How Much Do Self-Employed Accountants Earn?

How Much Do Self-Employed Accountants Earn? | Accounting Smarts
Charles Hall

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Charles Hall

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June 10, 2022

Self-employed accountants are able to set their own hours and pay rate. As a result, they get to determine how much they want to make. How much money is that, though?

Self-employed accountants are able to set their own hours and pay rate. As a result, they get to determine how much they want to make. How much money is that, though?

Self-employed accountants make about $35 an hour, resulting in an annual income of around $73k. This number will differ based on what the individual accountant determines their pay rate to be. 

If you are considering becoming a self-employed accountant or are already one, you are probably interested in how you can make the most money possible. We have put together a few different ways for you to make the most out of your accounting skills. From how to get started to how to maximize your profits, we have the answers to every one of your accounting questions along the way.

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Why Become A Self-Employed Accountant?

There are many money-making perks to becoming a self-employed accountant. As an independent accountant, you get to choose:

  • How many clients you take on
  • How many days you work
  • How many hours you work
  • How much vacation time you get
  • How much you get paid
  • What hours of the day you work
  • What types of clients you take on

You determine how much you work and what you do. If you want to make more money, take on more clients, or work longer hours. Everything is completely up to you.

The best part is that you decide how much you get paid. You are not limited by a salary that your employer sets.

If you decide you deserve a raise, you simply raise your prices. You must be cautious with this, though, because you do not want to lose clients due to prices that are too high. 

A Few Cons to Consider

Although there are many positive aspects to being a self-employed accountant, there are a few negative ones to keep in mind. 

As an individual accountant, you may:

  • Have to pay for future training
  • Only be able to offer limited services

Firms often pay for their employee's future training, and now this will be an extra cost you will have to incur if you plan on receiving more training. Extra training is required if you plan to acquire your CPA, so keep that in mind.

You also may not be able to offer all the different aspects of accounting like larger firms do if you have not been properly educated in everything. This will result in some clients choosing larger firms over you because of the varied slate of services they offer. 

Other Aspects to Be Aware of

You should also be mindful that:

  • You are responsible for business expenses
  • You are solely responsible for complying with all accounting regulations 
  • You don't get paid for sick time
  • You have to market yourself

As with any business, there are costs associated with individual accounting that you are responsible for, such as small business insurance or rent payments. 

Also, you are in charge of incurring marketing costs and determining the best way to market yourself. This may be difficult for some people who are not aware of proper marketing techniques.

Luckily for them, though, accountants are in high demand. As a result, there may not be a lot of marketing required to get clients. 

Why Are Accountants in High Demand?

Accountants are always in high demand. That is why most self-employed accountants still thrive even on their own. 

Accounting is an industry that is always needed. Here are a few reasons as to why there is such constant high demand.

  • Accounting is recession-proof
  • Businesses always need accountants
  • There is a high turnover rate for accountants

Even during recessions, businesses need an accountant to consult with them about their financial situation. So, while other industries struggle, accountants will not. 

Businesses need accountants whenever a financial transaction is processed. Also, taxes need to be filed once a year by businesses and everyday people. Meaning there is always a need for an accountant. 

Finally, the accounting industry has one of the highest turnover rates for any industry. This means that there is always an accounting job available somewhere. 

Different Types of Self-Employed Accountants

As a self-employed accountant, you control how your job is defined. As a result, you can choose between starting your own business or simply freelancing. Both have their perks and drawbacks, though. 

Freelance Accountants

Self-employed freelance accountants or auditors are not required by law to have any credentials, although a CPA certification or similar certification is likely to land them more clients. 

They use online job platforms such as Upwork, as well as blogs and websites to market themselves to potential customers. 

Freelancers also utilize different accounting software such as QuickBooks Online Accountant to help with their accounting needs. 

As a freelancer, you have the ability to work from home or rent out an office space if you so desire. You can also choose to drop or gain clients whenever you want. 

However, the downfalls to freelancing include:

  • Building a client base takes time
  • Clients frequently feel they can pay less for freelancers than those who work for an established business
  • Work may not always be available

Freelancing is a great side hustle, but it can be hard to build up a full-time job. If you plan to make a career out of freelance accounting, you will need to consider how you will manage your time as well as how you will maintain a steady flow of clients. 

