How to Start a CPA Firm

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A CPA works at a desk using a calculator.

Graduate students who choose an accountancy career have many professional options, including working for large companies, mom-and-pop businesses and governmental agencies. However, some who graduate with an online Master of Accountancy and pass the CPA exam may dream of opening their own CPA firm. The time may be right to pursue this goal.

The accounting industry is experiencing a CPA shortage due to a large number of retiring accountants, assumptions concerning automation in accounting and even the profession’s reputation, according to Controllers Council, a professional organization for the accounting and finance industry. This downturn can present opportunities for graduates with the entrepreneurial spirit to open up their own practice.

While starting one’s own business can be rewarding, it also comes with challenges. Starting a CPA firm means digging deep, answering tough questions and formulating sound plans. Accounting talent and skill are crucial, although it takes more than those elements to succeed. However, graduate students interested in starting a CPA firm can take several steps to improve their chances.

Reasons for Starting a CPA Firm

CPAs have plenty of reasons to want to start a private firm, from having a better work-life balance to earning more money. Many CPAs with a clear vision for their future open private firms to further their dreams. Other reasons for starting a CPA firm include the following:


Employment of accountants and auditors will grow by 7% between 2020 and 2030, according to the U.S. Bureau of Labor Statistics (BLS). This growth aligns with the average of all professions.

While this may seem to run counter to the industry’s warning of a CPA shortage, it also represents  a pattern of steadiness, which is the hallmark of the profession. It’s important to bear in mind the fundamental nature of accounting as it relates to business. Companies great and small will always need qualified accountants to help them make sense of their finances. Unlike other jobs that may come and go based on trends, accounting roles are evergreen.

Additionally, there’s still a projected need to replace retiring CPAs. With all members of the baby-boom generation reaching retirement age by 2030, the number of retiring CPAs is likely to increase. This may lead to greater opportunity for CPAs from younger generations. What’s more, those who enter the market may find that a smaller field offers opportunities. Estimates shared by the American Institute of Certified Public Accountants (AICPA) report that roughly 18,000 fewer candidates sat for the CPA exam in 2021 than in 2010.

Low Overhead

As a sole proprietor startup, a CPA firm generally has low overhead. Many CPA startups opt to apply a work-from-home (WFH) strategy, which can dramatically decrease operating costs. For a home office, CPAs only need a designated space for work that includes a desk, a reliable computer with the appropriate software, communication equipment (cellphone or landline), and reference materials to stay current on rules and regulations. CPAs who choose to have public office space have the additional expense of building rent and leasing or purchasing office furniture.


CPAs in private practice can specialize and establish a foothold in a niche market. Specialization — which may include personal financial planning, forensics, taxes, nonprofit or international accounting — can lead to an enhanced business reputation, the ability to charge more for services, higher salaries and other benefits.

Specialization can also help individuals guide their career paths toward areas of practice that are in high demand or that best align with their personal interests. This can mean a steady supply of clients or less chance of burnout.

CPA Firm: What to Know

Successfully opening a CPA firm is a proactive process, and part of this process involves completing several prerequisites. Professionals seeking to launch their own firm must be fully prepared to meet these requirements, which often go beyond just having talent with numbers.

State Licensing

To start a CPA firm, an individual must be a licensed CPA in their state of practice. While there are common elements to licensing shared by all 50 states, other elements vary. For example, many states require a minimum of 150 hours of coursework prior to being eligible to apply for the license. Completing these hours typically requires individuals to earn an advanced degree, such as a Master of Accountancy (M.Acc.).

This step also typically includes passing an examination furnished by the state. Additionally, some states may require prospective CPAs to already be residents in their state of practice prior to sitting for the exam. It’s crucial for individuals to know the exact licensing requirements of their desired state prior to taking the exam to avoid any unwelcome surprises.


Once an individual has their state license and is ready to open their own CPA firm, they must be prepared to raise capital. The necessary amount depends on several metrics, such as the size and scope of office space and equipment, advertising, ongoing overhead, and living expenses. The result should be enough to cover the firm for a full year. The precise amount of capital can be determined by a firm’s revenue goals. The revenue goal should typically be about three times the amount of the startup costs. For instance, if a CPA sets their revenue goal at $150,000, they should consider raising $50,000 worth of capital.

