Business Loans for Accounting Firms

Accounting firms are very popular businesses to start among people that are looking to provide bookkeeping, tax preparation, and auditing services to the general public. Business loans for accounting firms are generally easy to obtain. Most importantly, many accounting firms are able to generate extremely high gross margins from their services and these revenues are immune from negative changes in the economy. In any economic climate, people are going to continue to need tax preparation services while concurrently having clear and accurate books. This is especially true among small business owners that do not necessarily have the time to complete all the proper accounting on a daily basis. As such, accounting services are very good businesses from economic stability standpoint. They are highly scalable as associates can be quickly hired in order to render a greater number of services to the general public as well as small businesses.

The most common type of financing to use used for a development of a new accounting firm is usually a working capital line of credit. The startup costs that are associated with the new accounting firm are typically low given that the small office and a modest amount of marketing capital is really all it takes in order to commence revenue-generating operations. As such, many accounting firms can even go profitable within the first month of operation provided that the owner is able to simply generate billable hours to create income greater than the very small monthly expenses of the business. It is rare that an accountant will start the firm as a large-scale operation from the onset of operations. In many cases, the only times when an accountant seeks a large-scale business loan is that they are acquiring a practice from a third-party certified public accountant. In these cases, a much more complicated financial situation is provided given that the previous owners going to need to assist the new owner with transitioning the business. In many cases, the existing owner will also provide a certain level of seller financing to the buyer so that they are able to have a smaller traditional business loan when acquiring this type of business.

Given that many accountants are familiar with the day-to-day operations of these types of businesses, a business plan specific for this type of practice is usually pretty easy to put together for a financial institution. Most importantly, one of the key things to stress and any documentation that is going to go in front of a loan officer is that these businesses generate very high gross margins, they are immune from negative changes in the economy, and they can become profitable very quickly. The startup costs for a new accounting firm typically range anywhere from $10,000 to $50,000 depending on whether or not the individuals can have a receptionist or a number of staff bookkeepers from the Onset of operations.

Part of getting a business loan specific for accounting firm will also require the owner to provide a significant amount of information regarding the demographics within the local market. This examination should thoroughly focus on the number of small business owners that are within this market given that these are the primary users of local and regional accounting services. This information can be easily sourced from the US economic Census as well as the general U.S. Census. There are a few online resources that can assist in accounting with developing the demographic profiles that need to be shown to a loan officer when entertaining a business loan specific for an accounting firm.

In closing, professional practices are able to very quickly generate revenues and profits. As such, they almost always make very good candidates for business loans as well as lines of credit. One of the nice things that owning and operating accounting firms that they can usually sell finance as they progress through their expansion operations. This is something that we continue to touch upon as we develop this website and showcase information regarding how professional practices and related businesses can expand the revenues over the lifetime of their operation.

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