At some point in the journey of building your own accounting firm, you’ll likely face the pivotal challenge of deciding when and how to hire your first employee. In this guide, we explore the strategic and financial considerations of building a team for your tax firm, from understanding the hiring process to outlining the unique solutions that Harness Wealth can provide.
Table of Contents
- Knowing When To Hire Your First Employee
- Deciding Between an Accountant and a Tax Assistant
- Accounting Industry Salaries in 2023
- Budgeting for the True Costs of Your First Hire
- Hiring Challenges When Operating Solo
- Harness Wealth: Your Strategic Partner in Growing Your Tax Firm
Knowing When To Hire Your First Employee
When your client base expands to the point where it’s challenging to keep up with demand, it might be the right time to start thinking about adding a new employee to your team. Adding any new team member is a major decision that will require careful financial planning and a complete understanding of the specific tasks you need to be covered. So, as a first step, look for signs that you may be overworked, for example, turning away new business or feeling overwhelmed by administrative or other non-core responsibilities.
Deciding Between an Accountant and a Tax Assistant
The first hire you might consider adding to your team is another accountant. By adding another CPA to your company, you will, of course, be able to serve more clients, but it will also likely result in more administrative tasks.
Alternatively, you could consider hiring a Tax Assistant who would focus more exclusively on the administrative and client servicing needs of your firm, enabling you to focus solely on your accounting work.
To help you reach an informed decision, consider the following:
- Business Goals: Are you looking to expand your client base rapidly, or are you more focused on providing a high level of service to a smaller, more select group of clients?
- Strengths and Weaknesses: Are you more comfortable with client-facing work or the nitty-gritty of accounting? Your strengths can help you decide which tasks to delegate.
- Task Analysis: Make a list of daily, weekly, and monthly tasks. Which tasks can only be handled by a CPA, and which can be handled by an assistant?
Accounting Industry Salaries in 2023
When you do have your answer on which team member to hire, you’ll, of course, need to understand if you can afford their salary.
Of course, for either role, there are always outliers, and wages can vary based on a number of factors, including geography, as we’ve outlined in two charts below.
CPA salaries can range rather broadly from $50,000 to $125,000. Here are the 10 highest-paying states for CPAs in 2023.
|Average CPA Salary (Source: Zippia)
|District of Columbia
Tax Assistant salaries can range from $50,000 to $65,000 annually, similar to that of a Staff Accountant. Here are the 10 highest-paying states for Tax Assistants in 2023.
|Average CPA Salary (Source: Zippia)
Budgeting for the True Costs of Your First Hire
Beyond the basic salary, the true cost of hiring an employee encompasses a range of additional expenses. These can include:
- Health Insurance
- Retirement Plans
- Paid Time Off
- Workers’ Compensation Insurance
- Training and Development Programs
Before making your first hire, consult an employment attorney to understand the legal obligations and potential liabilities. This will help you create a comprehensive budget that accounts for all potential costs.
Hiring Challenges When Operating Solo
When you’re a one-person operation, the hiring process can be particularly daunting. You’re not just the CEO–you’re also the HR department, the interviewer, and the decision-maker.
To help you find qualified candidates, you could consider working with a professional recruiter, but that would significantly increase your hiring costs, as recruiters typically take anywhere between 20 to 30% of a new hire’s first-year salary.
Furthermore, in a tight labor market, it may be even more difficult to persuade a potential new hire to leave the stability of a larger firm to join a small business. In situations like these, Harness Tax and its community of experts can offer a competitive edge, both in networking with other accountants and in learning from others about how to best grow your new tax firm.
Harness Wealth: Your Strategic Partner in Growing Your Tax Firm
If you’re looking for support in growing your tax firm and are not quite ready to take on full-time employees, consider joining Harness Tax, a modern platform offering best-in-class technology and support to help you meet your growing needs.
When you join Harness Tax, you gain access to a modern software suite and an in-house support team to help with basic needs, from coordinating client servicing to tax return e-filing and other administrative tasks. In addition, our Concierge team will work with prospective clients to schedule meetings and help you manage the sales process to not only match you with better clients but also close more deals.
Hiring new employees for your tax firm is a significant milestone, and it’s important not to rush to any decisions. With the support of Harness Tax, you’ll be equipped with the resources you need to scale at the pace that works for you. If you’re interested in working with Harness Tax to grow your accounting business, schedule a call with our team today.