Steps to Starting a Small Business

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					Starting Your Own CPA Practice
Planning Checklist

                                                                                                                                                       Other
                             Action                                            Description                                     PCPS Tool            Useful Tools          Status
Note: Some of the PCPS Tools are available only to members of the PCPS section. Subscriptions to The Management of an Accounting Practice (MAP) Handbook (in print or online), including
the appendices referenced below, can be purchased by PCPS members at a substantial discount. In fact, the savings alone pays for the PCPS membership!
Click here for information on becoming a PCPS member.
   1    Determine your readiness to start your own    Items 1-6 on Exhibit 102-4 "Checklist for Starting a Practice"
        business                                      of the MAP Handbook provide important questions you
                                                      should ask yourself before establishing your own practice.
                                                                                                                                              U.S. Small Business
                                                                                                                     Exhibit 102-4 of the MAP Administration's Starting
                                                      The U.S. Small Business Administration (SBA) provides a        Handbook                 a Business Readiness
                                                      self assessment tool that prompts you with questions and                                Assessment
                                                      assists you in evaluating skills, characteristics and
                                                      experience.

  2        Decide whether to start a practice (by yourself or   Evaluate which route works best for you after comparing
           with a partner) or to buy an existing practice       time, costs, and establishment of a client base for each
                                                                alternative.
  3        Establish goals and a firm philosophy                Written statements will set the tone of your practice and
                                                                assist you in outlining the goals of your business. Chapter
                                                                101 "Vision Statements" of the MAP Handbook discusses
                                                                "how to build a successful firm using vision statements as a Chapter 101 of the MAP
                                                                keystone, and outlines firm characteristics that are beneficial Handbook
                                                                in making a vision a reality". Define your goals and
                                                                determine how you will attain them.
  4        Define your business and how you will compete in     Determine the types of clients and industries you will serve
           the marketplace                                      and the services you plan to offer. Identify the market in your
                                                                area and the client base potential.

  5        Select location and office facilities                There are several guidelines that should be considered when
                                                                selecting your office facility. Chapter 102, Section 102.03 of
                                                                the MAP Handbook points out some items of importance and Chapter 102, Section 102.03
                                                                                                                               of the MAP Handbook
                                                                options.

  6        Outline financial requirements                       There are several components to consider when determining
                                                                your financial requirements. 6a - 6d below discusses these
                                                                items:

      6a         Determine start-up costs                       Start up costs can vary depending on the selection of the
                                                                location and office facilities and if you need to purchase new                            AICPA Member Benefits
                                                                equipment. Outline your office and equipment requirements.                                and Service Discounts
                                                                Exhibit 102-1 "Start-up Costs for a Sole Practitioner" of the  Exhibit 102-1 of the MAP   on Equipment and
                                                                MAP Handbook illustrates a summary of the basic elements Handbook                         Services
                                                                of start up costs.                                                                        Small Business
                                                                                                                                                          Administration calculator
                                                                                                                                                          for start up costs
      6b         Revenue projections and pricing of your        The key elements for a CPA practice revenue projection is
                 services                                       the projected number of billable hours and the standard
                                                                billing rate you expect to charge. Exhibit 102-2 "Fees Based Exhibit 102-2 of the MAP
                                                                on Hours and Standard Rates" of the MAP Handbook             Handbook
                                                                provides guidance on how to go about this.

                                                                Practitioners should recognize that effective pricing and
                                                                invoicing is necessary for firm success. There are many ways
                                                                for CPA’s to price their services. Look at our Pricing Your    Pricing Your Services
                                                                Services section of our website for further tools and articles
                                                                on options for structuring fees.


                                                                                                                    Page 1 of 4
Starting Your Own CPA Practice
Planning Checklist

                                                                                                                                                        Other
                            Action                                              Description                                      PCPS Tool           Useful Tools         Status
Note: Some of the PCPS Tools are available only to members of the PCPS section. Subscriptions to The Management of an Accounting Practice (MAP) Handbook (in print or online), including
     6c     Expense projections                       First year expenditures must realistically be projected. Use
                                                      professional resources to reduce the risk of In fact, the savings alone pays for the PCPS membership!
the appendices referenced below, can be purchased by PCPS members at a substantial discount. overlooking a
                                                      category. Also, talk to other practitioners. Exhibit 102-3
                                                                                                                       Exhibit 102-3 of the MAP
                                                      "Projected Income Statement" of the MAP Handbook
                                                                                                                       Handbook
                                                      provides a useful illustration of first year operating expenses.


