The Annual New Accounting Firm Review Checklist

Running a new accounting firm means juggling client work and business operations. An annual review helps you spot problems early, plan for growth, and stay compliant. This checklist walks you through the key areas to review, with concrete steps you can take this week.

1. Financial Health Check

Start with your firm’s numbers. Review your profit and loss statement, balance sheet, and cash flow statement for the last 12 months.

• Revenue streams: Break down income by service line (tax prep, bookkeeping, advisory) and by client. Identify which services and clients generate the most profit.
• Expense review: Categorize expenses. Look for recurring costs you can cut or renegotiate, such as software subscriptions or office rent.
• Cash flow: Calculate your average monthly cash burn. Ensure you have at least 3 to 6 months of operating expenses in reserve.
• Profitability: Compute your net profit margin. For new firms, a margin of 10% to 20% is typical; if you’re below that, examine pricing and overhead.

Action this week: Pull your last 12 months of financial statements. List your top 5 clients by revenue and your top 5 expenses. Identify one expense to reduce or renegotiate.

2. Compliance and Regulatory Review

Accounting firms face specific compliance requirements. An annual review ensures you’re not missing deadlines or obligations.

• Licensing: Verify your CPA license and any state-specific registrations are current. Renewals typically cost $50 to $300 per license.
• Continuing education: Confirm you and your team have completed required CPE hours (usually 40 per year, but varies by state).
• Professional liability insurance: Review your coverage. Premiums for new firms range from $1,500 to $5,000 per year, depending on location and services.
• Data security: Check that your client data storage and transfer methods meet IRS and state requirements. Consider a security audit if you haven’t done one.
• Tax deadlines: List all federal, state, and local filing deadlines for the upcoming year. Mark them in a shared calendar.

Action this week: Check your license expiration date and CPE transcript. If your insurance policy renews soon, get quotes from two other providers.

3. Technology and Software Audit

Your tech stack affects efficiency and client experience. Review what you use and what you might need.

• Tax preparation software: Compare costs and features. Popular options include UltraTax (about $2,000 to $4,000 per year), Drake ($1,500 to $3,000), and ProConnect (per-return pricing, roughly $50 to $100 per return).
• Practice management: Tools like Karbon or Jetpack Workflow cost $30 to $80 per user per month. Evaluate if your current system tracks deadlines and client communication effectively.
• Client portal: Secure portals like ShareFile or SmartVault run $30 to $60 per month. Ensure clients can easily upload documents.
• Cybersecurity: Update antivirus, enable multi-factor authentication, and back up data to the cloud. Budget $100 to $300 per month for robust security tools.

Action this week: List all software subscriptions and their monthly costs. Identify one tool that’s underused or redundant, and cancel or downgrade it.

4. Client Portfolio Analysis

Not all clients are equal. Review your client list to improve profitability and reduce risk.

• Client profitability: Calculate time spent per client vs. fees charged. Drop or reprice clients that consistently lose money.
• Concentration risk: If one client makes up more than 20% of your revenue, develop a plan to diversify.
• Client satisfaction: Send a short survey to your top 20 clients. Ask about responsiveness, clarity, and value. Use a tool like SurveyMonkey (free to $25/month).
• Onboarding and offboarding: Review your client acceptance procedures. Ensure you have written engagement letters and clear scope of services.

Action this week: Rank your clients by revenue and profitability. Identify your top 3 and bottom 3. Reach out to one bottom client to discuss fee adjustments or refer them elsewhere.

5. Team and Staffing Review

If you have employees or contractors, an annual review helps you retain talent and plan for growth.

• Roles and responsibilities: Update job descriptions. Ensure everyone knows their tasks, especially during tax season.
• Compensation: Benchmark salaries for your area. For junior staff, $50,000 to $70,000 is common; senior CPAs can earn $90,000 to $130,000.
• Training: Plan CPE and skill development for the next year. Budget $500 to $2,000 per employee.
• Performance reviews: Conduct formal reviews with each team member. Set clear goals for the coming year.

Action this week: Schedule a 30-minute check-in with each team member. Ask what’s working and what needs improvement.

6. Marketing and Business Development

Your annual review should also assess how you attract new clients.

• Website and SEO: Check your website’s loading speed and mobile friendliness. Review your Google My Business listing. Basic SEO tools like Ahrefs or SEMrush cost $99 to $200 per month.
• Referral sources: Track where new clients come from. If referrals dominate, consider a formal referral program.
• Content plan: Outline quarterly blog posts or newsletters. Use a free tool like Canva for graphics and Mailchimp (free up to 500 contacts) for email.
• Networking: List 3 to 5 local events or professional groups to join this year. Budget $200 to $1,000 for memberships and events.

Action this week: Review your last 10 new clients and note how they found you. Update your website’s homepage with a clear service description and contact form.

FAQ

How often should I do this review? At least annually, but a mid-year check on finances and compliance is wise. Quarterly reviews can help you catch issues early.

What if I can’t afford new software? Start with free or low-cost tools. For tax prep, consider per-return pricing if your volume is low. Use spreadsheets for practice management until you grow.

Should I hire a consultant for the review? If you lack time or expertise, a part-time CFO or business consultant can help. Costs range from $100 to $300 per hour, but a one-time review may cost $1,000 to $3,000.

How do I prioritize the checklist? Start with financial health and compliance, as they carry the most risk. Then move to technology and clients, and finally marketing and team.

Related guides

• The Complete New Accounting Firm Startup Checklist
• 7 Questions to Ask Before Buying a New Accounting Firm
• 7 Things to Know Before You Start a New Accounting Firm

The bottom line

An annual review is not optional for a new accounting firm; it’s how you stay profitable and compliant. Set aside one day this month to work through this checklist. You’ll likely find quick wins that save money or reduce risk. Then schedule the next review for the same time next year, and make it a habit.