Starting Your Own Accounting Business: 5 Things You May Not Have Considered

Have you been thinking about starting your own accounting business? It can be tempting to take this leap into being your own boss, but there are several things you should consider before you move forward. There are plenty of advantages to running your own accounting business, but just because you are great at accounting doesn’t necessarily mean that you’re ready to be a business owner. The points below are all important ones to consider.

Your Education

Both starting an accounting business and education cost money, and you might be concerned about spending money on your education that you should be setting aside for your accounting business. However, having the right education is critical as well, and a graduate degree can really unlock your potential and prepare you for success. You may be able to get student loans from a private lender at a favorable interest rate to pay for the degree.  Either way, there is a path to becoming an Accountrepreneur.

Buying One or Starting a New One

One of the most important decisions you’ll need to make is whether to purchase an existing accounting firm or start your own. There are different factors to keep in mind, and some of them will be specific to the company that you are considering buying. First, think about costs. On the one hand, you can arguably start your own accounting business out of your house with very little overhead. However, you might have to spend some money on marketing and getting your name out there, while an established firm might already have better name recognition. On the other hand, there’s no question that you’ll need a substantial amount of money in order to purchase a company.

If you’re buying a firm, one thing you have to be careful about is their existing financial situation. You will need to be prepared to really dig into their records and make sure you understand any liabilities they have. The owner of a struggling company that is up for sale might not be very forthcoming about money problems. When you purchase a firm, there are certain things that might be out of your control, like client loyalty and whatever rates the business has established. You can certainly increase the rates later, but you’ll need to keep them the same to start with.

Along similar lines, you may need to offer the same services for a while as you make the transition while if you start your own, you can simply offer what you want. Software and other equipment are going to be necessary and potentially costly. If you purchase a company, make sure you know exactly what is coming with the purchase and the age and condition of it all.

Either way, consider being in business for yourself but not by yourself with Universal Accounting Center.

Managing Employees

Whether or not to have employees might not be a decision you have to make immediately, but it is something you’ll need to deal with eventually. If you are starting from scratch, it might just be you, but you may want to add staff over time. If you’re purchasing a company, there may already be employees.  How much do you know about managing people? It may not be enough to be a good accountant.

This is where a degree in management could come in handy if you don’t have a background in it. If you have neither of these, you might want to read a few books about management and, if possible, explore taking some classes or seminars. Managing people is a skill in itself, and it’s a mistake to think that just because you are a whiz at accounting, you’ll also be great at management. Of course, some people are naturals in this position, but doing some reading can help confirm your instincts or shore up places where your skills might be weaker.

Your Personal Qualities

Having the right qualities to be an entrepreneur go beyond management skills. You also must know that owning your own business comes with many shades of grey. You might currently be asking yourself basic questions like is starting a tax prep business right for me but you need to understand that knowing if you have what it takes to actually do it is going to come from many more in depth questions about who you are as a person.

One irony you may face is that the very qualities that make you an excellent accountant are not necessarily that same ones that make for an excellent entrepreneur. Accountants may tend to be cautious and conservative, not risk takers like many entrepreneurs. There is an element of financial insecurity associated with running your own business that may fly in the face of your instincts. However, careful, and cautious people can be successful entrepreneurs as well. Making sure you have the right business knowledge and skills will be important. Writing a business plan can help you figure out where your weaknesses may be, and you’ll need one if you’re planning to seek loans or other types of funding.

Networking and Building a Client List

It’s not uncommon to get so caught up the various details of getting everything up and running that you lose sight of what you most need to succeed: customers. Are you a people person? If you’re more comfortable with numbers than people, this may involve some effort, but you’ll need to retain clients if you’re buying a business and attract them in the first place if you’re starting your own. And without the big budget that large firms have, that may depend on your ability to network and sell yourself and your company effectively.

You should work to strengthen the existing contacts you already have in the industry and locally and think about how you can make yourself more visible. This will vary depending on the type of service that you offer and the clientele that you want to attract, and you may want to consider working with a marketing firm or an individual to help you raise your profile if you are struggling to attract clients.

