Starting an accounting firm in 2026 costs $5,000-$15,000 and can generate $150,000-$500,000+ in annual revenue within 3-5 years. The talent shortage and cloud technology have never made it easier: remote teams, virtual client service, and a massive pool of underserved small businesses create strong market conditions. The keys to success: CPA or EA credentials, a clear niche, value-based pricing, and a personal brand that generates inbound leads.
- Whether starting your own firm is the right move (honest self-assessment)
- Step-by-step process from business plan to first paying clients
- Realistic startup costs and revenue projections
- How to choose the right firm model (solo, virtual, small team)
- Pricing strategies that maximize revenue per client
- Client acquisition playbook — from warm network to inbound marketing
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How much does it cost to start an accounting firm?
Startup costs range from $5,000 to $15,000 for a solo or virtual firm. Major expenses: LLC formation ($50-$500), professional liability insurance ($800-$2,000/year), accounting and practice management software ($300-$600/month), and initial marketing ($1,000-$3,000). No office space needed if operating virtually.
Do you need a CPA to start an accounting firm?
You need a CPA to offer audit, attestation, and certain tax representation services. For a bookkeeping, tax preparation, or advisory-focused firm, an EA (Enrolled Agent) or no license may suffice — depending on state requirements. However, CPA licensure significantly expands your service offerings and credibility.
How much do accounting firm owners make?
Solo firm owners typically earn $100,000-$200,000 annually once established (2-3 years). Small firms (2-5 staff) generate $300,000-$800,000 in revenue with owner compensation of $150,000-$350,000. Top-performing niche firms exceed $1M in revenue within 5-7 years.
How long does it take to build a profitable accounting firm?
Most new accounting firms reach profitability within 6-12 months and replace the owner's previous salary within 12-24 months. Building to $500,000+ in revenue typically takes 3-5 years with consistent client acquisition and team growth.
The accounting profession is experiencing a convergence of forces that favor firm founders: a severe talent shortage, cloud technology that eliminates geographic constraints, and millions of small businesses that can't afford (or can't find) full-time accountants.
But starting a firm isn't freelancing with a fancier name. It's building a business — with all the operational complexity that entails. This guide covers the real process, from assessing readiness to landing your first clients and scaling beyond a solo practice.
Is Starting an Accounting Firm Right for You?
Firm ownership rewards a specific combination of accounting expertise and entrepreneurial drive. Honest self-assessment before making the leap prevents expensive mistakes.
- You have 5+ years of public or industry accounting experience
- You hold a CPA, EA, or other relevant credential
- You've managed client relationships (not just done the technical work)
- You have 6-12 months of living expenses saved as financial runway
- You're willing to do business development — selling is part of the job
- You can manage people (even if starting solo, you'll likely hire within 1-2 years)
- You have a professional network that could generate initial referrals
- You've identified a niche or market underserved by existing firms
Scored 6+? You're well-positioned. Start planning.
Scored 3-5? Consider freelancing first to build your client base and business skills with lower risk before committing to firm infrastructure.
Scored under 3? Build more experience. The most successful firm founders have deep technical skills AND client-facing experience before going independent.
- + Unlimited income potential — firm revenue scales beyond your personal billable hours
- + Build an asset with real value — accounting firms sell for 1-1.5x annual revenue
- + Choose your clients, your team, and your culture
- + Tax advantages of business ownership (S-Corp, retirement plans, deductions)
- + The talent shortage creates strong demand for new firms
- + Cloud technology means low overhead and location independence
- − Financial risk — you're responsible for payroll, overhead, and your own income
- − Management burden — hiring, training, and retaining staff requires different skills
- − Business development never stops — even successful firms need a client pipeline
- − Regulatory compliance — licensing, CPE, peer review, insurance
- − Busy season stress multiplied — you're responsible for everyone's work quality
- − Isolation at the top — fewer peers to consult on firm decisions
Starting a firm requires both accounting expertise and entrepreneurial willingness. The ideal founder has 5+ years of experience, CPA credentials, client relationship skills, and financial runway. Starting as a freelancer first is a valid lower-risk approach.
How to Start an Accounting Firm: Step by Step
Choose your niche and services
The most common mistake new firm founders make: trying to serve everyone. Niche firms grow faster, command higher prices, and build stronger reputations.
Choose your niche on two dimensions:
Industry specialization:
- E-commerce and online businesses
- Real estate investors and developers
- Medical and dental practices
- Restaurants and hospitality
- Construction and contractors
- Startups and tech companies
- Nonprofits
- Professional services (law firms, consultancies)
Service specialization:
- Tax planning and preparation
- Monthly bookkeeping and CFO advisory
- Audit and assurance
- Forensic accounting
- Business valuation
- Fractional CFO services
The sweet spot: Pick one industry AND one primary service. "Tax planning for real estate investors" is more compelling than "full-service accounting for everyone." You can expand later — but starting focused accelerates everything.
