How much does a CPA practice cost to start?

What does the opening budget cover?

The assumed office is 800 square feet at $1,800 monthly rent, equivalent to $27.00 per square foot annually before other charges. No particular local lease has been quoted. The workstations support preparation, while the owner has a laptop and a separate client/review meeting area. Four computers cover the owner, two eventual permanent preparers and a seasonal position; there are three preparation stations, so the hardware and desk quantities describe different functions.

Pre-opening work is paid. The budget includes 100.0 owner hours for engagement design, client intake and review processes, plus 100.0 preparer hours for setup and training. The owner is not treated as free labor. These hours are separate from the operating salary that begins in month one. Licensed-owner readiness is assumed, so degree costs, CPA examinations and initial personal licensure are outside scope.

Where does the opening money go?

Book presentation conservatively expenses pre-opening payroll, formation, implementation, marketing and spent contingency. Hardware and furniture are depreciating assets; lease deposit and software prepaid remain assets. A rounded display can create a small apparent sum difference: the actual sources-and-uses check uses unrounded inputs. The opening cash reserve is funded once and remains available for payroll and operating payments.

How much cash remains after opening?

The model holds $60,000 at launch and includes no opening receivables or client deposits. Base recurring invoices collect 85.0% in the service month and the remainder the following month. Base tax/advisory invoices collect 50.0% in the bill month and the remainder next month, after the assumed 0.5% loss allowance. A retainer policy could alter this timing, but client tax money and trust funds must not be treated as firm revenue.

Base cash reaches a minimum of $48,823 over the full forecast. The lower case first becomes negative in month 8 and ultimately needs an additional $286,942 to cover the most negative month-end balance if every modeled commitment continues. Those later negative figures are unfunded obligations. They do not imply that an owner can keep paying staff without new capital or a change in the operating plan. A larger reserve helps liquidity; it cannot repair negative unit yield or weak demand.

Which commitments need real proposals?

The two largest discrete non-reserve commitments are paid pre-opening labor and the hardware/network bundle. The labor allowance is $10,012. California BLS May 2023 wages provide historical context only: bookkeeping/accounting clerks had a $25.95 hourly median and accountants/auditors $44.31. Current skilled-preparer availability, owner opportunity cost, payroll burden and training time remain unquoted.

For hardware, the inspected Dell Pro 16 configuration displayed $1,520 for Core 5, memory and storage specified in the evidence ledger. The case uses $1,600 per laptop. The Epson ES-580W was $449.99. Four compared laptops plus that scanner would be $6,529.99 before tax, network equipment, delivery and installation. The model’s broader hardware total includes an assumed 9.0% tax allowance; an independent implementation allowance is expensed separately. Neither comparison is a delivered secure-office quote.

Three observed TROTTEN desks and MARKUS chairs sum to $1,499.94 before tax, assembly and delivery. The furniture budget also covers meeting/storage allowances. For software, the Drake listing displayed $3,145 with edition/user selectors and a $3,295 December retail figure; selected multiuser eligibility and checkout are unconfirmed. The case instead budgets $3,600 annually and keeps its scope qualified.

What must be added before committing?

Obtain a lease proposal covering deposits, common-area charges, permitted professional use and improvements. Obtain a complete software proposal covering tax returns, users, portal, e-signatures, accounting, document storage and renewals. The assumed $400 monthly practice budget is broader than a Microsoft subscription. For comparison, Business Premium with Teams is $22.00 per user per month paid yearly; four such users alone cost $1,056 annually, without the rest of the practice systems.

Also obtain liability and cyber cover, secure storage/backup and recovery work, benefits and compliant hiring terms, legal formation support and a lender fee schedule. Health and pension benefits have no separate budget, so the assumed burdens are not a complete benefit plan. Missing quotations remain research gaps, not zero-cost commitments. Reprice taxes, delivery and license renewals for the actual jurisdiction and launch year, then rerun cash and profitability before accepting a lease or loan.

Validate the case inputs

Download the input and evidence register (CSV). This case export separates observed context from assumptions and leaves quotation fields blank for your project. It is an educational register, separate from the planned personalized model.