How much does it cost to start an accounting firm?

Starting an accounting firm typically costs between $15,000 and $60,000. A solo CPA working from home can launch for under $20,000, while leasing office space, hiring staff, and investing in premium software pushes costs toward the higher end. Your biggest ongoing expense will be professional liability insurance and software subscriptions.

Do I need a CPA license to start an accounting firm?

You do not need a CPA license to offer bookkeeping or general accounting services. However, you must be a licensed CPA to perform audits, sign tax returns as a paid preparer in most states, or represent clients before the IRS. Most states also require CPA firm registration if you use the term CPA in your business name.

How long does it take for an accounting firm to become profitable?

Most solo accounting firms reach profitability within 6 to 12 months, especially if the owner brings existing client relationships. Tax season provides a natural revenue boost in the first year. Building a steady year-round client base for bookkeeping and advisory services typically takes 12 to 18 months.

Accounting Firm Startup Cost Comparison

Los Angeles, CA vs Chicago, IL

Los Angeles, CA

$27,000 - $112,000

COL Index: 166.5

Chicago, IL

$24,000 - $90,000

COL Index: 107.8

Detailed Cost Comparison

Expense	Los Angeles, CA	Chicago, IL	Difference
Business Registration & Licenses	$4,000 - $14,400	$5,600 - $10,900	+12%
CPA License & Certifications	$1,000 - $4,000	$1,000 - $4,000	Same
Office Lease (First + Last + Security)	$7,500 - $37,500	$5,900 - $29,300	+28%
Computers & Office Equipment	$2,000 - $8,000	$2,000 - $8,000	Same
Accounting Software & Subscriptions	$1,500 - $5,000	$1,500 - $5,000	Same
Professional Liability Insurance (Annual)	$1,200 - $5,000	$1,200 - $5,000	Same
Marketing & Client Acquisition	$1,500 - $8,000	$1,500 - $8,000	Same
Working Capital (3 Months)	$8,300 - $30,000	$5,400 - $19,400	+54%
Total Estimated Cost	$27,000 - $112,000	$24,000 - $90,000	+22%

Local Market Factors

Factor	Los Angeles	Chicago
Cost of Living Index	166.5	107.8
Commercial Rent ($/sqft/yr)	$30 - $85	$25 - $65
Labor Rate Index	1.35	1.15
Sales Tax	9.5%	10.25%
Minimum Wage	$16.78/hr	$15.80/hr
LLC Filing Fee	$70	$150

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