      6d        Project your personal financial needs          Make sure your personal financial affairs are in order. Your
                                                               domestic financial obligations and pressures should be                                        Aon - Financial
                                                               considered when determining your financial requirements.                                      Considerations

  7        Develop a monthly budget                            Determine your monthly budget based on the financial
                                                               requirements per #6 above.

  8        Identify and evaluate your experience and skills    Running your own practice requires more than just being
                                                               technically proficient. Chapter 102, Section 102.03 of the
                                                                                                                             Chapter 102, Section 102-3
                                                               MAP Handbook discusses these additional areas you should
                                                                                                                             of the MAP Handbook
                                                               have experience or exposure in before starting your practice.

  9        Determine your form of organization (i.e. sole      Chapter 109 "Forms of Practice" of the MAP Handbook
           proprietor, partnership, S Corp)                    discusses an overview of the business forms of organization
                                                               that accountants may consider in the formation of an           Chapter 109 of the MAP
                                                               accounting practice                                            Handbook


  10       Check regulation and CPA accreditation rules in     Check with your state society and the AICPA to determine       Mobility and State Licensing
           your area                                           what regulations apply to you and your firm.                   Issues

                                                                                                                              State News and Information
  11       Legal considerations - EIN, Licenses and Permits    Engage an attorney to ensure you are in compliance with all    U.S. Small Business
                                                               federal, state and local business requirements.                Resource Center - Licensing
                                                                                                                              and Permits
  12       Insurance considerations                            Aon, AICPA’s affiliate for insurance programs, offers
                                                               information to help you address your total insurance                                          Aon - Insurance
                                                               requirements.                                                                                 Considerations

  13       Decide on the timing of opening your practice       Consider the accounting business cycle when deciding when
                                                               to open your accounting practice. Chapter 102, Section
                                                                                                                           Chapter 102, Section 102.03
                                                               102.03 of the MAP Handbook discusses three important
                                                                                                                           of the MAP Handbook
                                                               guidelines on timing the opening of an accounting practice.

  14       Establish a business checking account with your
           local bank
  15       Determine your source for start-up and operating    Depending on your personal financial situation, you may        U.S. Small Business
           capital and, if necessary, make initial financing   need to borrow money to get you started. There are several     Resource Center - Financing Aon - Borrowing Money
           arrangements                                        options you can consider.                                      and Loans
                                                               Chapter 102, Section 102.05 of the MAP Handbook ,
                                                                                                                             Chapter 102, Section 102.05
                                                               "Borrowing Money to Start the Practice", discusses attributes
                                                                                                                             of the MAP Handbook
                                                               the lender will consider of the CPA.




                                                                                                                  Page 2 of 4
Starting Your Own CPA Practice
Planning Checklist

                                                                                                                                                   Other
                            Action                                            Description                               PCPS Tool              Useful Tools                 Status
                                                      Professional assistance is Subscriptions to The of
Note: Some of the PCPS Tools are available only to members of the PCPS section.available from a number Management of an Accounting Practice (MAP) Handbook (in print or online), including
  16 Seek out professional resources
the appendices referenced below, can be purchased by PCPS members at a substantial discount. In fact, the savings alone pays for the PCPS membership!
                                                      sources:

                                                          Consider networking with fellow professionals. PCPS has
                                                          organized Networking Groups for small-, medium-, and
                                                          large-sized firms. Through each group's informal system, PCPS Networking Groups
                                                          members assist one another with common goals,
                                                          concerns, and objectives.

                                                          You should know what steps you can take to get off to a
                                                          successful start. This publication contains a wealth of      On Your Own! How to Start
                                                          information to help you avoid early stumbling blocks and     Your Own CPA Firm By
                                                          to build a solid foundation needed for growth.               Albert Williams, CPA

                                                          From research and planning to choosing a location to
                                                          finding clients, this Journal of Accountancy article
                                                          explores major aspects of starting a CPA practice. The       Start Your Own Practice By
                                                          article also includes “Tips from six who made the leap”      Randy Myers
                                                          and additional resources.