Steps to Starting a CPA Firm

The first element of launching any business is developing a business plan to serve as a blueprint for current and future work. The business plan is particularly important for CPAs who are seeking investors or business loans.

Deciding to start a CPA firm begins with assessing personal readiness to open a business. This means evaluating skills, experience and personal characteristics and setting goals. The U.S. Small Business Association offers a Small Business Readiness Assessment Tool that can help individuals determine if they’re prepared to make the leap. ”

Other steps that are crucial to successfully starting a CPA firm include the following:

1. Choosing a Legal Structure

Determine if the business will be a sole proprietorship, a partnership, an S corporation, a C corporation or any other limited liability firm. The status of the company will determine the type of record keeping required as well as the firm’s tax structure.

Each structure contains elements that may benefit a specific type of firm, such as legal protections or payment flexibility. The structure isn’t permanent, and firms can change their legal structure over time as they grow. An attorney can go over the available options and establish a new CPA firm as a legal entity.

2. Determining Operating Costs

Individuals must be prepared to make cost-effective decisions that allow their firms to operate effectively and within the confines of their budget. Operating costs are typically divided into three key areas:

  • Office space. Office space could be a home office, or it could be in a commercial or a shared office.
  • Equipment E. Equipment includes the tools needed to perform the functions of a CPA. It can also include materials consistent with creating a business setting, such as visitor chairs, conference tables and office supplies.
  • Staffing S. As a firm grows, more people may be required to handle its daily operations.

3. Considering a Marketing Plan

When advertising the business, find the target client market and focus marketing efforts in a way that optimizes demographic reach. Business owners must determine the best way to communicate with potential clients. This could range from producing traditional marketing materials like brochures to engaging in trending digital messaging on social media. It’s also crucial to build a user-friendly website and ensure that it contains up-to-date, relevant information.

Once a client base is developed, entrepreneurial CPAs can use it as a resource to further grow their business. This can be done through various referral programs that encourage clientele to spread the word about their services, a tactic that can be further facilitated using incentives.

4. Protecting Assets

Professionals who start a CPA firm should develop strategies to cover their assets in the event of legal liability. This can typically include obtaining professional liability insurance. If a firm has employees, it can also include employment practice liability insurance to guard against issues such as wrongful termination or discrimination suits. Other liability plans individuals may consider for their firms include professional liability, employment practices and group life insurance.

Start the Journey to Your Own CPA Firm

Those seeking to open a CPA business must start the process by earning the best education possible. The University of North Dakota’s online M.Acc. program prepares students to sit for the CPA exam and grow their accounting future.

Our program focuses on accounting fundamentals to prepare individuals who haven’t completed significant undergraduate accounting coursework. Additionally, UND MAcc graduates consistently score above the national average on the CPA exam and go on to become business owners and community leaders.

Discover how UND ‘s online MAcc program can give you the advanced skills and resources to pursue your professional goals.

Recommended Reading:

Diversity in Accounting: Statistics, Benefits and Challenges

Financial Accounting vs. Managerial Accounting: Choosing an Accounting Passion

What Kind of Jobs Can You Get With a Master’s in Accounting?


Accounting Today, “Art of Accounting: Developing a Niche or Specialty”

Ace Cloud Hosting, “10 Things You Should Know Before Starting Your Own CPA Firm”

American Institute of CPAs, 150 Hour Requirement for Obtaining a CPA License

American Institute of CPAs, Specializations & Credentials

American Institute of CPAs, Starting Your Own CPA Firm

American Institute of CPAs, 2021 Trends Report

Association of International Certified Public Accountants, State & Territory Requirement

Controllers Council, Accounting Crisis — CPA Firms Face 75% Retirements

Controllers Council, The Growing Shortage of Accountants and CPAs

Houston Chronicle, “Requirements for Opening an Accounting Firm”

Houston Chronicle, “What Equipment Is Needed to Open a CPA Firm?”

Investopedia, “Are We in a Baby Boomer Retirement Crisis?”

Thomson Reuters, How to Start an Accounting Firm: Your Checklist for Successfully Starting a Firm

U.S. Bureau of Labor Statistics, Accountants and Auditors

U.S. Small Business Association, “Small Business Readiness Assessment”