Starting a practice

Hello,

Seeking some advice from others who may have been in my shoes. I’m working for a large accounting firm (as been the case for most of my career) but considering my own small practice. I have quite a bit of experience primarily with individual tax returns. Understandably I have not spent much of my career seeking individual clients on my own!

Not being position to leave my current employment at this time, how have you made the transition? Gradual approach on the side during busy season (yikes ) or dive in and work up the practice from the start?

I’ve found some useful information online about initial steps on starting a practice but also want to get thoughts from professionals on the field.

Any advice / suggestions / horror stories are welcome!

Thank you

When I started I was a Controller for a manufacturing firm and I knew my boss (the owner) was looking to cut costs. I offered to go part-time to allow him to reduce costs and allow me the time to start my practice. It worked eventually but it was painful for a few years. If I had to do it again I would have had 6 months of savings in my pocket first. So, starting on the side or saving until you can afford the income hit (better yet, both) would be my suggestion.

The other option is to buy another practice and hit the ground running.

Do you have a noncompete with your current employer?
If you haven't been generating new business, will the clients you work on now come with you?

One reason many choose to stay in a job that sucks, because that is the only place to obtain health insurance at an affordable price. Unfortunately that is the American stupidity since WWII!

So if benefits and a steady paycheck is not the prime issue, I say cut the chord! If you have the option to work part time great but more than likely if your employer thinks it will be competition they may not agree. If you have a non compete agreement have it reviewed by an attorney because most of them don't stand in a court of law if it is too restrictive.

A little bit of pre-planning is very important so sit down with your family and draw up a plan how to transition.

When I transitioned support from the family was absolutely necessary otherwise I would have drowned!

Look into available tax franchises in areas you like.
I've seen some very profitable situations.

Call older CPAs in the area.
So many solo practitioners don't have an exit strategy.
If they aren't ready to hang it up, they will likely be a referral source as many firms (in my area) are not taking on more work.
You might find someone willing to mentor you up as they transition out, or maybe just give you a book of business for a low or substantially reduced cost just so they know their clients are going somewhere good.

It's difficult to start your own practice if you work for someone else right now. Not impossible, but difficult, especially if your current boss "owns" all of your time.

I literally just took the jump back in August. Fortunately I was already working for a small firm that did not have a non-compete, only a non-solicitation and my prior boss wasn't a micromanager. I'd recommend getting some clients of your own, that's what I did if you can get away with moonlighting. I'll hit just under 90K in revenue this year. This allowed me to build up a few clients to at least pay my bills while I'm ramping up for this tax season coming up.

Referrals, referrals, referrals, networking, referrals, google my business, referrals, word of mouth etc! Don't take on work that is a pain, be picky, even from the beginning!

Look into available tax franchises in areas you like.
I've seen some very profitable situations.

I think it is a mixed bag. Most of the reviews (for the top two retail chains) that I saw on other sites painted a rather bleak outlook at least for the near term, given their large franchise fees and other mandatory expenses.

I think purchasing the established business of a retiring accountant, may be less risky if you do the proper due diligence. I have done that twice and I was happy with the outcome. I had much wider control to manage the acquisition.

Look into available tax franchises in areas you like.
I've seen some very profitable situations.

I think it is a mixed bag. Most of the reviews (for the top two retail chains) that I saw on other sites painted a rather bleak outlook at least for the near term, given their large franchise fees and other mandatory expenses.

I think purchasing the established business of a retiring accountant, may be less risky if you do the proper due diligence. I have done that twice and I was happy with the outcome. I had much wider control to manage the acquisition.

Franchises also usually require that you be worth so much on paper or have X amount of liquid capital. I'm leery on purchasing a practice because you're going to lose some clients through the transition. They could be big ones, could be small ones.Then you're paying someone back for something you don't even have the revenue from any more. I would also be careful purchasing from a retiring CPA if they have an elderly client base for obvious reasons and also due to the fact that elderly people do not like change and if you're more technology driven they may not like that.