore everything about starting your own accounting firm. This includes the drawbacks you are likely to face and how to maneuver around them in the course of starting the firm.
Why an accounting firm?
There are numerous reasons why starting an accounting business from home makes for a feasible and lucrative venture. These include:
- Law requires that every business keeps record of accounts
- A potential of earning a good living
- It’s a cost-effective business to start
- You have the advantage of working anytime, anyplace
- You make money doing what you enjoy
- No expensive equipment required
While starting an accounting firm remains a lucrative venture, there are several crucial issues that you need to be aware of before starting.
Common pitfalls to avoid when starting an accounting firm
In starting an accounting business from home, it is essential that you avoid the following drawbacks lest your business fails to stand the test of time:
Poor marketing and inadequate market research
While research and planning are key to ensure that your business concept is practical, the pricing is competitive and provides sufficient returns, many business owners fail for having not spent adequate time researching on their business and its feasibility in the market.
Poor marketing is another hurdle in starting your accounting firm. One way to overcome this barrier is to be the lowest bidder on public job offers.
When you get the job, perform exceptionally and beyond client’s expectations. With this, you win the positive word-of-mouth advertising, putting you on the way to winning more contracts.
Planning, more so the financial aspects, is crucial for most new businesses. Inadequate capital, lack of contingency plan and failure to conduct extensive research and seeking professional advice can pose adverse challenges.
It is imperative that you draw a high-quality business plan to secure the right type of financing that you need to steer up your business to success.
Dishonesty when handling clients’ taxes
In order to succeed in your accounting business, you have to set a noble example for your clients, especially when handling tax preparation.
Never misadvise your customers. Advising your customers against reporting cash sales or on illegal methods of avoiding taxes, may lead them to taking advantage of your services.
You need to uphold high standards and your clients will follow suit.
Getting into the business for the wrong reasons
While there are a lot of advantages attached to owning your own business, be sure that you are not blindly venturing into your own business to reap profits oblivious of the arduous and time consuming work that come with it.
Some of the perks include having complete control over your program, ability to pocket profits and the ability to control the future and direction of your firm.
However, running your own business comes with challenges that shouldn’t be ignored.
Not knowing you target market
While failure to conduct adequate market research puts you in the danger of selling to the wrong clients, it is essential that you decide what types of clients you’d like to serve when starting your own business.
It is a common mistake among accountants to show off all of their specialties and services to everyone who seems interested. Much as you need to make clients aware of all your abilities, make sure you develop a specialty. Then pick a market segment you would like to focus on.
Hiring the wrong people
The people you recruit play an integral role in the success of your business. Employees should subscribe to your business goals, work hard, and be confident in the future of your business. Thus, selecting the right employee, in whatever position, is crucial.
Coming up with high-quality employees with the ideal mix of skills may be a challenging process, but it is rewarding in the long-run.
Just like any other business, starting an accounting firm has its share of risks and success cannot be guaranteed. While businesses are most prone to failure in their formative years, starting an accounting business from home is easy and can stand the test of time if you do things right and avoid the common pitfalls.