The hard part was deciding. Once you have concluded you are ready to leave, which is the subject of the first post in this series Breaking Away, Part 1, learning how to start your own accounting firm is mostly a sequence of concrete steps. None are complicated on their own. What trips people up is order and timing, because a few of these have real lead times, and doing them out of sequence can cost you a filing season.
This guide runs that sequence top to bottom: the legal foundation, the IRS registrations, insurance, the clean break from your current employer, your technology, and where the first clients come from. Work it in order.
Start with the entity, because everything else attaches to it.
Most solo practitioners land on an LLC, a professional LLC (PLLC), or a professional corporation (PC), and then decide separately how it is taxed. A sole proprietorship is the default if you simply start working, and it is the cheapest to run, but it puts your personal assets on the line. The catch is that your state may not give you a free choice.
Two things to carry out of that table. First, no entity shields you from a malpractice claim on your own work. That is what insurance is for, and we will get to it. Second, the entity and the tax election are separate decisions. An LLC, PLLC, or PC can elect S corporation treatment by filing Form 2553, which once your profit is high enough can trim self-employment tax by splitting your take into a reasonable salary plus distributions. State rules dictate which entity you can even use: California, for one, bars CPAs from LLCs and routes them to a PC or a registered LLP. Call your Secretary of State or an attorney before you file anything.
Then register the firm itself, which is the step people forget. Beyond forming the entity, most state boards of accountancy require the firm to register separately and set rules on ownership and naming. In New York, for instance, a firm can call itself a CPA firm only if all owners are licensed CPAs, and firm registration renews every three years. If you plan to perform attest work, you will also need to enroll in a peer review program. Get an EIN from the IRS, open a business bank account, and keep firm money entirely separate from personal money from day one.
If you prepare returns for compensation, you already hold a PTIN. Confirm it is current, because it expires every December 31, and the 2026 renewal fee is $18.75. The PTIN identifies you personally and follows you, not the firm.
The EFIN is the one to start early. You cannot e-file client returns without it, and it identifies the firm rather than you. You apply through IRS e-Services: create an ID.me-verified account, complete the e-file application with details on the firm and every principal and responsible official, and select Electronic Return Originator as your provider type. As a licensed CPA or EA you enter your credential and skip the fingerprinting that non-credentialed applicants must schedule. The IRS then runs a suitability check covering credit, tax compliance, and criminal background, and approval can take up to 45 days. Unlike the PTIN, the EFIN carries no fee and does not expire annually. Apply in the fall, not in January, or you will open the season paper-filing.
Because no entity shields your own work, professional liability insurance, also called errors and omissions or E&O, is not optional. Cost tracks your service mix. Insureon's 2026 data puts the average E&O premium for accountants near $45 a month, with most solo and small firms under $100 a month, though audit work runs materially higher. E&O does not cover a data breach, so if you hold client Social Security numbers and financial records, and you do, carry separate cyber liability coverage, which also maps to your obligations under the FTC Safeguards Rule.
The cheaper and more powerful protection is a signed engagement letter on every engagement, without exception. It defines scope, which is your first line of defense when a client later claims you were supposed to do something you never agreed to. Some carriers will not even quote a firm that cannot produce a standard engagement letter. Use one for every client and every service.
Before you take a single client, reread what you signed. This is where a smooth exit turns into litigation.
The federal picture is settled for now: the FTC's 2024 non-compete ban never took effect, and the Commission formally removed the rule in early 2026, so enforceability runs entirely on state law. For most accountants, though, the non-compete is not the operative clause. The non-solicitation provision is, because it governs whether you can approach, or even accept, clients you served at the firm. Read it closely, know which relationships you can legally and ethically pursue, and if anything is ambiguous, spend an hour with an employment attorney before you give notice. Transfer client records and working papers by the book, and give professional notice. The goodwill you leave behind is often where your first referrals come from.
A modern solo firm runs on a handful of tools, and you do not need all of them on day one. Match them to your services and your niche.
That last item is the gap most new owners underestimate, and it is where a surprising amount of solo time disappears.
You are set up. Now you need work, and the good news is you already know where the first of it lives.
Start with your warm network: the clients you can legally and ethically bring over, former colleagues, friends, family, and your state society contacts. From there, referrals are the lifeblood of a small firm, so deliver well and actually ask for them. Build relationships with referral partners who see the same clients you want, attorneys, financial advisors, bankers, and larger firms that pass along work they do not want. Stand up a basic online presence too, a simple website and a Google Business Profile, so you look real when someone searches your name. One caution as the work comes in: watch client concentration. If two or three clients become most of your revenue, a single departure can sink the year.
On pricing, decide your model before you quote anyone. The profession has moved away from pure hourly billing toward fixed-fee and value-based pricing, which rewards efficiency instead of punishing it. Price to your target income and the value you deliver, not to the rack rate you carried at your old firm. The most common early mistake is underpricing out of fear. Raising prices later is harder once clients are anchored to a low number, so set rates you can sustain and reprice every year. Resist the pressure to niche on day one, as well. Most firms find their specialty by taking broad work first and narrowing later, which is the subject of the next post in this series.
However you assemble the stack, you are now your own research department, your own memo writer, and the one keeping every client's work straight. That is the gap Marble is built to close.
Research. Ask a federal or state tax question in plain English and get a citation-backed answer that links directly to the controlling Code section or IRS guidance, so you can stand behind a position without a firm library behind you.
Drafting. Turn that answer into a client-ready memo or explanatory email in minutes, then review, adjust, and send.
Projects. Keep the research and client communications for each engagement organized in one place, instead of scattered across your inbox and desktop.
Less than most people expect. Entity formation typically runs $100 to $700 depending on your state and structure, and total startup costs generally land between $2,500 and $25,000, driven mostly by your software and whether you take on office space. The larger financial question is not startup cost but personal runway while you build a book.
Not to offer bookkeeping, tax preparation, or advisory services, which many enrolled agents and non-credentialed preparers provide. You do need the credential to call the firm a CPA firm, to hold out as a CPA, and to sign off on attest work such as audits and reviews, and state boards set the specific rules. If you are not a CPA, be precise about how you describe your services.
Plan for up to 45 days from the date the IRS receives your complete application, since the suitability check takes time and applications filed close to filing season tend to move slower. As a credentialed CPA or EA you skip the fingerprinting step, which helps. Apply in the fall so the credential is in hand well before the season starts.
Often, but check two things before you do. Your employment agreement may restrict outside practice or soliciting the firm's clients, and that governs what you can take on. Beyond the contract, running a practice during someone else's busy season is a real time commitment, so be honest about capacity. Many people start with a small book on the side and go full time once the numbers support it.
