Essentially to own and operate your own accounting practice requires two things; experience and a client base.
The four main pathways to achieving this are:
(1) Buy into your employer
Stage one of this pathway involves getting a job as an accountant with a public practice firm and having them train you up over a three to five year period. During this period you are getting trained, developing experience, completing additional studies, and gaining tax agent registration with the Tax Practitioners Board.
Stage two involves buying into your employer and becoming a practice owner/partner. This is an attractive low risk pathway. Not always possible as accounting firms normally only need one partner/principal per five to ten accounting staff.
(2) Start a sole public practice firm
Stage one also involves the five years of employment to gain experience.
Stage two involves leaving paid employment for life as a public practitioner operating your own accounting practice. The initial years with this strategy can be hard and lean as it takes many years to build clients, credibility and a business from scratch.
(3) Buy accounting fees
Stage one of this pathway also involves working for a public practice firm for three to five years to gain the relevant experience.
Stage two involves leaving paid employment to buy an accounting fees base of between $100,000 – $200,000. These client bases are very attractive to new public practitioners as they’re easy to service and manage. The big problem with this strategy is that there are 70 buyers for every seller, so actually being able to negotiate and buy accounting fees parcels under $200,000 is very difficult.
(4) Buy an accounting & tax franchise
This generally involves an accountant buying an accounting & tax franchise and being trained up by the franchisor at the same time as they build their client base. This pathway has the advantage that once the franchise is purchased the building of the client base can start immediately. The disadvantage is that the training process will still take three to five years before an accountant is trained to a high standard.
The three main pathways to owning and operating an accounting practice have different advantages and disadvantages.
There is no one pathway that’s best for every-one and it really is a case of accountants looking at their individual circumstances and preferences, and working out which pathway best suits them.