Worth going independent?

I have a 100K job. Work from home whenever I want. Great benefit. No stress whatsoever. Basically can take leave whenever I want.

For non competing and conflict of interest reason, I can’t moonlight on the side for extra income. It’s been hard deciding if I should leave this gig to start something of my own.

How long did it take you to get 100K NI?

could take you many, many years unless you have a lot of great contacts....or you go after clients you've worked on after non-compete expires.. Depends what kind of circle in. Do you know a ton of professionals that can refer to you?.....what genre of client do you work with?.....indiv tax returns for $400 a pop or maybe you are in circles where you get 5-10k engagements....YOu have a 100k job, but the employer pays 1/2 the self employment tax so that'll be an incremental cost to you. Dont' forget the cost of health insurance (and if you have to pay for family)that'll cost a fortune..how about rent, utitileis, malpractice insurance, computers, software, computer consultants....maybe some staff....going to cost you quite a bit more to net to 100k.....clients don't just switch over to a new accountant for your benefit, they change over for their benefit - b/c you offer something better, quicker, cheaper than the competition that they are currently using.

Sounds like you have a cushy job with a depending on where you live decent salary. Why would you want the stresses of being self employed. Sometimes it's just easier being an employee and letting someone else worry about the business.

Hi zl28,

thank you for your input. I get the fixed and variable costs associated with running a practice. Most of my clients are non profits so the returns variable from 850-5000. It will probably take me a good 50 clients to be where I would be right now without going independent.

I'm just curious if it's worth it to drop this gig completely.

TaxCut: I don't even know why I would want the additional stress, I guess for more money (potential).

More money is definitely a motivating factor and you'll certainly have a better chance if you have your own practice. But it can't be the only factor. You really have to like doing this more than what your doing now. Even if it means taking a pay cut at the start.

I was in a similar situation as you but I hit a wall. I didn't have the potential to make more as an employee so I had to go out on my own to make my own future. It is hard but I enjoy it, so working 12 hour days doesn't bother me as a self employed but it did bother me as an employee. Just my 2 cents for what they're worth. Plus my spouse works

Personally, I think your age would be a large factor. If you are 25, you can work more hours and harder, for another 30 years and make more money as a self employed. However, if you are 50, the stress would kill you.

50 clients at $5,000 each would only be about $250,000. Typically 50% after expense: $125,000. $125,000 does not go very far in operating expense.

also the job security - when you get older sometimes firms cap salary, or just give inflation, or drop you. when it's your own firm you can control your destiny the best.......here's another idea if you are really motivated to be self employed.....Go work for another firm that will allow you to do outside work and grow your practice while working so you don't have to cross the bridge in one shot.............work 5 days wk new firm, take on clients....when get enough clients, do 4 for firm and 1 for you, then 3 and 2....and so forth..................to cross the bridge to 100% self employment would not be prudent.

TaxCut: how long has it been since you make the cut? i'm glad to hear that things worked out for you.

Hi Phil: I'm 34 so I do have another 20 years ahead of me. The reason I have such a dilemma is because I know that self employment will ultimately yield more money in the end if I keep at it. It's just that my job is too good to give up and the salary is really nice for the time I spend doing it. But i'm not sure if money is the deciding factor for me. I'm at a stage in life where I feel a little lost in my career.

zl28: thank you for the great suggestion. Ive never though about doing that before. I just think that most firms wouldn't want me to compete with them so I don't even consider it.

It's been about ten years and it's always a work in progress. I probably should have made the cut sooner. It's very hard to do this while trying to keep a full time job. You have to dedicate yourself to one or the other.

"No man can serve two masters". (As I juggle finishing extended returns for old firm and set up for new firm.) I agree with TaxCut. While the idea of slowly transitioning is attractive, I have rarely found that sort of arrangement to be sustainable. Ymmv.

I broke free 7 years ago and here is my 2 cents...

