Now may be the perfect time to start an accounting firm.

With client demand growing and many baby boomer CPAs hitting retirement age, there is certainly no shortage of work, and advances in technology have lowered the cost of launching a new business. 

But experts say there is much to consider before accountants jump into the deep end, such as their personal financial bandwidth, whether they want to do the technical work in their firm or just manage it and where to find support. Perhaps the best place to start is figuring out why you want to start your own firm in the first place.

By and large, there are two kinds of firm founders, experts say: Those who are natural-born entrepreneurs, and those who become founders as a result of some professional or personal change that requires them to have greater flexibility.

The first group can look like accountants who have lots of ideas but who may not be able to implement them at their current firm. Or it could be an accountant who sees what their employer is doing but believes they could do it better.

The second group can look like accountants who are starting families or battling an illness, or accountants whose firms are undergoing a structural change like a merger.

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Logan Graf, founder of the Graf Tax Co. in Austin, Texas, said, “You have to want it. I would not recommend starting a firm unless you have a burning desire for doing something on your own.”

He added that firm founders must be inquisitive—they need to be willing to test things out and experiment where things can be improved. 

Miklos Ringbauer, treasurer and secretary for the California Society of CPAs and founder of MiklosCPA, recommends that firm founders work for someone else first, learning the ropes in another firm and determining what they want to do differently.

“You don’t know what you don’t know,” Ringbauer said. 

Stephen Buller, founder of Buller Accounting in Tacoma, Washington, added, “Learn the ins and outs, the rights and wrongs, while getting paid for it.” 

Will I have enough clients?

Before actually starting a business, any savvy founder should consider whether there is a market for their services. For accountants, that translates to whether there are enough clients.

The answer is “not only applicable for accountants, but for all startups – it’s an unknown,” according to Ringbauer.

That’s where professional experience and understanding comes into play, he said. Accountants should consider a couple of factors: their personal financial obligations—whether they have children, student debt or a mortgage—and their personal savings. 

If you don’t have enough runway to sustain yourself for a year or two, then you may need to plan longer or save more, Ringbauer said.

One common practice among accountants is buying a book of business to secure an established set of clients. However, Angie Wood, founder of Wood CPA in Edina, Minnesota, advises against it.

“Don’t buy a book of business,” she said. “I learned that the hard way. You don’t need to.”

Many clients will make the switch to the new firm, Wood explained, “but a lot of them choose to leave shortly after because it’s a different process. It’s a different person, it’s a different relationship. Fees change. The relationship is so personal, so it’s just not worth buying a book of business because clients can leave. There’s no guarantee.”

How do I do this legally?

The legal requirements for setting up a CPA firm vary from state to state, and the requirements are different for a CPA firm versus a firm offering bookkeeping services. Ringbauer recommends that accountants do their due diligence and research on their state’s requirements, but he offered a few tips and tricks. 

“Some states limit certain things,” he said. “For example, in the State of California a professional limited liability company, PLLC, is not allowed, domestic or foreign, to operate and offer services in the state. Versus in Texas, you can be an LLC. So understanding state rules and regulations is incredibly crucial.”

In addition, many state boards of accountancy have special language requirements that must be included in a firm’s bylaws or incorporation documents. He also reminds accountants that you can always incorporate later.

“Depending on the type of services you offer, you may not necessarily need to incorporate upfront for liability purposes,” Ringbauer explained, using his own experience as an example. “For a very long time, I was doing the self-employed Schedule C. Then when our clientele started to change — when things got more complicated, when I ended up doing offshore voluntary disclosures, very scary IRS compliance stuff with clients having hundreds of thousands of dollars of penalties because they were not right previously, filing their returns with their foreign assets — I decided that this was too much risk for me and incorporated.”

Ringbauer recommends hiring a lawyer, “so you understand what your requirements are and the pitfalls or benefits of the different entities. … A lot of people think that just because you are a CPA, you know the tax laws.”

Do I need to hire?

The next big question for firm founders to consider is if and when to hire.

Buller said it’s important for the firm owner to first decide whether they want to continue as the main service provider in their business. Do they love actually doing the technical work, or is their goal to manage a firm and its employees? 

“You should hire your first employees when you have a good process and good systems in place to deliver the service that you can charge for and that will make it easy for you to train an employee to generate revenue for your business,” Buller said.

“If you’re going to hire somebody, it basically means you’re taking a pay cut and a bunch of your time is then going to be spent training this person,” he continued.

For most accountants, the easiest and most logical first hires are usually admin and a bookkeeper.

“Affordability is a factor, and then what are the tasks I wanted to get rid of?” Wood said. “Tax was my strong suit, so I held on to that for the longest and found somebody else to do the other things that I didn’t really enjoy doing as much.”

What if I’m not ready?