For a detailed look at accounting specializations and their market outlook, see How to Become an Accountant: Complete Career Guide.
Handle legal structure and licensing
Get the legal foundation right from day one. Mistakes here create liability and tax problems that compound.
Entity structure:
- PLLC (Professional LLC) — Required in many states for accounting firms. Provides liability protection with pass-through taxation
- PC (Professional Corporation) — Alternative in some states. Different tax treatment; consult an attorney
- S-Corp election — Consider once income exceeds ~$80,000 for self-employment tax savings
Licensing requirements:
- CPA license — Verify your state's firm licensing requirements (many states require separate firm registration)
- State board registration — Most states require the firm itself to be registered with the state board of accountancy
- Business license — Check local municipality requirements
- EIN — Free from IRS.gov; needed for bank accounts, hiring, tax filings
Insurance (non-negotiable):
- Professional liability (E&O) — $1,000-$3,000/year. Protects against errors in client work
- General liability — $400-$800/year. Covers premises and operational risks
- Cyber liability — $500-$1,500/year. Critical for firms handling sensitive financial data
- Workers' compensation — Required once you hire employees (varies by state)
CPA firm licensing requirements differ dramatically by state. Some require peer review participation, specific ownership structures, or minimum insurance levels. Check your state board of accountancy's website before filing any paperwork.
Create a business plan and financial projections
You don't need a 50-page business plan, but you need clear answers to these questions:
Essential planning elements:
- Target market: Who are your ideal clients? (Industry, size, location, pain points)
- Services and pricing: What do you offer and at what price points?
- Revenue projections: How many clients at what average fee equals your target revenue?
- Expense budget: What are your fixed and variable costs?
- Break-even analysis: How many clients before you cover expenses?
- Growth plan: Solo for how long? When to hire? What roles first?
Example first-year projection (solo tax and advisory firm):
- Target: 40 clients at $5,000 average annual fee = $200,000 revenue
- Expenses: $40,000 (software, insurance, marketing, CPE, misc.)
- Owner compensation: $160,000 (pre-tax, pre-self-employment tax)
- Realistic acquisition: 3-4 clients per month → full capacity by month 12
Build your technology stack
Your tech stack is your firm's infrastructure. Cloud-first tools enable remote service delivery, team collaboration, and operational efficiency.
Core software (required):
Total software budget: $250-$650/month depending on firm size and tool selection.
Don't buy every tool on day one. Start with accounting software, a practice management tool, and a client portal. Add specialized tools as your client count grows and workflows become clear. Many platforms offer startup or solo pricing.
Set your pricing model
Pricing is the single highest-leverage decision in your firm. The model you choose determines your income, workload, and client quality.
Pricing models compared:
Recommended approach for new firms:
- Monthly retainers for ongoing services (bookkeeping, advisory, CFO)
- Fixed fees for defined deliverables (tax returns, entity setup)
- Value-based pricing for high-impact advisory (tax savings, M&A support)
- Hourly only for truly unpredictable consulting work
Pricing benchmark by service:
Build your personal brand and online presence
For accounting firm founders, personal brand IS the firm's brand — especially in the first few years. Clients choose firms based on trust in the founding accountant.
Priority order for building online presence:
- LinkedIn profile — Optimized headline ("CPA | Helping [niche] with [service]"), consistent content 2-3x/week about your expertise area
- Google Business Profile — Immediate local visibility, review collection platform
- Professional website — Services page, about page, blog, testimonials, contact form. Doesn't need to be elaborate — clarity beats design
- Content marketing — Blog posts, LinkedIn articles, or a newsletter answering your target clients' most common questions
- Speaking and networking — Local business groups, industry conferences, webinars
The goal: when someone in your target market needs accounting help, your name surfaces — through Google, LinkedIn, or a referral from someone who's seen your content.
Every successful accounting firm founder we've studied built their practice on personal brand. It's the difference between chasing clients and having them come to you. For a complete playbook, see Personal Branding for Accountants and our Complete Personal Branding Guide.
Get your first clients
The first 10 clients define your firm. They generate the revenue that funds growth, the testimonials that attract more clients, and the referrals that build your pipeline.