Cons:

Temporary pay cut
Much more stress
Much more work
Employee headaches (OMG)
<50% profit margin

Pros:

Very low chance of failing
More money in long run
Wont take too long to make decent money (you'll see - treat clients well and 5 clients turn into 20 which turn into 80)
More control over destiny
More control over quality
More control over schedule
More overall job satisfaction
You can help others grow
You can give to charity
After a decade or so, you will fly first class when you travel

To say I'm glad I did it is an understatement. It's the most satisfying thing I've done by far - and I've lived an adventurous life.

The biggest mistake I made at the beginning was not charging enough. I didn't realize I would get very few rejections at triple my original quotes.

Disclaimer - perhaps I'm lucky to be in an under-saturated area(?)

Itdepends: congrats on your success! I definitely don’t mind hard work and long hours if it’s self employed. I will take your story into consideration.

I guess at this point, will it be worth while to leave this cushy gig I call a job. Need a lot of reflection and discussion with wife.

Just want to elaborate a little bit more on why I didn't jump ship sooner.

I wanted to pay off my debts and save as much as possible so I wouldn't rely on wifey too much. Once I felt comfortable I made the leap. It's nice to able to do it that way but sometimes we make excuses and wait too long.

I know guys who lost their jobs and had to build a business overnight. Nothing like getting shoved into the deep end not knowing how to swim..

Peace of mind is priceless! I have experienced that myself and would not trade that for a 9 to 5 job with a steady paycheck

There are many days I feel the same.

Sounds like you have a cushy job with a depending on where you live decent salary. Why would you want the stresses of being self employed. Sometimes it's just easier being an employee and letting someone else worry about the business.

If you work hard and network your butt off you can easily hit $100k 1st year but you would want to start soon so you have a few months to generate business for tax season. I started in November and immediately joined a BNI and another networking group in my local Chamber of Commerce. I also went to every networking event I could and worked the room meeting as many people as I could. If you are outgoing and able to do that sort of thing then you will be where you want to be in no time. If you are very shy and introverted then it will probably take you much longer.

Also I supplemented my income that first tax season by working part-time at another CPA firm so that is always an option for you.

I'd look for a CPA looking to retire. There are a lot of them approaching retirement age.

I left a job at about the same level you are at. I was able to make a deal to buyout a CPA firm over 3 years and make close to the same money I was making at my old job during the buyout. After the buy out was done, I got a big raise. I can't imagine growing revenue to the level I'm at now without the original client base that I purchased.

Also, many CPA's are willing to sell their business with little to no money down, with payments paid as a percentage of revenue. I'm on my second deal right now with those terms.

Also, many CPA's are willing to sell their business with little to no money down, with payments paid as a percentage of revenue. I'm on my second deal right now with those terms.

Agree, but how have you located the CPAs looking to or willing to sell? Honestly, I am kind of waiting for some of them to die, as I doubt many of them have succession plans and there is a limit to what the largest firms here can acquire or absorb...they're already nearly capped out from an overhead perspective.

ALL of my growth has been from referrals and networking, primarily one of the local chambers. BNI keeps bugging me, and I did contemplate it, but their structure is too rigid for a CPA's schedule...or perhaps it is just mine, since I do travel a fair amount and my schedule is also rather unpredictable. One chapter keeps trying to get me to join since they have an open seat for a CPA.

It depends on what is most important to you and your family.

If money is most important, you can almost surely make more money out on your own.

If quality of life is most important, stay with your job. Tax seasons are brutal. You work many stressful hours.

Cornerstone, I used a broker for my first one. That led to me being introduced to some other CPA's near retirement age. I have had referrals from some of these older CPA's that are looking to phase back their work but not fully retire.

Most recently I placed an advertisement in our State Society magazine. Surprisingly that has led to a large acquisition of a local accounting firm. All I did was place an ad and I have received multiple calls from different CPA's looking to sell in my local market.

It is true that the larger firms will buy out the best ones looking to sell. However, there are plenty of firms that don't fit the business model of a larger accounting firm.