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Home-Based Accounting Practices Thrive

Low overhead, easy entry may spur trend. How many CPAs work at home? Join the survey; get the answers.

August 13, 2007
by Rick Telberg/At Large

Your mother was right: Accounting is a career you can always fall back on.

In fact, data from a U.S. Small Business Administration (SBA) report show that tax preparation, accounting and bookkeeping services are among the most popular home-based businesses in the nation.

The report “The Impact of Location on Net Income: A Comparison of Homebased and Non-Homebased Businesses” culled sole proprietorships’ Schedule C tax returns for the 2002 tax year to compare home-based and office-based sole proprietorships. The data show that accounting services are among the top 30 employment areas in terms of numbers of home-based businesses and sole proprietorships.

How many CPAs work at home?

Join the survey; get the answers.

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The report makes a strong case that accountants seeking a little extra income can fairly easily start a side practice at home. As most accounting professionals know, sometimes those side practices turn into the launching pads for their own firms.

In fact, home-based accounting practices are more likely to turn a profit than most of the at-home businesses in other professions. Fully 50 percent of home-based accountants’ tax filings showed net incomes. Among other home-based businesses, only 46 percent had net income. Within legal services, only 22 percent did. The most frequently profitable home-based businesses include computer design services, in which 76 percent of the filings had net income.

Net income as a percentage of receipts is another area where home-based accountants shine but still trail other consulting types. Home-based accountants reported net incomes that, on average, were 46 percent of their reported receipts, which compares to a 36 percent average for all home-based business categories.

The incomes reported in the filings suggest that the bulk of accountants are probably non-CPAs or CPAs working part-time hours at home. The average income for the home accountants was $14,000 compared to $23,000 on average for all home-based business filings. Among non-home-based businesses, accountants averaged $45,000 against $38,000 on average for all other professionals.

Clearly, a big chunk of those home-based accounting businesses are run by non-CPA accountants and tax practitioners. To be sure, this overlooked market of work-at-home accountants is still generating far less revenue and income than accountants working at offices as sole proprietors or in firms.

The SBA report did not examine the number of hours worked other than to cite earlier research findings that home-based practitioners average 26 to 35 hours worked per week, and in-office practitioners average 33 to 43 hours.

So if you’re between jobs, just starting out, or maybe need a little extra income, working at home can be an eminently viable option. It’s especially easy these days, because you hardly need to invest big money in overhead. So much of the world now is online and accessible from anywhere and everywhere. In fact, all you need these days is a cell phone and a laptop. And with something like internet telephony, even the cell phone may be optional.

Make your own hours and never change out of your pajamas. How bad is that?

NOW IT'S YOUR TURN: How many CPAs work at home? Join the survey; get the answers.

COMMENTS: Rants, raves, idle thoughts or questions? Contact Rick Telberg.

Copyright © 2007 Bay Street Group LLC: All Rights Reserved: Used by Permission.

About Rick Telberg

Rick Telberg is editor at large/director of online content.

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Disclaimer: Any views expressed in this article do not necessarily reflect the views of the AICPA or CPA2Biz. Official AICPA positions are determined through certain specific committee procedures, due process and deliberation.