Five ‘Don’ts’ When Starting Your Own Tax or Accounting Business

There’s a world of demand for accounting and tax services out there. Maybe in light of this, you’ve decided to make the jump to starting your own firm from working for someone else.

We’ve both taken this step over the past several years, and based on our own experience, we are here to tell you some important ‘don’ts’ when going out on your own. These suggestions all center on ensuring that you don’t undervalue yourself and your services when starting a firm.

Don’t Work for Free

You may be tempted early on to work on projects for free or low cost to help friends out, practice your skills, and possibly gain some exposure. Don’t do it. Time and skills are our primary assets, and we need to value both appropriately. Doing work for free or for an extremely low cost conveys not just that our work is easy, but that accounting and tax prep in general is easy.

The world of do-it-yourself accounting and tax software already encourages this perspective. This mindset does a disservice to the clients. They come away thinking that accounting and tax work is an afterthought, meaning they’ll always be behind on their bookkeeping or will push or miss deadlines for filing taxes. And if you do a good job, they’re likely to send their friends and family to you expecting a similar deal.

The same principle applies once you have a client base. Set boundaries on your time and services to avoid scope creep. Are “quick questions” throughout the year included in your tax preparation price? If so, price accordingly and clarify where that service becomes an additional engagement with an additional charge. Make use of scheduling software such as Calendly or the Google scheduling feature to help you stay ahead of client requests and budget your time.

Don’t Take Work From Just Anywhere

Friends and family (and social media contacts, and someone who knows someone at your daughter’s preschool, and the nice guy at the bagel counter who learned you do taxes) will say, “Oh I should bring you my tax returns” or “Oh, I’m starting a side hustle.” For close friends and family, do you really want to know that much about their situation?

For more casual acquaintances, the risk is high that they’re unprepared to pay for quality accounting or tax prep. (Refer back to the first item, above.) A good way to defuse these conversations is to say up front something along the lines of “Happy to talk to you, but you should know my rates start at X dollars and go up from there.” That usually puts a stop to things.

This doesn’t mean friends and family aren’t helpful in building your client base. They can be a great source of referrals by passing your information to people who they know need quality accounting and tax services. Be sure to give your friends and family an idea of your base rates so they can avoid sending you folks who are just looking for the cheapest deal they can get.

Don’t Quote Rates Without Full Scope

Building on the previous point, quoting a minimum fee may discourage tire kickers, but it also will ensure that you hear a lengthy explanation from a potential client that their returns are really simple. Still, it makes sense to let prospects know your minimum fee so that you’re not wasting each other’s time.

Make clear that the minimum is a starting point. Be sure to review prior period returns and financials and meet with the client to discuss their particular situation so you can assess the scope of the project prior to issuing a price quote.

Don’t Ignore Your Professional Contacts

These are your best sources of referrals. Join your local professional association if you haven’t already. Plenty of firms are downsizing and are looking for good homes for some of their best clients. If you’ve worked with attorneys, financial advisers, or professional fiduciaries in the past, let them know that you’re starting your own practice.

If you can remind them of the time you helped them resolve a specific issue for a mutual client, so much the better. Clients who work with these professionals are by definition clients who value professional expertise and are willing to pay for it.

And a corollary to this point: Don’t ignore the online community. Some of your best and most supportive colleagues will live inside your laptop. There are many formal and informal online groups for accounting and tax professionals out there. These groups are invaluable when you need to ask questions or find an expert to help with a specific problem.

Don’t be afraid to ask for help on tricky issues and offer up your knowledge in return. Referrals emerge organically from these groups as you get to know other professionals and learn about each other’s strengths and professional styles. Increasingly, your clients can be anywhere, so having professional contacts in other geographic locations will strengthen your expertise and build your reach.

Don’t Skimp on Software and Staffing

This subject requires its own list of dos and don’ts, so we’re just pointing out the issue here. Purchase the most robust tax software you can afford, since it will be your second brain. Get your office infrastructure and processes in place so that as you grow, you’ll be prepared to handle the added workload.

Think big. What do you want those processes to look like if you have more clients and employees? How will you track who’s doing what and make sure all deadlines are met with nothing (ideally!) falling through the cracks. Practice management software is a great tool for keeping the operation smooth, but be sure to talk to current users and take advantage of demo versions before committing to a specific product.

Having strong structures in place is key, but so is having the flexibility to adapt as your firm focus and work patterns take shape.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Brenda Cannon is a CPA at Cannon & Associates, CPAs with over 20 years of experience in tax and accounting. She and her team focus on small business accounting, tax, and advisory services.

Katy Ayer has been a CPA in on the California Central Coast since 2012. After working for two small firms locally, she started her own practice at the beginning of 2020.