A must-read if you're thinking about starting a tax practice. In this article, we go over some of the notable pros and cons of running your own business.
So you’re interested in starting your own tax practice. That can be really exciting, but it can also be a little overwhelming and difficult to know where to begin. So, to help you focus your time and energy, we are going to simplify the process into clear, actionable steps that will get you started on the right path. In this video series, we will teach you what you need to know to start and succeed in your very own tax practice.
The first step, and the subject of today’s video, is to answer the question: “Should you start your own tax practice?”
Not all accountants, even excellent accountants, want or need to run their own practice. It’s different in many ways from working for an established firm or another practitioner. Some accountants thrive on the freedom of running their own business, while others prefer the stability of working for someone else.
Starting your own practice requires not only a firm knowledge of tax and accounting but also a general understanding of how to run a business. Once you make the leap into starting your own practice, you can no longer afford to be only an accountant. You also have to be a marketer, hiring specialist, strategist, and salesperson. In short, you are required to wear a lot of hats, especially in the early stages of your business.
Being self- employed can be extremely difficult but it can also be extremely rewarding. Are you ready and willing to take this risk? Proper research and planning will help you decide if this is the right choice for you. To help you with this research, let’s discuss some of the general advantages and disadvantages of starting your own tax practice.
Let’s start with a few notable disadvantages:
Your salary is greatly dependent on your efforts and on having clients. If there is no money coming into the business, you won’t get paid.
Established firms usually offer their employees benefits, such as 401k, insurance, paid time off, etc. If you are your own employer, you have to fork over the funds yourself.
You are responsible for paying the capital startup fees and ongoing fees, including rent, software, marketing, supplies, and other general costs necessary to make your practice run.
As a new tax and accounting business, you probably won’t have established credibility or people who are loyal to your services. You will have to put in a lot of work to get clients in the beginning.
With all of the responsibility on your shoulders, your work will likely spill over into the rest of your life. Starting your own practice can take a lot more of your time than a typical nine to five job.
That may feel overwhelming, but don’t lose hope. Despite the risk, there are some very attractive advantages to owning a tax practice:
As your own boss, you have the freedom to set your own hours. You can choose where to run your business from and the kind of environment you want to work in, day in and day out. Essentially, you have the freedom to create a practice that complements, rather than controls, your life.
You don’t have to worry about company downsizing or getting fired. As long as you are willing to put in the necessary work, you can create a successful business and control your own employment destiny.
Recent years have revealed a shortage of accountants, which means that there are huge opportunities for growth in the industry. Individuals and companies still need accountants year after year and are willing to work with smaller, emerging practices. As a business owner, you will have the opportunity to capitalize on this growth potential and benefit financially.
Which leads us nicely to...
While your pay may not be as stable as a salaried job, that can actually be a good thing. As your company grows and succeeds, the financial profits will directly benefit you. You can invest these profits into growing your business or take home a larger paycheck.
This includes both clients and team members. When you run your own practice, you have the opportunity to choose clients who play to your strengths. You can choose to focus on a niche that interests you, or you can just focus on finding clients that are enjoyable to work with.
Similarly, you get to hire individuals who you want to work with and will help your practice succeed. Having good employees who you enjoy working around is worth a lot.
Of course, the advantages and disadvantages of running your own tax practice will carry different weight for each of you. Ultimately, the only person who can answer the question, “Should I start my own tax practice,” is you.
Be sure to subscribe to our YouTube page and follow along with the rest of our How to Start a Tax Practice series.