A private accounting or tax law practice can be an easy and rewarding small business opportunity. First, you should explore whether or not you have the personality traits that can make you successful when you launch a private practice. Second, you should avoid making some common rookie mistakes.
Before an accountant can set up a private practice, most states require the accountant to earn the CPA designation. A tax attorney should have at least a J.D. degree, and you can try this web-site if you’re interested in earning a tax llm degree. While a J.D. qualifies you to practice in the U.S., an LL.M degree introduces you to international tax issues so that you can advise clients from all over the globe.
Qualities of Successful Private Practice Owners
Whether you’re a recent graduate or a seasoned corporate professional, you should evaluate whether you possess the most recognized qualities of successful private practice owners.
- You’re passionate. Being passionate about your field and about what you can offer to the community should be your primary motivation for starting your own practice. Motivations like hating your 9-to-5 job and throwing off the yoke of your boss won’t be enough to sustain you. When you believe in your private practice with your heart as well as with your mind, then you can persuade potential clients or referrers to support you.
- You have a balanced viewpoint regarding risk. Anyone who starts a small business has to deal with a certain amount of risk, so don’t hesitate to take certain chances if you’re confident that you can succeed. At the same time, you should know when it’s time to give up on a toxic client relationship or to stop offering a service that’s not paying off.
- You’re uncompromisingly ethical. Accountants and attorneys should operate according to the highest ethical standards. A reputation for ethics is crucial when you’re trying to attract clients. Also, you’re responsible for checking with trade organizations and state regulatory bodies to ensure that you’re following all of the requirements for your practice. No one else will be looking over your shoulder.
- You’re tenacious. You may not make as much money as you’d like to in the first few years of your practice, and you may make mistakes that will make it harder to get your firm off of the ground. Make sure that you have the grit to persevere through those setbacks.
- You’re comfortable with technology. Any private practice requires owning a telephone and a computer. You can save a lot of money if you have Web development, unified communications and marketing technology savvy.
Common Mistakes to Avoid
You will inevitably make mistakes when you start your practice, but avoiding these common pitfalls can spare you from unnecessary headaches.
- Playing every role in the business. If you think that you can be your own marketing consultant, payroll specialist, office manager and bookkeeper, think again. Be realistic about what you can do, and hire staff to support your vision.
- Providing substandard service. Make sure that you’re responsive to your clients and that you don’t cut corners to save time. When you make mistakes, admit them and do what’s necessary to remedy the situation.
- Taking every available client. Only accept clients that are willing to pay what you’re worth. Take the time to screen potential clients and to consider their lifetime value before accepting them.
- Hiring too quickly. Take the time to screen your employees. Call their references, interview them thoroughly and don’t be afraid to ask colleagues for a second opinion. Also, make sure that their personalities complement yours. As your business grows, these people will need to fit in with your firm’s culture.
- Failing to prepare your family. If you’re single, then you don’t have to worry as much about working 80+ hours every week. However, if you have a partner or children, then you’ll need their support. Make sure that they have realistic expectations about the time pressures and financial demands of starting a private practice. At least in the beginning, you’ll probably work longer hours than you ever have before.
Owning a private practice takes drive and stamina. However, when you possess the qualities of successful private practice owners and the wisdom to avoid common mistakes, you have a great chance of succeeding.
Image from Flickr’s Creative Commons by 401(K) 2013
About the Author: Jared Crawley, J.D., LL.M, provides consulting services to tax professionals that want to start their own private practices.