As an employee of someone else’s company or accounting firm, you may have thought about what it would be like to start your own accounting business. Ah, the freedom of being your own boss and managing your company the way you believe it should be run.
Having launched several businesses in my career, I can tell you from personal experience that running your own business has its perks. It also comes with responsibilities. To legitimately and legally start and run your accounting business, you need to pay attention to some business compliance matters.
In this article, and the one to follow next month, I’ll share some of the basic considerations you need to address when launching and managing your business.
So, without further adieu, let’s get down to business:
To get your business off the ground, here are the six steps for starting your company on the right foot.
No. 1 – Choose your business name
Your business name is an important part of your brand. Think through whether you want to use your given name in your company name (e.g., “Laura Jones, Accountant”) or create a name (e.g., “Union County Accounting”). When creating a name, make sure no other business has claimed it—before you start printing it on marketing materials or using it online.
You can see if the name is available in the state where you’re planning to operate your business by checking with your state’s Secretary of State office. You can also find free tools online (like those on my CorpNet.com site) to help you determine the availability of a business name – and the domain name (e.g., unioncountyaccounting.com) you plan to use for your business’s website.
If your research shows no one in your state is using the name you want, it’s also wise to search the U.S. Patent and Trademark Office to see if anyone has registered a trademark for the name. You don’t want to infringe on another company’s trademark!
No. 2 – Decide on your company’s legal structure and register your business.
The business structure you select has both legal and tax impacts on your business. Many small accounting firms and solopreneur accountants choose to register as an LLC (Limited Liability Company), PLLC (Professional Limited Liability Company), or PC (Professional Corporation). For any of these business entities, different rules may apply in different states. To find out what your state requires, contact the Secretary of State office for the specifics.
No. 3 – Apply for necessary business licenses and permits.
Rules vary from state to state, but regardless of where you provide public accounting services, you'll have to obtain some form of licensing. In addition to your CPA license, your firm may need a public accountancy license. Check with your State Board of Accountancy to learn what requirements will apply to you.
You might also need other state and local municipality permits. Some of the possibilities include a general business operation license, a home occupation permit (if you’re running your business from a home office), and a signage permit. Contact your local government office to find out which permits you’ll need.
No. 4 – Apply for an EIN (Employer Identification Number).
Also called a Federal EIN or Tax ID number, the IRS will use your EIN to track your business transactions. If you operate as a formal legal structure (LLC or corporation), you’re required to have an EIN, and most banks will require one before allowing you to open a business bank account.
No. 5 – Open a business bank account
For both legal and tax purposes, you’ll want to keep your personal and business finances independent of each other. After registering your business with the state and getting your EIN, I suggest you talk with your bank about setting up a separate bank account for your business.
No. 6 – Secure a business insurance policy
Yes, officially forming an LLC or incorporating your business will help provide some protection of your personal assets in the event of business debt and lawsuits against your company. But it will not protect your personal property if your own actions result in a legal claim against you.
For some additional protection – and peace of mind – consider getting an insurance policy for your business. Seek an insurance agent who understands the needs of accountants and can explain the various types of coverage available, such as Professional Liability Insurance, a Business Owner’s Policy (BOP), Data Breach Coverage, and others.
With this checklist, you now have a better understanding of what’s involved in starting your accounting business. Every business owner faces unique circumstances, though. That’s why I strongly recommend talking with trusted legal and tax professionals for insight and guidance as you tackle the steps of launching your business.
And as you proceed with submitting the business filings related to registering your business, securing licenses and permits, etc., consider working with an online business document filing service to save time and money.
Remember, starting your business is just the beginning. As an LLC or corporation, you’ll face ongoing legal requirements to keep your accounting business in good standing. Stay tuned for my next post to learn the nuts and bolts of keeping your business legally compliant.
Once you’re up and running – consider joining my Partner Program for an added revenue stream and to add additional services for your clients.
MarvinSteindler
Nellie Akalp CorpNet FINAL
Nellie Akalp, CEO of CorpNet.com, is a passionate entrepreneur and small business advocate who is dedicated to helping other entrepreneurs start their businesses, incorporate, form an LLC and apply for trademarks. Along with her husband, Phil, they have formed more than 100,000 corporations and LLCs across the United States.