To start a CPA firm, you assess whether ownership fits you, choose a niche, confirm licensing and firm registration in your state, budget 24 months of cash flow plus a 20% cushion, build a cloud and AI-ready tech stack, and write a business plan you then stress test. You should also weigh buying an established practice against starting from scratch.

Are you exploring the idea of starting your own CPA firm? Or perhaps you are ready to reinvent the one you have? Either way, this checklist from Poe Group Advisors covers the key focus areas: defining your target market, outlining a business plan, knowing your financial requirements, and understanding a market that has changed a lot in recent years.

How the market has changed for new CPA firms

Four shifts should shape your plans before you sign a lease or buy software.

Private equity is reshaping the profession. CPA Trendlines has tracked 527 institutional investments and acquisitions involving accounting firms from 2020 through June 2026, including at least 386 backed by private equity. Larger firms are consolidating fast, which leaves room for focused firms that wish to remain independent. Independent firms stand to acquire great staff and clients that do not choose to stay with PE purchasers. .
The talent shortage is still real, but licensure is opening up. Most states have adopted or are moving toward an alternative pathway: a 120-hour bachelor’s degree plus two years of experience instead of 150 hours plus one. The 150-hour route remains available, and mobility rules are still settling, so check your state board before you hire across state lines.
AI is changing the work. Routine compliance and data entry are increasingly being automated. New firms that build advisory, planning, and niche expertise into their model from day one have a pricing advantage.
The succession wave means more firms are for sale. Many owners are reaching retirement age, so buying an established practice is a realistic alternative to building from zero. Note that SBA 7(a) loans now require at least a 10% equity injection for both startups and acquisitions, with tighter limits on how seller notes count toward it.

Step 1: Self-assessment and pre-planning

Start with a serious look at whether starting a CPA firm is the best move for you. Should you work solo or build a full firm? Or would buying an existing CPA firm with established staff, processes, and clients get you there faster?

Should you start your own CPA firm? Not everyone is cut out to own a business. For a deep dive, download our Profile of a Successful Practitioner. Here is a short list of what it takes to thrive:

Adequate experience in public practice
Motivation and determination to push past the natural ceilings you will hit
Good work habits. Effort alone won’t cut it, even in a small firm. You need to get results.
Communication skills to work well with clients, prospects, and staff
A positive attitude
Comfort with technology and change, since your tools will keep evolving

Confirm your licensing and registration. Check your state board of accountancy for CPA firm registration, peer review requirements if you plan to offer attest services, and entity rules (most new firms choose a PLLC or professional corporation). If you hold a license through the new 120-hour pathway, confirm how it is recognized in any other state where you plan to serve clients.

Create your vision. Planning makes everything easier. Answer these questions to outline your vision:

How would I describe my ideal practice model: in-person, hybrid, or fully virtual?
What type of work will I focus on?
What will we not do?
How much time do I want to work in the practice?
What are my 5-year revenue goals?
How would I describe my ideal client?
How would I describe my ideal employees?

Calculate how much capital you need, then add 20%. Trust me, you’ll probably need it. Budget your first 24 months by month. CPA practices have very seasonal revenue, so a 24-month cash flow projection helps you anticipate the dips and manage expenses. If you plan to use an SBA loan, expect to put in at least 10% of total project costs yourself.

Step 2: Market research and tactical planning

Understand the market you plan to serve and build a marketing plan that brings in new clients. With a virtual model, your market may be national rather than local, which makes your niche even more important.

Understand the landscape. Know your competitors and the general business environment. A practice is easier to start in a region with strong economic growth, or in a niche where demand outpaces supply. As private equity-backed firms consolidate, many small business owners are looking for a CPA who still knows them by name. That can be your advantage.

Define your target market. One of the biggest mistakes we see owners make is trying to be all things to all people. It’s a recipe for burnout, low profit, and long hours. A very wise business owner once told me, “Niche rhymes with rich.” You may need to be a generalist at first, but the more specific your plan, the better your marketing and pricing will work. Ask yourself:

What industries do I enjoy, and what are their accounting and tax needs?
Which past clients have been ideal, and why?
Where can I add the most value: tax planning, estate work, CFO and advisory services, or a specific industry?

Develop a sales and marketing strategy. Sales is an art. One of my favorite books on the subject is The Patterson Principles of Selling, based on the century-old strategies of John Patterson, “The Father of American Salesmanship.” His best line: “People don’t like to be sold, but they love to buy.” A strong website is still the cornerstone of your marketing. Other channels to consider:

Clients from your previous firm, if you are not under non-solicitation or non-compete restrictions
LinkedIn and other social networking
Google search, both organic and paid
Visibility in AI search tools like ChatGPT and Google AI Overviews, which reward clear, expert content that answers real client questions
Community involvement and traditional networking
Referral marketing
Writing, speaking, and podcasting
Community networking

Step 3: Develop your vision for your firm

Know the why, what, and how of your firm. Why do I want this? What are our target goals? How will we serve our target market better than anyone else? Your answers set the baseline for culture, processes, and tools.

“If you don’t like the road you’re walking, start paving another one.” Dolly Parton

Design the client experience. Most clients want someone knowledgeable and easy to work with. Personal touches go a long way. If you want top clients through referrals, first provide service worthy of a referral. At Poe Group Advisors, when a right-fit client is happy and receiving value, they are glad to refer others. All we have to do is ask. The book Giftology has great ideas here.

Define your firm culture. Start with the values that will guide your team. Ours are published on our website. Values matter more than office hours or a dress code. Attracting and retaining talent is still a top concern for firm owners, and a fun, productive environment where people learn and grow is key. Flexibility and remote options now matter as much as pay to many candidates.