Highest-converting client acquisition channels (in order):
- Your existing network — Former colleagues, clients from your employed years, friends, family. This is the #1 source for first clients at nearly every firm
- CPA referral partnerships — CPAs who don't offer your specific service (e.g., a tax CPA who doesn't do bookkeeping). Offer to handle overflow or complementary work
- Attorney and financial advisor referrals — Attorneys and wealth managers regularly need accounting partners for their clients
- LinkedIn outreach and content — Share expertise publicly; connect with business owners in your niche
- Local networking — BNI chapters, Chamber of Commerce, industry associations, rotary clubs
- Online directories — QuickBooks ProAdvisor, CPA directory, Yelp, Google Business
- Content marketing — Blog posts, webinars, and guides targeting your niche's pain points
Speed matters. Aim to sign your first client within 30 days of launch. Even if it's a small engagement at a modest fee, momentum builds confidence and referral potential.
The seven-step firm launch: niche down, handle legal/licensing, plan finances, build your tech stack, price for value, build your brand, and acquire clients. Most firms reach capacity within 12-18 months with consistent execution.
Accounting Firm Startup Costs
Accounting firms have relatively low startup costs compared to most professional services businesses — especially if you operate virtually.
Minimum viable firm (virtual, solo, already own equipment): Entity + insurance + software + website = approximately $3,500-$6,000 to launch, plus $400-$700/month ongoing.
An accounting firm can launch for $5,000-$15,000 with $400-$700/month in ongoing costs. Virtual operation eliminates the largest traditional expense — office space. The low startup cost relative to earning potential makes accounting one of the most attractive professional services businesses to start.
Solo Practice vs Small Firm vs Virtual Firm
The firm model you choose determines your ceiling, your lifestyle, and the skills you'll need beyond accounting.
Which Model to Choose?
Solo practice if you want maximum flexibility and are content with income capped by your personal capacity. Best for semi-retired accountants, career-changers, or those who value independence over growth.
Small firm if you want to build a business that generates income beyond your personal billable hours. Requires management skills and comfort with hiring, but creates the highest earning potential and strongest exit value.
Virtual firm if you want location independence and a modern practice model. Growing rapidly in 2026 — cloud tools make it fully viable. Can be solo or staffed with remote contractors and employees.
Most successful firm owners start solo, prove their model with 15-25 clients, then hire their first team member to handle lower-level work. This approach minimizes risk while testing whether firm ownership (vs. solo practice) is right for you. For the solo path specifically, see our Freelance Accountant Guide.
Solo practices maximize flexibility; small firms maximize income and exit value; virtual firms maximize location independence. Start solo and scale to the model that fits your goals. For employed accountant salary benchmarks to compare against, see our Accountant Salary Guide.
How to Get Accounting Clients
Client acquisition is where most technically excellent accountants struggle — because getting clients is a different skill from doing the work.
The Client Acquisition Funnel
Awareness → Trust → Conversation → Proposal → Engagement
Most new firm owners skip straight to "proposal" by pitching cold prospects. This rarely works. The firms that grow fastest invest in awareness and trust-building, then convert warm leads.
Acquisition Strategies Ranked by Effectiveness
The Referral Engine
Long-term, the best accounting firms run on referrals. But referrals don't happen passively — you have to build the engine:
- Ask every satisfied client for referrals (directly and specifically: "Do you know other [niche] owners who might need help with their accounting?")
- Make it easy — Provide a templated email or LinkedIn message they can forward
- Acknowledge referrals — Thank clients who refer, even if the referral doesn't convert
- Build a referral partnership network — Attorneys, financial advisors, insurance agents, and business coaches who serve the same market
Client acquisition is a skill, not a talent. The most effective channels are referrals, strategic partnerships, and LinkedIn content. Build systems for each rather than relying on any single channel.
Building Your Personal Brand as a Firm Owner
Your personal brand is the firm's competitive moat — especially in the first 3-5 years before the firm develops its own institutional reputation.
Why personal brand matters more for firm owners:
- Clients choose accounting firms based on the person, not the entity name
- Content from a real person gets 3-5x more engagement than company content
- Speaking opportunities and media appearances build authority faster for individuals
- Referral partners remember people, not firm names
The brand-building system:
- Define your positioning — "I help [specific audience] with [specific problem] so they can [specific outcome]"
- Show up consistently on LinkedIn — 2-3 posts per week sharing expertise, insights, and client wins (anonymized)
- Create pillar content — 1-2 long-form articles or guides per month that demonstrate deep expertise in your niche
- Collect and showcase testimonials — LinkedIn recommendations, Google reviews, case studies
- Speak at industry events — Start with local business groups, scale to conferences and webinars
- Build a newsletter — Direct access to your audience, not dependent on algorithm changes
For a comprehensive personal branding playbook, see Personal Branding for Accountants and our Complete Personal Branding Guide.