Founding a firm isn’t for everyone, of course. And there are those who start their firm but realize that it isn’t the right fit for them. But most people quit because of some personal circumstance, not because they weren’t making enough money, according to Ringbauer. Thankfully, accountants have a safety net in that they can always go back to being an employee. 

“The most beautiful thing in accounting is that if you are fit to do the practice, you will always make enough money to put food on the table,” he said. “It’s a secure and very viable business.”

Throwing in the towel on a firm isn’t a mark of failure, either, Buller said.

“I think it’s a good idea to have this attitude of, ‘How could I replace myself in this business in the long run?'” He said. “And then you start thinking about all these systems and processes you need to create to make it so somebody else could do the work, and then immediately you have started to create some value that you could actually sell to somebody. That’s one exit plan.”

Do I have enough support?

There is a litany of resources available to accountants looking to start their own practice, including the American Institute of CPAs and state CPA societies, which host networking events, workshops and post reading materials. Even insurance companies have boilerplate engagement letters and guidance support.

Then there’s an accountants’ personal network, which can include friends, colleagues, partners and sole practitioners. 

Wood said she experienced overwhelming support and advice when she told her network she was starting her own firm. “If I would have known how much support I would have gotten from people, I would have done this so much earlier,” she said.

Graf said he received support from other tax experts on Twitter when he was starting out. And in October, he created his own online community of firm founders called Counter, which now has over 200 members.

At the end of the day, for most accountants, there will never be a perfect time to start a firm, according to Buller—you need to just do it.

“It’s kind of like having a kid,” Buller said. “People can tell you there’s challenges. People can tell you how hard it’s going to be or various things you’re going to have to do. And you’re going to have to be ignorant about it, no matter what, to some degree, until you do it yourself.”

“That’s one of our biggest hurdles,” Ringbauer said. “We believe that we need to know everything, and we are afraid of reaching out for help. The best thing is, most accountants now are looking at each other as support rather than competition.”

He continued, “Of course there are articles and books, but the most important thing to understand is that books give you the basic idea, but your own unique life experience and circumstances will dictate what may work from it or what doesn’t.”

AI productivity and search solutions represented the biggest growth area for technology implementations, yet the proportion of firms that actually use them remains in the minority. 

A recent survey from Wolters Kluwer found that the proportion of firms that implemented AI search and productivity solutions jumped from 1% in 2023 to 35% in 2024, a reflection of the rising interest in the technology by accounting professionals, with 53% viewing the adoption of AI in the tax and accounting industry positively. However, the proportion of firms that have integrated generative AI into their workflows remains the minority, just 27%, with an additional 22% planning to adopt the technology this year. 

Part of this lag is due to concerns over data security and privacy risks (44%), and accuracy (43%), but another reason is the perception of high costs to implement and monitor AI (35%). These concerns are consistent regardless of location, firm size or how positively or negatively one feels about AI adoption. If one wishes to get more granular, firms in the Asia-Pacific region cited limited knowledge of AI implementation as a major concern, firms in the EU were worried about degradation of skills, and firms in the U.S. expressed worry that their clients do not trust AI.  Wolters Kluwer noted, though, that the specific concerns a firm has tends to depend on how they view AI unto itself. 

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“Firms that view AI negatively often worry about its potential impacts on decision-making, job replacement and reduced personal contact with customers,” said the survey. “Conversely, enthusiastic firms are more concerned with implementation costs, lack of expertise, and potential challenges in integrating AI with existing systems. These concerns highlight practical adoption issues, rather than objections to the technology itself.”

In terms of how firms plan to utilize generative AI, the top use case at 60% was client communications, which could theoretically range from simple emails to newsletters to engagement letters and more. In second place, at 50%, was using it as a productivity tool or assistant; in third place, at 48%, was scanning documents and data directly into a form or workflow; in fourth place, at 46%, was conducting tax, audit and accounting research; and, in fifth, at 39%, was bookkeeping automation. 

The main benefits that accountants see in terms of AI include streamlining tasks (60%), automating processes (50%), reducing costs while boosting productivity (40%), and improving the accuracy of tax calculations (38%). However, 42% of firms that feel negatively about AI adoption are unable to see any positives at all. 

The survey found that the interest in AI, and in implementing AI solutions, scales with firm size. Microfirms, defined as those with one to four employees, were generally the most skeptical, with only 33% feeling positively about the impact of AI on the profession. Meanwhile, 54% of small firms (five to 19 employees), 61% of mid-size firms (20-49 employees), and 80% of large firms (50+ employees) felt the same. Wolters Kluwer also noted that, regardless of firm size, high performing firms are more likely to implement the use of this technology; 21% of such firms (defined as those that experienced revenue growth of 5% or more in the past year) intended to implement AI-enabled tools next year, versus 19% of firms overall.