In short there is a Turnkey Business Plan for accounting professionals, there is no need to feel like you need to reinvent the wheel.

Providing Excellent Accounting Services

If you’re like most accounting professionals, you want to provide excellent accounting services to every client. If you don’t, you probably won’t be in business for long.

I once heard a speech by a man who I greatly admire. His name is Dallin H. Oaks and his talk was entitled “Good, Better, Best”. Although he was speaking of choosing the best activities when considering how to use our time, I feel the principle is appropriate here. Are you just a “good” accountant, a “better” accountant, or the “best” accountant for your clients?

Most people will answer, “I want to be the best accountant, but I only have so much time.” Certainly, time is important when evaluating what to do for a client. Yet, what if you could go from being a “good” accountant, to the “best” accountant in only ten minutes? Would it be worth it?

The key to providing excellent accounting services is to look forward, not just backward, with each client. When we do accounting, we are entering historical data to determine where our client’s been and what their present situation is. Most good accountants consider this their primary purpose and are satisfied simply handing over the financial statements and calling it finished.

Nevertheless, the most important thing we can do is assess where the client’s going, and warn of concerns, and share ideas for improvement even when the client’s business is doing well.

You can save time by limiting your assessment to the top three sources of income, and the top five expense categories. Run trend reports on each of these eight accounts for the past six accounting periods, and project those trends into the next two accounting periods to determine where they will be.

For the flat or dropping income accounts, consider geometric marketing ideas (see “In the Black”, Chapter 3) that will improve revenues. For any growing expense accounts, evaluate vendors and prices to make suggestions for decreasing expenses.

You will amaze yourself how easy and possible it is to go from good to your clients’ BEST accountant, in fact a Profit & Growth Expert.

Why is Bookkeeping Important?

The absence of bookkeeping in a business is like a road without signs because you’re likely to arrive at a different place than intended. Any large business learned the value of financial records produced by bookkeepers is crucial for proper management.

Bookkeeping is essential to every business for both financial and legal reasons. Without record keeping, it is difficult to get a business loan, and impossible to do taxes. Even more importantly, without the information that bookkeeping provides, wise decision-making is tricky and can lead to disastrous conditions.

There is a close correlation of success with those that realized the importance of bookkeeping and those that did not. Those that thought bookkeeping was an unnecessary luxury judged the success of their business by the amount of money in their bank account. Their thinking was “If I have money, I must be doing well.” That assumption, all too often, caused them to always be in the “fire-fighting” mode of management. Unfortunately, a lack of a bookkeeping system would end disastrously for the owner, with mortgages on their home, and bill-collectors hassling them. It even led to bankruptcy too many times.

Certainly, bookkeeping does not guarantee success. Nor is it all that is needed. Yet it leads us to information that can help us make well-informed decisions. Allen Bostrom, in his book “In the Black”, states “You hear a lot about the importance of making decisions based on data. What I have learned is that decisions should be based on wisdom, not necessarily data alone.” He goes on by describing the Wisdom Pyramid which is a triangular shape with “Data” at the bottom and topped by “Wisdom”. In other words, data leads to information, information leads to knowledge, and knowledge leads to wisdom.

In summary, the difference between achieving entrepreneurial dreams and disaster for a small business owner is often based on their appreciation or lack of appreciation for the information coming from a bookkeeping system.

Ideal Accounting Skills for Working with a Not-for-Profit

Needed across industries and sectors of the economy, accountants play vital roles in maintaining the financial success of any endeavor. In the not-for-profit world, accountants take on the job of securing resources and reducing operating costs to help task-driven organizations achieve more good in the world.

 

Many accountants likely see this as a good enough reason to pursue accounting as a career. Through managing nonprofit budgets and expenditures, an accountant can indirectly serve individuals and communities in need. Even ministers have switched careers to capitalize on the amount of good they could achieve through accounting.

 

But not-for-profit work isn’t the same as traditional accounting work. While many of the same skills apply, accountants in the nonprofit world must hone a unique set of talents. Here’s what you should know.

How Non-Profit Accounting Differs

Many accountants making the transition from work in the for-profit world face a steep learning curve when starting with a non-profit. These economic sectors differ, composed, and driven by different goals and overall missions. While for-profit companies will be more focused on bottom lines, not-for-profits look more at their overall goals and the ways they are using their resources.