You will also need to look into how you can charge higher prices for the work that you do. 

Starting Your Own Business

If you want to start your own accounting business, the first thing you need to do is acquire a bachelor's degree as well as the necessary certificates (i.e., CPA, EA).

Next, you need to choose the structure of your business as well as the name. Limited liabilities and sole proprietorship are the most common business entities for self-employed accountants. 

After that, you need to determine where you will be working. You can work from home, but you appear more professional if you rent an office space. Renting space also allows you to add employees to your business more easily. 

Starting your own business gives you more credibility and possibly protection if you decide to form a limited liability business. However, it comes with more costs associated with it, such as:

  • Business fees
  • Payment to employees
  • Rent of office space

Choosing the Right Accounting Niche

As a self-employed accountant, it is important to choose the right niche for you. Accounting encompasses a vast number of aspects in a multitude of different industries. Being good at your specific niche will allow you to charge higher prices and thus make more money. 

Picking the right industry to specialize in can greatly impact the success of your career. However, do not just pick the industry with the highest wages. 

You want to make sure you are good at that specific industry as well as enjoy it. The last thing you want is to be stuck in a job you hate. People who do not like their job will not perform as well as those who do, so keep this in mind. 

Other Reasons to Specialize as An Accountant

Choosing a niche enables you as the accountant to:

  • Better serve your client than a general accountant
  • Create focused marketing messages to attract specific clients
  • Develop a better understanding of your clients' problems
  • Speak your client's language because you are knowledgeable about the industries language

Specializing in a specific niche essentially allows you to understand your client better.

Best Niches for Accountants

When picking your niche, take into consideration these top accounting niches. 

  • Chiropractors
  • Construction
  • Engineering Firms
  • Finance
  • Insurance
  • Law Firms
  • Marketing Agencies
  • Not-for-Profits
  • Real Estate
  • Restaurants & Bars
  • Tradesmen (plumbers, HVAC, electricians, etc.)
  • Veterinary Practices

According to Investopedia, the finance and insurance industries were the top paying industries in 2019 with an annual mean wage of $76,440. 

However, finance and insurance are not for everyone. That is why we provided some other great industries to consider as your niche. Each comes with its own set of perks. 

Do You Have to Choose A Niche?

Although we highly recommend choosing a niche to specialize in, it is not imperative to your success as an accountant. General accountants analyze financial records for a variety of clients across a range of industries. 

They have to be aware of each industry's ins and outs, though, in order to be successful. This can be hard to do. 

Also, people will not be as inclined to pay more for someone who is not an expert in their specific industry. 

Do You Need A Degree to Be an Accountant?

Typically, you need a bachelor's degree in accounting or a similar field to become an accountant. Even freelance accountants, most of the time, need a degree. 

However, without a degree, you can become a(n):

  • Accounting clerk
  • Auditing clerk
  • Bookkeeper

These accounting-related areas are the closest you will get to being an accountant without a bachelor's degree. 

What Is the Starting Salary of an Accountant?

Since you are able to set your own pay rates, your starting salary is whatever you set it to be. 

However, it is not plausible to set your starting salary immediately at the highest rate and expect to get lots of customers. You need to gain experience and credentials before you can advertise higher or even average prices. People pay for quality and experience. 

It makes sense to start your pay rate out small and as you gain experience and more qualifications, then raise your rate. 

For comparison, the average entry-level CPA salary for all accountants, not just self-employed, is $66,000 a year. 

However, each year CPAs expect to have their earning increase. Due to this, a highly qualified CPA with around 20 years of experience can achieve an average salary of $152,000 a year. 

If you gain the correct certifications and experience necessary to market yourself as a reliable accountant, people will be willing to pay more for your services. As a result, your earning potential is only limited by you since you are self-employed. 

Certifications to Help You Make More Money

Acquiring certifications within the field of accounting can make you more credible and trustworthy. As a result of your increased knowledge base making you more qualified for your job, clients are willing to pay more money for your services.

