How to Start a CPA Firm

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A CPA works in an office.After graduating with a master’s in accountancy and passing the CPA exam, many professionals dream of opening their own CPA firm. 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.

Graduate students who choose an accountancy career have many professional options, including working for large companies, mom-and-pop businesses and governmental agencies. But with the shortage of talented CPAs across the United States, the time may be right to open a CPA firm. CPAs with an entrepreneurial spirit are in high demand.

Blake Oliver, senior product marketing manager of FloQast Inc., told Accounting Today, “You don’t have to follow the traditional career path in the Big Four anymore. It’s not about ‘making it to manager and then going to industry.’ You can start in industry. You can go to public after that if you want. You can even start your own firm in your 20s these days if you’re good at marketing yourself online.”

Graduate students interested in how to start a CPA firm have several steps they can take. The first is earning a master’s degree in accounting, such as a master’s in accountancy (MAcc) online.

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.


According to the U.S. Bureau of Labor Statistics (BLS), employment of accountants and auditors will grow by 4% from 2019 to 2029. This growth aligns with the average of all professions.

While these numbers represent a pattern of steadiness, 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 is still a projected need to replace retiring CPAs. A commonly reported figure from the American Institute of Certified Public Accountants (AICPA) projects that 75% of current CPAs will retire over the next 15 years. This could lead to companies seeking out new and qualified CPA talent from younger generations.

Low Overhead

As a sole-proprietor startup, CPA firms can generally have 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.

In its article “Art of Accounting: Developing a Niche or Specialty,” Accounting Today writes, “In this age of specialization and niche expertise, being a generalist is a negative to most people, indicating a lack of competency in an area. When someone professes to be an ‘expert’ in multiple areas, the image of ‘knowing everything’ is counterproductive to establishing your competency. Most public accountants today need to choose a specialty or perhaps two.”

Requirements to Open a CPA Firm

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, certain states require a minimum of 150 hours of coursework prior to being eligible to apply for the license. This step typically includes passing an examination furnished by the state. 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 propel the firm for a full year. The precise amount of capital can be determined by a firm’s revenue goals. Experts state that this revenue goal should be roughly three times the amount of the startup costs.

Steps to Starting a CPA Firm

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

Accounting professionals should ask themselves why they want to open their own firm, according to Thomson Reuters: “Knowing why you’re starting a firm can help you define your target market, whether it’s helping small businesses, real estate, or another service area.”

Other steps that are crucial to successfully starting a CPA firm are listed below.

1. Choosing a Legal Structure

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

An attorney can go over the available options and establish a new CPA firm as a legal entity.

2. 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 is also crucial to build a user-friendly website and ensure that it contains up-to-date, relevant information.

Thomson Reuters recommends that professionals who are setting up a new CPA firm “look for ways to partner with other companies and firms, as well as networking opportunities in the community.”

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

3. Protecting Assets

Experts recommend that professionals who start a CPA firm cover their assets with umbrella professional liability insurance. In some cases, practitioners should seek general liability, commercial property and business income insurance.

As AICPA points out, “Lawsuits are a fact of life in the business and professional world. You must protect your practice and your personal assets against legal liability resulting from errors or omissions in providing professional services.”

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 MAcc program prepares students to sit for the CPA exam and grow their accounting future.

To meet students’ personal and professional needs, the degree program offers two distinct tracks. Those who have not completed significant undergraduate accounting coursework can join the fundamentals track, while students who have earned an undergraduate accountancy degree are eligible to enroll in the practitioner track.

UND MAcc graduates consistently score above the national average on the CPA exam and go on to become business owners and community leaders. Part of the University’s College of Business & Public Administration and accredited by the Association to Advance Collegiate Schools of Business (AACSB), the program is recognized among the top 5% of business schools worldwide.

Discover how the University of North Dakota’s online Master of Accountancy program can give you the advanced skills and resources to pursue your professional goals.


Recommended Readings

Diversity in Accounting: Statistics, Benefits and Challenging 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”

Accounting Today, “Great Advice for Young Accountants”

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

American Institute of Certified Public Accountants, Starting Your Own CPA Firm

CPA Practice Advisor, What Accountants Need to Know About Professional Liability Insurance

Going Concern, “Number of the Day: 75%”

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

Journal of Accountancy, “Start Your Own Practice”

Small Business Trends, “3 Pros and 3 Cons You Need to Weigh About Specialization in Today’s Job Market”

The Tax Adviser, “How to Start a Firm”

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

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