You did it. You went out on your own, started your own accounting practice, and now you’re on to the next step: growth.
But before you add the first employee to your accounting firm, there are some precautionary steps you should take. You’ll also want to assess how ready your business is, and how you plan to grow your clients to support another salary.
Don’t worry, we’ve done the research. Here’s what you should consider before you add another employee to your accounting firm.
Deciding when to bring on a new hire
How do you know when it’s time to hire someone? For one, your schedule. If you’ve booked more clients than you can handle (even with the extra hours you’re putting in each week), it’s time to bring in some help.
On the other hand, if you have growth goals for that year that can only be accomplished with another professional, it might also be time to hire.
Knowing when to hire is a balance of future planning for your business, and assessing profitability and utilization. However, the most common time to hire an employee is after the business owner has reached the point where existing without another colleague is impossible. The breaking point, if you will.
This new hire may be another CPA or accounting professional, or you may be looking to hire an assistant, client relationship manager, office manager or another key position that will streamline how your firm operates.
Ultimately, this person should alleviate the added tension while improving another aspect of your business.
First, check in with your business plan
You’ve likely already outlined how you plan to grow your business when you first started it. Now is a good time to revisit your business plan and see whether you’re on track, ahead of schedule, or behind your estimated timeline for growth.
Consider the factors that have influenced your growth so far. Was your business plan accurate in describing how you would attract and retain clients? Are there areas of improvement you need to make before bringing another professional into the mix?
There may be lessons in how you planned your business versus how your business operates that you can apply to this next phase.
The financial side
If you’re considering hiring, you likely have the funds set aside or at least planned for at this point. You’ll need to cover not only salary and benefits, but also the cost of hiring and onboarding — an estimated $4,000 on average.
Here are the expenses you should expect:
1. Payroll. Are you hiring a full-time salaried employee? Hourly staff? Contractors or consultants? The type of professional you bring on will help determine salary, so research what’s competitive in your area and how your business plans to stand out.
Paying your team is one expense to plan for, as is the act of paying your team. Running payroll comes with its own investment, whether you use software, hire a bookkeeper, or use your own time to check hours and issue the right payments.
In addition to salary, payroll can include taxes, retirement contributions, health insurance premiums or other benefits, which we’ll cover next.
2. Benefits and insurance. Are you planning to offer health insurance? Check with your state and federal requirements, as there may be benefits you might not know about. Some cities are enacting paid sick leave, though the size and location of your business might influence whether or not you’re included in that.
You’ll also need to make sure your business insurance policy is ready for another team member, which you can clarify by talking to an insurance representative.
Speaking of, there are a number of legal steps you should consider before hiring. Keep reading for more.
Make the decision legally sound
While there are plenty of legal considerations before hiring, it’s best to defer to a business attorney to get specific guidance for your practice.
To start, check out
Take hiring seriously
You’re ready to start searching. As you’re writing the listing, setting the compensation, and requirements, and interviewing candidates, you’ll need to consider how one hire will impact your business.
One pitfall of starting your own accounting firm is hiring the wrong person. Do your research, check references and be picky when it comes to bringing on another person. The key is to attract as many candidates as possible so you can get a better idea of each person’s strengths and potential weaknesses. Even if you’re only hiring one person now, it doesn’t hurt to have other candidates in mind in case you hire again, sooner than expected.
Plan to spend some of your hiring budget on advertising listings or appearing on high-quality job search sites.
Create a handbook and onboarding documents
Your employee’s first day should feel like a smooth transition into your office. You can ensure this by preparing documents in a handbook format, so they can revisit the documents as needed whenever a question comes up.
Key training docs include everything from login information and the software used to contacts and process outlines. If your new hire will use something in the first week, make sure any relevant details are included in the handbook. Think email, client communication tools, project management, billing and invoicing, etc.
Start with the most critical tasks they’ll be doing and then outline the steps for completing each one.
This also minimizes your risk of slip-ups. The more detailed you can be early on, the more confident your new hire will feel in their role.
When you’re ready, go for it
It can be difficult to know when it’s the right time to hire someone at your accounting firm. If you’ve considered everything here (and more), you’re likely on the right path to hiring.
And if you’re like most business owners, even considering hiring in the first place means you’ve likely taken on more work than is comfortable.
Enjoy the process of growing your firm as best you can while being realistic about what you can support. After all, adding a new hire is a big accomplishment.
