Tag Archives: CPA

Advice for a Successful Local CPA Practice

The Finance Writer has worked with a few individuals wanting help becoming CPAs as well as many who obtained Enrolled Agent certification. The brand recognition of a CPA license simply remains superior to the Enrolled Agent designation. Hence, even individuals who want to specialize in tax work still pursue the rigorous CPA exam, which encompasses a variety of accounting matters.

After starting a local CPA practice, an effective web presence allows people to find you for tax preparation services.

A good mixture of tax, bookkeeping, and consulting services tends to deliver successful results for small accounting firms. The formula works best by selective acceptance of bookkeeping clients. Young practices have a tendency to accept every business owner that walks in the door. Choose industries to focus upon… and hire bookkeeping staff who know those areas. At the very least, list types of businesses you will not accept for bookkeeping services. The best avenue, however, is limiting your practice to specific categories – such as medical practices (or all professional service providers, if you take a broader approach). Remember that retail operations with a lot of inventory are really challenging.

Also, consider not being a turnkey service for every bookkeeping element. For instance, payroll preparation seldom generates targeted profit margin for a CPA practice. It’s occasionally acceptable as a leader to delivery of other services, but that’s a consideration for a mature practice that can afford strategic low margin endeavors.

Tax services are the main profit generator at local accounting firms. In fact, the key justification for rendering bookkeeping operations is that it simplifies tax return preparation. While bookkeeping itself will not bring much profit margin, the eventual tax preparation more than makes up for the trouble. You charge market rates for the tax returns despite completing them in half the time required for entities that handle their own bookkeeping.

Be leery of acquiring other CPA practices. Sometimes, however, the terms are acceptable. Deferred payment amounts based upon client retention is a must. Some clients you expect as part of an acquisition were only interested in working with a particular person at the acquired firm. You can bring that existing CPA into your fold, but make sure he or she fits into the culture of your business. Just remember to consider why the existing CPA is selling. If the client relationships are so great, why would a thriving CPA want to sell?

Gradual expansion is generally preferable to acquisition of other CPA practices. This relates back to the concept of having the right web marketing strategy. Rapid growth is achievable with sound planning, which is crucial to efficiently deploying your capital.

You’ll need to add staff at some point to accommodate a rising number of tax returns. This means turning your attention to training and supervision. Too many tax accountants want to become wealthier but expect to continue only preparing tax returns. If you want to be a tax preparer, go work for someone else without taking the risk of owning your own practice. Don’t think that simply owning an enterprise where you prepare tax returns leads to greater financial rewards than working as a tax employee. It doesn’t.

The value of entrepreneurship is derived from leveraging the efforts of others. You agree to give them a paycheck every other Friday and – in exchange for that guarantee – they sacrifice a part of the expected fruits from their labor. (Sprinkle some economics knowledge on your accounting expertise.) The more patience you exercise with training and guidance for lower-compensated employees, the greater your share of their output. However, too much training puts you in a large shortfall of capital before worker output generates a return on your investment.

Hence, whom you hire is crucial. Experienced individuals are immediately productive, but also have immediate high salary demands. (This is a primary cost concern when bringing a CPA into the practice from an acquisition.) Alternatively, raw recruits have too little value and mostly become mentoring projects with payoffs that are too distant.

Fortunately, tax practices can easily resolve this problem by hiring people with no experience as long as they have some proven skills. They develop tax expertise by studying for the Enrolled Agent exam. Ideal prospects are recent college graduates with just bachelor’s degrees in accounting (or even finance or economics) as well as individuals with bookkeeping ability, especially those already working for you in bookkeeping posts. Send them to take an online tax course and pass the EA exam. This arms them with all the knowledge needed for preparing tax returns. They only require some training with tax preparation software and file documentation procedures. The CPA practice delivering this environment is destined to maximize profits in the most efficient and timely way.

Role Helping Family Businesses Awaits Accountants that Take the CPA Exam

Long before stock markets and venture capital, aspiring entrepreneurs created businesses to attain personal profit from serving consumer demands. These family owned operations stood as testaments to an advancing standard of living. Although this phenomenon arose well before external audits and quarterly reports, family enterprises still recognized the value of accurate accounting work. Despite the lack of a CPA exam, skilled accountants were key members of every entrepreneur’s team.

Family businesses are still the largest group of commercial entities in the US economy. More importantly, they are achieving a larger scale than ever before. This only increases their need for accountants. Fortunately, locating elite accountants is now easier than a century ago by seeking those with CPA licenses.

Today, family businesses operate in both local and expanded markets. Many of them sell products globally. They employ more people than all companies with public stockholders. In addition, family enterprises generate a substantial amount of economic activity.

A growing family business is faced with the same challenges as a major corporation. This requires monitoring of costs and measurement of success from a new product, location, or group of customers. After passing the CPA exam, an accountant is prepared to embark on a career that helps family businesses innovate and thrive throughout generational transitions.

If you strive for this role, be sure to become a trusted source of advice to family businesses. Don’t price your services in a way that discourages contact. Provide brief phone conversations and email responses free of charge. Use these opportunities to communicate your value at delivering extra services for a contractually arranged fee. Soon, your CPA practice will advance beyond delivering financial reports and tax returns. You will help balance business strategy with family goals. For example, you will be at the forefront of devising fair procedural and control structures. Rendering effective decision-making advice to family enterprises demands that you follow the right career focus with the accounting skills you mastered to successfully complete the CPA exam.

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