By Jessica Scheck, MBA
Transitioning from employee to owner can be an intimidating endeavor, but it could potentially be one of the most rewarding decisions of your accounting career. Maybe it has been your lifelong dream to run your own business or maybe you are just tired of working for others. Whatever your personal reason is for wanting to branch off on your own, carefully consider the pros and cons of being an employee vs. owner first.
Working for “The Man”
Accounting provides an attractive career path, especially for CPAs. A steady salary, job security, and employee benefits are among several advantages of working under the umbrella of an employer.
According to Indeed.com, the average annual salary for CPA jobs is $82,000 which is 42% higher than the average salaries for all job postings in the United States.1
In addition to being highly compensated, CPAs working for an employer have the comfort of knowing they can rely on bringing home a consistent paycheck throughout the year.
Accounting jobs in well established businesses such as big accounting firms or large public corporations are very secure. The National Association of State Boards of Accountancy (NASBA) states that “Due to a shortage in experienced accounting professionals in business today, CPAs are in more demand than ever before – and that doesn’t seem to be changing any time soon.”4
NASBA reports that the shortage in accounting professionals is mainly attributed to a decrease in accounting students during the 1990’s when the Internet created an increased need for IT and online marketing jobs.
The demand for qualified CPAs was amplified with the passage of the Sarbanes-Oxley act in 2002, requiring public corporations to administer new higher financial reporting standards and internal controls. In addition, there is a large percentage of accounting professionals that belong to the Baby Boomer generation who are retiring and leaving a massive gap in the market.
Employee benefits in the accounting industry often include attractive 401(k) contribution matching plans, affordable family health insurance coverage, substantial paid vacation time, and generous maternity or paternity leave.
Being your own boss
“It’s a good time for people to start firms” says James Metzler, vice president of Small CPA Firm Interests at the American Institute of Certified Public Accountants (AICPA).2 Thanks to Sarbanes-Oxley, business is thriving for CPA sole practitioners. The Sarbanes-Oxley act initiated an overwhelming workload for the ‘Big four’ accounting firms causing them to push clients to top-100 accounting firms. In response, top-100 firms were forced to drop their smallest clients, and the trickle-down effect created a larger demand for CPA sole practitioners.
Before you rush to quit your nine to five and start your own CPA practice, understand that it will require more than just your accounting expertise.
“Just because you’re a CPA doesn’t mean that you can run a firm that does CPA work” says Jason Blumer, a CPA that turned entrepreneur after becoming managing shareholder of Blumer & Associates—a firm that provides accounting and consulting services.3
As with any new business, launching your own CPA practice requires extensive research and planning. If you are interested in starting your own CPA practice, there are tools available to help you on your venture to entrepreneurship. AICPA recommends following their detailed planning checklist for guidance with steps such as determining the types of clients and industries you plan to offer services to, how to outline your financial requirements appropriately, and make the necessary administrative decisions for your business.6 To view the full planning checklist for starting your CPA practice you can visit the following link:
Whether you plan on growing into a regional company or working out of your own home, building a business entails lots of hard work and long hours. Is it worth it in the end? Yes! According to CPAs like Debbie Lessin, owner of a Chicago tax practice—D J Lessin & Associates. After establishing her business, Lessin controlled her schedule to allow work to come second to life and she couldn’t be any happier. “If I work really hard for 10 weeks [during tax season] and then I work 3 days a week the rest of the year, I think I can do this a pretty long time” said Lessin.5
The ability to become your own boss is one of the biggest incentives for CPAs to start their own practice. However, understanding the financial obligations, time commitment, and entrepreneurship that are involved in opening a new business is fundamental to deciding if starting your own CPA practice is the right decision for you personally.
- CPA Salary. Retrieved October 15, 2016, from http://www.indeed.com/salary/CPA.html
- DeZube, D. Guide to Starting Your Own CPA Practice. Retrieved October 18, 2016, from https://www.monster.com/career-advice/article/start-your-own-cpa-practice
- Drew, J. (2012, August 21). Accountants: What it takes to start your own business. Retrieved October 18, 2016, from http://www.journalofaccountancy.com/news/2012/aug/20126217.html
- Five Popular Reasons for Earning a CPA License. (2006-2016). Retrieved October 15, 2016, from https://www.nasba.org/licensure/gettingacpalicense/whygetlicensed/five-popular-reasons-for-earning-a-cpa-license/
- So, you want to be your own boss? Retrieved October 18, 2016, from https://www.thiswaytocpa.com/profession/articles/why-be-a-cpa/so-you-want-be-your-own-boss/
- Starting a CPA Practice. Retrieved October 18, 2016, from http://www.aicpa.org/InterestAreas/PrivateCompaniesPracticeSection/FinancialAdminOperations/StartingaCPAPractice/DownloadableDocuments/StartingYourOwnPracticeChecklist.pdf