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A Career In Professional Practice

alt text hereThis brief overview outlines the major issues that are likely to influence your decision to enter a career in professional practice.


Making the Decision

Professional practice is a rewarding and demanding venture. Successful practitioners are entrepreneurial and keep up-to-date in their fields and areas of expertise. Yet, even the right combination of experience, education and good work habits is not necessarily a guarantee of success.


Practice Options

There are many ways to practice. Following are some ways and factors to consider:

  • Sole practitioner: start-up costs must be borne alone; sufficient financing is a necessity.

  • Sole practitioner, home-based business: low overhead; difficult for some to work at home; some clients may prefer a professional office setting.

  • Partnership: know your future partners well; have a formal written agreement to resolve disputes and make succession arrangements.

  • Cost-sharing with a CPA or another professional: retaining your own fees and clients, but sharing space and expenses.

  • Professional corporation: for your public accounting practice.

  • Preferred areas of practice.

  • Evaluate your skills and experience.

  • Select services you can provide competently.

  • Resist the temptation to provide all services to all clients; be selective.

  • Serve particular industries (such as retail), or provide particular services (such as financial planning).


Practice Development

Ironically, having a professional practice will not enable you to sit in your office and "do accounting" all day. The success of your practice will depend in part on your marketing skills, and your ability to meet people, to listen to their needs and to communicate well. You will spend between 25 and 40 per cent of your time (more in the first year of your practice) on practice development, marketing and administration,--not accounting. If possible, take on contract work for an established firm.

Practice development is an ongoing process. You will rely on most of these sources throughout your professional practice career:

  • Word of mouth, satisfied clients.

  • Personal and business contacts.

  • Referral sources (such as bankers and lawyers).

  • Raising your profile through community and industry organizations, writing articles and giving talks.

  • Buying an existing practice or block of clients from another practice.


Financing

Adequate financing is essential for establishing a profitable firm. To determine if you have enough capital, or to calculate the amount of start-up capital, you will need to:

  • Establish hourly rates based on the services you will provide, i.e., what other CPAs are charging, and local market conditions.

  • Develop a business plan.

  • Develop a three-year cash flow.

  • Develop a revenue forecast based on a reasonable number of billable hours (60-75 per cent is the maximum number of billable hours).

Plan to spend at least 25 per cent of available working hours on practice development, marketing, continuing education and practice management time that cannot be billed to clients.


Office Location and Premises

Many factors come into play in your site selection decision, including:
 

  • The implications of a home-based business on practice development and your work environment.

  • Location factors: near client base, in downtown core, in new building, near your home.

  • Sufficient space: to start out, and for expansion.

  • Overhead costs: rent, utilities, maintenance.

  • Facilities and convenience: parking, transportation, safety and comfort.

  • Office layout and design: your office space for staff, reception area, files, equipment and storage.

  • Décor: to reflect the image that will attract the clients you want.

If you decide to lease office space, enlist the services of a real estate agent.


Practice Administration

Basic office procedures, staff training, and billing policies are crucial to the efficient operation of your practice. Some of these administrative issues include:

  • Office procedures and staff training: handling cash, mail, filing, reception.

  • Employment contracts for your staff.

  • Engagement contracts with your clients.

  • Billing: time and cost records, credit terms, monthly billing, advances, retainers.


Financial Statements

Financial statement preparation is a widely recognized service provided by CPA firms. In Ontario, unlicensed CPAs prepare only one type of financial statements, with a Notice to Reader, also known as a Compilation Report.

With the passing of the Public Accounting Act, 2004, only licensed CPAs can perform review engagements and audits for third party use for a fee.


Income Tax Services

Practitioners provide income tax services, including compliance and planning issues, to corporations, partnerships, trusts and individuals.

Corporate tax services include preparation of federal and provincial tax returns, taxation of a company’s shareholders and complex tax issues such as Section 85 rollovers, foreign tax credits, or research and development credits. Many corporations do not employ a staff expert on tax matters; instead, they have a working arrangement with a CPA firm to handle these complex tax areas.

Tax services provided to individuals can range from preparing personal income tax returns to highly complex areas such as rollovers, family trusts, non-resident taxation and offshore tax planning.


Management Consulting

Many CPA firms offer a variety of management consulting services. Some typical management consulting services are:


Computer Consulting:

CPA firms offer computer consulting either directly or in concert with local computer experts. Consulting can include hardware and software requirements or general recommendations on incorporating technology into the client’s business operations.

CPA firms also provide computerized payroll services.


Estate and Financial Planning:

Some CPAs specialize in helping clients plan their finances for retirement, death and succession planning.


Business Valuations:

Business valuation is a specialized area of practice that is offered by a small but increasing number of CPA practitioners, either directly or through a CPA firm.


Sales Tax Consulting:

Many CPA firms assist clients with taxes, including knowledge of industry norms and practices, general advice, or a review of a specific issue or assessment.


Mergers and Acquisitions:

When a business plans to expand through a merger or an acquisition, CPA firms can provide advice and assistance.


Other:

When clients have specific needs, CPA firms often employ individuals with particular skills. For example, in recent years white collar crime has proliferated, particularly fraud committed through computer technology. Detection and further prevention of these crimes is a specialized skill. Many CPA firms include employee(s) with a certified fraud examiner (CFE) designation to offer specialized service to clients in this area.