 

Accountants in this new environment must be clear on these differences and explore how alternative goals affect accounting work in general. For instance, for-profit entities operate using an often singular ledger system that details revenues and expenditures in a self-balancing account. Not-for-profits, on the other hand, operate with a series of resources and ledgers that must be balanced for ideal application.

 

In conducting this work, there are all kinds of varying terms and practices for accountants to learn. For example, retained earnings become net assets and a net income means an excess of revenues. Rather than an income statement, non-profit accountants create a statement of operations.

 

While these differences may seem primarily semantic, they represent the different goals and practices that drive non-profits versus for-profit businesses. With a non-profit, you don’t want money left over: you want an organization that is doing the most with what it has.

 

That said, there are many useful skills that a not-for-profit accountant can hone to bring greater success to their organization.

Invaluable Skillsets for Not-for-Profit Accountants

First, while accountants can certainly specialize in non-profit work from their undergraduate program onward, any professional with an accounting degree can translate their skills into success with a not-for-profit organization. 

 

Then, it is simply a matter of learning the differences and finding methods to improve the flow of finances and resources towards non-profit goals. Aside from being adept at navigating the nuances of tax-exempt status as a 501(c)(3) organization, not-for-profit accountants require skills like the following:

Excellent Organizational Abilities

For an accountant, the ability to manage a ledger system complete with all its fluctuating account details is a must. For non-profits, however, the impetus for an ideal organization is even stronger. Nonprofits depend on efficiently maintained records to prove their tax-exempt status and be able to highlight processes for investors and stakeholders.

 

Auditing experience is a highly desirable trait of a non-profit accountant as a result. With the ability to organize and review records to prove compliance with investor and governmental requirements, accountants can keep a non-profit smoothly functioning. 

Effective Management of Tight Budgets

The majority of not-for-profit organizations operate with budgets of less than $1 million. Because of this, accountants in the industry need to keep a sharp eye out for any place they can reduce operational costs while also guaranteeing that donor and grant money goes where it needs to go. 

 

Non-profits are often limited by money given with specific donor restrictions. It is the job of the accountant to ensure that these restrictions are being met and reported within financial documentation. This takes attention to detail and great problem-solving skills. 

Quality Communication

One of the most important qualities for any accountant is the ability to communicate financial information. This is even more important in the not-for-profit sector, where donors want specific things and your organization has a mission to fulfill. 

 

Honing your communication skills can be one of the best ways to excel as a non-profit accountant. This takes empathy and clarity, as well as a willingness to be open to questions and concerns. Any member of your organization should be able to come to you with a question and come away with a clear explanation. Teammates should also be able to contribute with useful feedback and clarify practices wherever necessary. 

 

Implementing these ideal skills into your own toolset can be a great way to maximize the potential of your not-for-profit. If you’re just getting started in the non-profit sector, demonstrating these skills can help get your foot in the door. 

Improving your Status as a Non-Profit Accountant

Getting started as a non-profit accountant requires proper networking and professional qualities. While improving your skills, you can adapt your work and academic experience to write a great accounting resume. In turn, you’ll be able to improve your status as a non-profit accountant and land work with your dream organization. 

 

Your ability to do so, however, will come down to how well you showcase your skills on your resume. Highlight your soft skills like listening and communicating effectively alongside harder skills like experience with certain accounting software. Translate relevant job experience into applicable traits for non-profit work, or express a willingness to learn and adapt. 

 

Not-for-profits need skilled and attentive accountants to streamline the effectiveness of their resources. Demonstrating effective organization, budget management, and communication skills can help you get in the door with the non-profit of your choice. 

 

Then, hone these skills to ensure that your organization does the most good that it is capable of doing. By implementing skillsets and strategies like these, accountants can make a real difference in the world.

Lastly, become a certified Professional Bookkeeper that is both trained and certified in both For-Profit & Non-Profit accounting.

Contact Universal Accounting School to discuss how we can help you succeed as an accountant in a not-for-profit organization.