The survey also found that at least some firms think AI might necessitate changes in billing models, as increased efficiencies will make the traditional hours-based fee structure problematic from a revenue perspective, though respondents seem divided on this matter. Those saying the chance of hours-based pricing being replaced by subscription or value-based pricing is slight or not at all likely were 43% of the sample, but those 29% thought it was at least somewhat likely and 28% said it was extremely or very likely. Wolters Kluwer noted, though, that firms are already starting to head in this direction. 

“This does not mean that firms are not changing business models: 19% of firms have recently changed their billing model to subscription or value pricing and an additional 19% of firms intend to make the change in the next year,” said the report. “The industry seems to be maintaining a cautious approach to changing established billing practices. However, this change may become essential to staying competitive, more so when considering the 29% of firms that find it ‘somewhat likely’ that billing models will change.” 

While AI search and productivity tools represented the biggest growth area in terms of technology implementations, in terms of absolute proportions it was only third. The survey found that 44% of firms implemented client accounting solutions (up from 25% the previous year), and 39% of firms implemented client portal solutions (up from 28% last year).

The accounting profession is on the brink of a significant evolution, driven by technological innovation, regulatory shifts and increasing demands for transparency. 

Compounding these challenges is a decline in college students pursuing accounting degrees, shrinking the talent pool and placing additional strain on the profession. This talent shortage amplifies the urgency for firms to adapt quickly to maintain their competitive edge. These changes present both challenges and opportunities, requiring organizations to adapt rapidly to remain competitive. For management consultants working alongside accounting professionals, understanding these trends is key to guiding clients through this transformation. Here are the pivotal areas of focus as we approach 2025.

AI-powered automation: a strategic advantage

Artificial Intelligence has become an essential tool for accountants, streamlining accounting operations and enhancing client value. Automating repetitive tasks like data entry and reconciliation allows firms to reallocate resources to more strategic functions. For consultants, this means helping organizations navigate the integration of AI-powered tools into their workflows while ensuring that teams are equipped to maximize the value of this technology. The ability to provide real-time support and enhanced accuracy positions AI as a cornerstone of modern accounting operations.

Cloud-based solutions: empowering agility

The continued rise of cloud-based platforms is revolutionizing how financial data is managed and accessed. These solutions drive collaboration, efficiency and flexibility, particularly in hybrid work environments. For consultants, the focus lies in guiding clients on how to optimize cloud adoption, from vendor selection to change management. Firms that embrace these tools are better positioned to respond to dynamic client needs and scale operations seamlessly.

Real-time data and analytics: shaping better outcomes

With advanced analytics tools becoming more sophisticated, the ability to derive actionable insights from financial data is transforming decision-making. Predictive analytics empowers organizations to anticipate trends and proactively mitigate risks. Consultants help clients transition from reactive to proactive strategies by building the necessary infrastructure and skills. This shift not only enhances financial planning but also positions firms as strategic partners to their clients.

Data security and privacy: protecting what matters most

The increasing digitization of accounting processes brings heightened data security and privacy risks. Robust cybersecurity frameworks, including encryption and real-time threat detection, are essential to safeguarding sensitive financial information. Compliance with data protection regulations further complicates this landscape, requiring careful planning and execution. Consultants can offer critical guidance on how to strengthen security measures while maintaining operational efficiency. By prioritizing data security, firms can build trust and ensure long-term success in a digital-first environment.

ESG reporting: rising to stakeholder expectations

Environmental, social, and governance reporting is emerging as a non-negotiable component of corporate accountability. Stakeholders expect organizations to disclose their environmental impact, social initiatives, and governance practices transparently. This demand is reshaping reporting requirements and driving the adoption of new tools and processes to track ESG metrics effectively. Consultants have an opportunity to assist clients in aligning their reporting strategies with these expectations, ensuring compliance while enhancing their overall value proposition.

Master data management: ensuring data quality

As accounting firms increasingly use various software systems and technologies, maintaining data integrity and consistency across these platforms becomes crucial. Master Data Management is a key strategy to ensure that core data, such as customer and vendor details, account information and financial metrics, remain accurate and consistent regardless of their storage location or usage. With the increasing focus on data-driven accounting, the role of MDM in maintaining data quality and security is becoming increasingly important. Firms that implement strong MDM practices are better situated to manage the complexities of modern financial systems.

Navigating the road ahead

The road to 2025 is filled with complexity and opportunity. The role of consultants working in the accounting sphere is clear: provide insights, strategies and frameworks that enable organizations to thrive amid change. By focusing on areas such as AI, cloud technology, data analytics, cybersecurity and ESG reporting, consultants can help clients transform challenges into competitive advantages.

This moment is an opportunity for organizations to redefine their role in a rapidly changing marketplace. With their strategic perspective and expertise, consultants are uniquely positioned to guide this transformation and ensure their clients are not only prepared for 2025 but set up for enduring success. By addressing these pivotal areas, accounting professionals and consultants can work together to create a stronger, more resilient profession that is ready to meet the challenges and opportunities of the future.