                                                          This page features resources for the small firm including:
                                                          links to the Small Firm Solutions newsletter; marketing
                                                          brochures for small firms, archived Small Firm Corner        Small Firm Advantage
                                                          articles by Jim Metzler, AICPA Vice President of Small
                                                          Firm Interests; plus much more.

                                                          The SBA offers a myriad of tools and resources that serve
                                                          as excellent starting places when preparing to start your U.S. Small Business
                                                          own business.                                             Resource Center

                                                          The PCPS Top MAP Issues Survey gathers information
                                                          from a wide range of practitioners in firms of various sizes
                                                          to get a snapshot of the most critical challenges facing     National Map Survey
                                                          CPA firms. The Survey’s rich history makes it the leading
                                                          benchmarking survey for CPA firms.

                                                          Connect with your state society and get involved.

                                                          PCPS Practice Management Forums are a series of free
                                                          online forums available exclusively to PCPS members.
                                                                                                                       Upcoming Forums
                                                          These forums focus on the most critical practice
                                                          management issues facing firms today, including staffing,
                                                          succession planning, and workload compression.
                                                                                                                       Archived Forums
  17   Prepare a practice development plan             Once you define your business per #4 above, its time to
                                                       determine how you will be reaching out to prospective clients.
                                                       Chapter 102, Section 102.06 "Practice Development" of the Chapter 102, Section 102.06
                                                       MAP Handbook discusses the most common methods for             of the MAP Handbook
                                                       practice development for the beginning practitioner.

                                                       For additional resources to assist your firm with developing
                                                       new business and retaining clients visit the Marketing &        Marketing & Practice Growth
                                                       Practice Growth page on our website.




                                                                                                           Page 3 of 4
Starting Your Own CPA Practice
Planning Checklist

                                                                                                                                                       Other
                           Action                                              Description                                 PCPS Tool               Useful Tools            Status
  18 Information PCPS Tools are available only to members of the PCPS section. Subscriptions be The Management of an Accounting PracticeSmall Firm Technology print or online), including
Note: Some of the systems                             Keeping current on technology helps CPA's to efficient and                               (MAP) Handbook (in
                                                                                                                  Using Information the PCPS membership!
the appendices referenced below, can be purchased by PCPS members at a substantial discount. In fact, the savings alone pays for Technology
                                                      effective. Determine your information technology and                                    Tips By Ed McCarthy
                                                      information systems needs by obtaining a good
                                                      understanding of the many aspects of information systems    Information Technology
                                                      and how it relates to your practice.
                                                                                                                  Accounting and Auditing
                                                                                                                  Software
  19 Make other necessary administrative decisions    i.e., Develop an organization chart; Determine your client
                                                      acceptance policies as well as your billing, collection and Organizational Structure &
                                                      credit policies.                                            Governance

                                                                      Part 2 of the MAP Handbook provides a thorough discussion
                                                                      of the many facets of firm administration.                Part 2 of the MAP Handbook

                                                                      Determine your staffing needs. PCPS has developed the
                                                                      Human Capital Center that hosts a wide array of tools and               The PCPS Human Capital
                                                                      resources on this important topic.                                      Center

  20     Prepare a written business plan that will work!              Once you have completed the steps above you are ready to
                                                                      develop a formal business plan. The formal business plan is
                                                                      a detailed presentation that should outline of all aspects of
                                                                      your business. Define your set of business goals, the
                                                                      reasons why they are believed attainable, and the many        U.S. Small Business
                                                                      components that will attribute to you accomplishing those                                                  Aon - Developing a
                                                                                                                                    Resource Center - Small
                                                                      goals. There is not a fixed content for a business plan.                                                   business plan
                                                                                                                                    Business Planning
                                                                      Rather the content and format of the business plan should be
                                                                      determined by your goals and audience. A solid business
                                                                      plan is often required to receive financing.




DISCLAIMER: This publication has not been approved, disapproved or otherwise acted upon by any senior technical committees of, and does not represent an official position of, the American Institute of Certified Public
Accountants. It is distributed with the understanding that the contributing authors and editors, and the publisher, are not rendering legal, accounting, or other professional services in this publication. If legal advice or other expert
assistance is required, the services of a competent professional should be sought.




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