Sunday, August 8, 2010

My Own Accounting Firm…The Clients and the Money

In my last post, I wrote about what the stress is like if you have your own accounting firm. In this post, I write about my clients and the money.

The Clients

Well, I’m just a small firm in this vast world of accounting / auditing firms. My clients are usually private companies and individuals, most of them local entities in the retail business. I do mostly simple accounting work like bookkeeping, taxes, closing the books, preparing the financial statements and the like.

I already have over 70 accounting clients. And no, I’m not responsible for obtaining majority of these clients. I actually inherited the firm from my father who died several years ago. I took over after he died and, since I was working in another city when he was still alive, I had almost zero knowledge about the firm and its clients. Fortunately for me, I had my 8 – year experience to back me up and I have to say that I was able to keep majority of his clients plus gain a few on my own.

What about auditing? Well I have a few audit clients. I don’t handle a lot since I’m the only one in the firm who can sign off on the audit reports and I can’t physically (and realistically) go through all of them during the busy season since I already have the 70 that I need to close during this time.

So, clients? Lots of small to medium – size private entities (usually family – owned and individually – owned), usually local companies engaged in the retail business.

The Money

Now we come to the most important aspect – the earnings. I can’t divulge of course. But my firm is earning more than enough to cover its expenses plus my personal expenses. My annual net earnings are more than my annual net salary when I was still working in a big accounting firm as a manager.

But…

I have to be honest. If I want to purchase new office equipment (such as computers, photocopiers, and such), I have to literally look for ways to raise the funds to buy these equipment. Right now, there’s little room in my firm’s cash flows to buy these items anytime that I want to. This may not be the case all the time but I think I can safely say that a lot of not – so – big accounting firms also experience this.

Another but…

If you want to become a partner of the bigger firms, I say stick to those firms (unless you will start a firm that you hope will compete with these firms someday). My net earnings are not in the same category as the earnings of the partners of these firms. Far from it.

This doesn’t mean that I want to quit what I’m doing right now and go back and become a partner of a big accounting firm. Having my own accounting firm is actually a trade – off between the time versus the money; the stress / pressure versus the money and the work – life balance versus the money. I chose the former, some people may choose the latter.

And this ends my posts on having my own accounting firm. To the two who commented in my previous post, hope I answered your questions. Thanks for your comments / questions!

4 comments:

  1. Thanks bud, great post. I am the #2 anonymous from the last post, and this is a wonderful and honest viewpoing. Something that is really hard to get. Thanks for the insight, and all the best with everything.

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  2. It sounds like you definitely have your work cut out for you! If you do need office supplies always be on the lookout for liquidation sales and auctions where you can buy stuff for pennies on the dollar.

    Good Luck!
    Joe
    --
    CPA Exam Online

    ReplyDelete
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