Plan your schedule. Burnout is real. When I started Poe Group Advisors in 2003, I worked a lot in the first couple of years and it was a blast. But that pace isn’t healthy forever, and it can stunt your firm’s growth. Some of the most successful CPAs we know take significant time off. To learn more, read What Would Happen if You Started Working Less?

Choose your office model. Many new firms now launch fully virtual or hybrid. Tie your choice back to your vision and your ideal client.

Choose your technology. This is a game changer. Cloud-based tax, bookkeeping, practice management, and client portal tools let you serve clients anywhere. AI tools can now handle much of the data entry, document review, and drafting that used to require staff hours. Choose systems that scale so you won’t have to switch as you grow, and budget for cybersecurity and data protection from day one, including the written information security plan the IRS expects of tax preparers.

Develop your pricing model. In our opinion, value pricing is the best way to go, especially as automation shrinks the hours behind routine work. For the definitive take, see the work of Ron Baker, the thought leader on value pricing in the accounting industry, who wrote a guest post for us years ago.

Develop a client selection process. Consider:

Ease of doing business
Fit with your planned services
Financial stability
Integrity and reputation in the community
Size of opportunity

Decide how you will get paid. Cash flow is a key concern when starting out. Avoid carrying accounts receivable if you can. Many firms require payment on delivery of tax returns and use automatic billing for monthly and subscription work. If you do carry receivables, follow up quickly and consistently. Part ways with clients who don’t pay.

Step 4: Write a business plan, pick it apart, and make a backup plan

The right plan keeps a new firm on track. A formal business plan should cover projected revenue, services, the skills you bring, startup and operating costs, and other key variables. Build backup plans for different scenarios too. Agility is a real advantage for a new owner.

“Entrepreneurial business favors the open mind. It favors people whose optimism drives them to prepare for many possible futures, pretty much purely for the joy of doing so.” Richard Branson

Develop a business plan. Even if you don’t need one for financing, writing a formal plan forces you to be clear about how you will establish and grow your practice. It lets you make your mistakes on paper instead of in practice. Regulation keeps evolving, including licensure pathways, peer review, and the AICPA and NASBA response to private equity ownership. Check with your state board, your state society, and the AICPA to confirm which requirements apply to your firm.

Identify your stumbling blocks. Once your plan is solid, poke holes in it. Ask others to find weaknesses. Spend at least 10 minutes listing every obstacle you can think of, then plan your way through each one. Ideas need an incubation period: strong enough to withstand real objections, but not so fixed that there is no turning back.

Consider an acquisition. Admittedly, we are not completely objective here, since Poe Group Advisors sells CPA firms. But many buyers come to us after getting a practice off the ground and seeing the value of buying one that is already established, with recurring revenue, trained staff, and loyal clients from day one. With so many owners now planning their exits, there are more right-fit practices on the market.

Consider a partnership. Partnerships can be tricky. Just ask anyone who has had a bad one. But they can also be an excellent choice. The best partnerships pair complementary skills with clearly divided roles. One partner may excel at business development, while another is great at developing talent. Both are essential to growth. Sometimes 1 + 1 can be a lot more than 2.

Frequently asked questions about starting a CPA firm

How much money do you need to start a CPA firm?

It depends on your model. A virtual solo practice costs far less than a firm with an office and staff. Build a month-by-month budget for your first 24 months, since tax season makes revenue highly seasonal, then add 20% as a cushion. If you finance with an SBA 7(a) loan, plan to contribute at least 10% of total project costs.

Do you need 150 credit hours to become a CPA and open a firm?

Not in every state anymore. Most states have adopted or are adopting an alternative pathway of a 120-hour bachelor’s degree plus two years of experience. The 150-hour pathway remains available. Your firm must also register with your state board of accountancy.

Is it better to start a CPA firm or buy one?

Starting from scratch gives you full control but means slow early revenue. Buying an established practice gives you clients, staff, and cash flow on day one. Many owners are retiring, so there are more practices for sale than ever. The right choice depends on your capital, timeline, and appetite for building.

How long does it take a new CPA firm to become profitable?

Most new firms should plan for at least 24 months of thin or uneven cash flow. A clear niche, value pricing, and payment on delivery all shorten that runway.

How is private equity affecting small CPA firms?

Private equity has backed hundreds of accounting firm deals since 2020, mostly among larger and midsize firms. For a new small firm, that consolidation creates opportunity: clients who want a personal relationship, and experienced staff looking for a smaller firm culture.

P.S. Whenever you’re ready, here are 4 other ways we can help

Whether you are building, buying, or planning your exit, Poe Group Advisors can help you navigate it.

Seller FAQ: Answers to the questions sellers are asking, from practice value to timing.
Strategic Guide to Selling Your CPA Practice: The how-to of selling a CPA firm.
Accounting Practice Academy™: Our 8-week workshop connects you with a community of established firm owners who will help you benchmark, reduce your owner hours, and raise your bottom line. Email ibrennan@poegroupadvisors.com with “APA” and we will fill you in on the details.
Exit strategy call: Email bball@poegroupadvisors.com with “strategy call” or request a call here.

Sources

CPA Trendlines, Private Equity Brings in the Big Guns (July 2026): 527 institutional deals, 386 PE-backed, 2020 through June 2026
UWorld, CPA licensure pathways: 120-hour pathway adoption; 150-hour route remains
CFO Dive, Tracking CPA licensure paths: state legislation overview
Whiteford, SBA SOP 50 10 8 key changes: 10% equity injection; seller note standby limits

How to Start a CPA Firm: Top Checklist Items | Poe Group Advisors