Personal brand is the firm's growth engine in years 1-5. Consistent LinkedIn activity, testimonial collection, and speaking engagements convert awareness into trust and trust into clients.
Common First-Year Mistakes
First-Year Accounting Firm Owner Mistakes
- Underpricing to win clients — low rates attract bad clients and create unsustainable workload; price for the value you deliver
- No engagement letters — verbal agreements lead to scope creep, unpaid work, and potential lawsuits; every client needs a written agreement
- Trying to serve every industry — niching feels risky but generalist firms compete on price; specialist firms compete on value
- Ignoring marketing until you need clients — build your pipeline before you're desperate; consistent marketing prevents feast-or-famine cycles
- Hiring too early (or too late) — hire when you're consistently turning away work, not when you hope to grow; but don't wait until quality suffers
- Neglecting your own finances — the cobbler's children have no shoes; set up proper bookkeeping, retirement contributions, and tax planning from day one
- Not tracking key metrics — monitor client acquisition cost, average revenue per client, utilization rate, and client retention; what you don't measure, you can't improve
- Burning out during busy season solo — build capacity before busy season; temporary help or outsourcing is cheaper than losing clients to quality issues
The most common firm owner mistakes involve pricing (too low), boundaries (no engagement letters), and marketing (reactive instead of proactive). Avoiding these three accelerates the path to a sustainable practice.
Key Takeaways
- 1Starting an accounting firm costs $5,000-$15,000 with $400-$700/month ongoing — one of the lowest startup costs for a professional services business
- 2Choose a niche early: specialist firms grow faster and charge more than generalists
- 3CPA licensure expands service offerings and credibility, but EA-focused and bookkeeping firms are also viable
- 4Value-based and retainer pricing generate higher revenue per client than hourly billing
- 5Personal brand is the growth engine — invest in LinkedIn, content, and speaking from day one
- 6Referrals are the highest-converting client acquisition channel; build the engine systematically
- 7Start solo, scale intentionally — most successful firms begin as one-person practices
- 8Accounting firms sell for 1-1.5x annual revenue, making firm ownership a wealth-building strategy
Frequently Asked Questions
Can I start an accounting firm without a CPA?
Yes, with limitations. You can offer bookkeeping, tax preparation (without IRS representation in most states), payroll, and financial consulting without a CPA. EA licensure adds IRS representation capability. However, CPA firms can offer audit, attestation, and the full range of accounting services — significantly expanding revenue potential.
How many clients does an accounting firm need?
It depends on your services and pricing. A tax-focused solo firm might need 80-120 individual clients or 30-50 business clients. A bookkeeping firm targeting higher-value retainers might reach full capacity with 20-30 clients. A fractional CFO practice may be full with 5-10 clients at premium rates.
Should I leave my job before starting?
Ideally, start building your practice while employed. Sign 3-5 initial clients, validate your niche and pricing, and ensure revenue can cover basic expenses before leaving full-time employment. The exception: if your employer has a non-compete clause, consult an attorney first.
When should I hire my first employee?
When you're consistently at 80-90% capacity and turning away work. The first hire is typically a staff accountant or bookkeeper to handle lower-level work while you focus on client relationships, advisory, and business development. Many firms start with a part-time contractor before committing to a W-2 employee.
How do accounting firms handle busy season?
Planning and temporary help. Build capacity before January: hire seasonal tax preparers, outsource to contract firms, or bring on temporary staff. Set client expectations early on timelines. Some firms extend deadlines or limit the number of new tax clients accepted. Burnout during busy season is the #1 threat to first-year firm survival.
Is it better to start a firm or buy an existing one?
Both are valid. Buying provides immediate revenue and clients (typical price: 1-1.5x annual revenue) but requires significant upfront capital. Starting from scratch costs less but takes 12-24 months to build. Many accountants start their own firm while simultaneously looking for small practices to acquire.
What's the difference between a bookkeeping business and an accounting firm?
Bookkeeping businesses focus on transaction recording and basic financial reporting — lower barrier to entry, no CPA required. Accounting firms offer broader services: tax planning, audit, advisory, and representation. Accounting firms typically charge higher rates and have more complex operations. Many bookkeeping businesses grow into accounting firms over time. See our guide: How to Start a Bookkeeping Business.
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Sources & References
- Occupational Outlook Handbook: Accountants and Auditors — U.S. Bureau of Labor Statistics (2025)
- 2026 Finance and Accounting Salary Guide — Robert Half (2026)
- 2025 Trends in the Supply of Accounting Graduates and the Demand for Public Accounting Recruits — AICPA & CIMA (2025)