Reasons to Pursue a Career in Accounting

If you’re good with numbers and interested in a well-paying, stable career path, it may be time to turn your attention to accounting. In fact, according to the Office of Occupational Statistics and Employment Projections, the employment of accountants is projected to grow by four percent by 2029. 

 

If that’s not reason enough to strongly consider this career, here’s another statistic from the Office of Occupational Statistics and Employment Projections: The median annual wage for accountants, as of May 2019, is $71,550. This is much higher than the median annual wage for all occupations, which sits at $53,490. And although the pay is certainly an influencing factor for most when choosing an accounting career path, it isn’t the only reason why it’s become so popular.

Accounting Career Paths

Unlike some career fields, in which there’s only one path to travel, there’s more than what meets the eye when it comes to accounting. Generally speaking, you’ll choose one of the following routes:

 

  • Managerial: Managerial accountants generate documents that are used internally within a company. This can include documents such as those used for tax purposes and recurring expenses. 
  • Financial: Financial accountants generate documents, such as balance sheets and a variety of income statements, which are used by outside parties, such as investors. 

 

By understanding the similarities and differences between managerial and financial accounting, it’s easier to decide which path you’re most passionate about.

 

With that in mind, let’s examine some of the most common types of accountants:

 

  • Staff Accountant: For many individuals with a bachelor’s degree in accounting, this is the first job they seek. Reporting to a CPA, you’ll take on responsibilities such as creating financial reports and analyzing a variety of data. You’ll also use a variety of tools, such as a cash flow calculator, to track progress and make informed decisions. 
  • Certified Public Accountant (CPA): From the outside looking in, it’s easy to believe that CPAs focus on nothing more than the preparation of state and federal tax returns. However, this career path goes much deeper than that. For example, companies often hire a CPA to oversee other accountants. 
  • Investment Accountant: Investment accountants typically work for financial management or investment management firm. With this career, you have the opportunity to help individuals and companies make better investments, such as sharing advice on how specific decisions will affect their taxes. 
  • Project Accountant: As the name implies, project accountants are hired to manage a specific project. Some of the tasks they may take on include preparing invoices, maintaining budgets, and managing and approving expenses. In many cases, project accountants are hired on a contract basis. 
  • Cost Accountant: The primary responsibility of a cost accountant is to maintain cost efficiency on behalf of an organization. However, unlike a project accountant, these individuals are generally hired on a full-time basis. 
  • Management Accountant: There’s no shortage of management accountant responsibilities, which often include external financial reporting, budgeting, and creating reports on the overall financial health of an organization. 

While these are among the most common accounting career paths, there are others to consider as you gain experience and come to better understand what you’re most passionate about. However, no matter the type of accounting path you may choose, there are plenty of benefits as well.

Top Reasons to Become an Accountant

There’s no shortage of reasons to become an accountant, but there’s something you must remember: It takes a lot of hard work and dedication to reach your goal, so you must be 100 percent confident that it’s the right career path for you.

 

Here are five reasons to consider this career:

 

  • Above-average pay: As noted above, the median annual wage for accountants is more than $71,000/year. 
  • Job security: Every organization needs accountants, so job security is typically high. 
  • Career advancement opportunities: As you gain experience and knowledge, you can seek out career advancement opportunities within your company and at other employers. For example, after several years of working as a staff accountant, you may want to consider becoming a CPA.
  • The opportunity to be your own boss: There may come a point when you realize that you no longer want to work for someone else. As an accountant, you can start your firm, such as helping individuals and/or companies with tax preparation.
  • Puzzle-solving fun: Accounting isn’t everyone’s idea of fun, but if you like working with numbers it could be the perfect career path.

What’s Next?

Now that you better understand the reasons to pursue a career in accounting, it’s time to answer one very important question: Are you ready to head down this path?

 

If the answer is yes, assess your situation and decide what you need to do next. Become trained and certified Professional Bookkeeper. Once you have the right education and training, it’s time to land your first job. With the help of our job placement assistance program, it won’t be long before you have a career that puts a smile on your face, money in your pocket, and joy in your heart. Contact us to discuss how we can help you succeed.

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