The CPA Certification Is Important

Not all accountants have a CPA (certified public accountant) license. A CPA is more widely trusted than an accountant who has not acquired this certification because they:

  • Are considered fiduciaries to their clients
  • Must complete 1-2 years of accounting experience
  • Must complete 150 hours of accounting and business credits
  • Must continue their professional education (CPE)
  • Pass all 4-parts of the uniform CPA examination

CPAs must continue their professional education throughout the entirety of their career in order to keep their CPA certification. This ensures that they are up to date on the new and improved expectations of accountants. 

This certificate is great for any accountant looking to make themselves stand out from other accountants as a trusted professional individual. 

Enrolled Agent Certification for Tax Lovers

The Enrolled Agent Certification (EA) is a good consideration if you do not want to go through all the steps of acquiring a CPA but still want to be a tax expert. It is also good to be used with your CPA as well, though, to hone your tax knowledge better. 

The IRS created this certificate to allow you to do things such as sign tax forms and represent clients to the IRS. 

CIA Certification for Audit Lovers

Auditing is an important aspect of accounting. The Certified Internal Auditor (CIA) certification is for accountants who plan on conducting internal audits for businesses. It requires you to pass a 3-part exam with ongoing CPE credits required. 

Earn A Master's Degree

As with any job field, earning a master's degree in accounting will result in higher average salaries when compared to not having one.

When clients see that you have a master's degree, they feel that you are most trustworthy and qualified for the job. As a result, they are willing to pay more money for your services. 

Although you are able to make more money with a master's degree, you also need to consider the costs associated with acquiring one. You will need to pay for the tuition and cots of books to get the degree. You also have to take into consideration the money you lose while spending time getting a degree instead of working. 

The Top Paying States for Accountants

Some states have higher salaries for accountants than others. Although these states are for all accountants, not just self-employed ones, they are still good to consider since you get to set your own prices as an individual accountant. 

Therefore, you can set your pay rates to the state's average, and clients will not question it.

The top-paying states in order from highest paying to lowest as of 2019 are:

  • District of Columbia
  • $103,930 annual mean wage
  • New York
  • $98,650 annual mean wage
  • New Jersey
  • $91,960 annual mean wage
  • Virginia 
  • $85,720 annual mean wage
  • California
  • $83,910 annual mean wage

If you are a self-employed accountant looking to move, these states are your best choices. 

If you live in one of these states, it is good to know the average wage so that you do not miss out on earning potentials by under-charging. However, under-charging may be beneficial because it could possibly draw in more clients. 

Top-Paying Metropolitan Areas for Accountants

If you are looking to work as an accountant in a metropolitan area, here are the highest paying ones in order as of 2019. 

These include all types of accountants. As mentioned before, they still apply to self-employed accountants because individual accountants can easily set their rates to the area's average without much clientele backlash. 

  • New York-Newark-Jersey City, NY-NJ-PA
  • $102,090 annual mean wage
  • Salinas, CA
  • $97,640 annual mean wage
  • Washington-Arlington-Alexandria, DC-VA-MD-WV
  • $95,570 annual mean wage
  • San Francisco-Oakland-Hayward, CA
  • $93,590
  • Bridgeport-Stamford-Norwalk, CT
  • $92,770 annual mean wage

Best Non-Metropolitan Areas for Accountants

If you are looking to work in a non-metropolitan area, here are the highest paying areas for all accountants as of 2019 in order. 

  • Northeast Oklahoma
  • $81,360 annual mean wage
  • South Central Tennessee
  • $81,300
  • Alaska
  • $77,620
  • West Texas
  • $77,050
  • Southeast Coastal North Carolina
  • $75,310

Self-Employed Accountants Can Be Very Successful 

Self-employed accountants can make just as much, if not more, than their counterparts who work for accounting firms and businesses. 

When considering becoming a self-employed accountant, it is important to consider how you will discipline yourself. How you utilize your time will greatly impact your earning potential. 

You will face multiple hardships and tough decisions, but once you get yourself started, your earning potentials are completely up to you. You will not be limited by someone else's evaluation of your value. You decide your worth.

Charles Hall

Charles Hall

Charles has spent 25 plus years in the world of accounting and business. His experience includes working as a CPA/Auditor international accounting firms. He has worked as a controller and as a COO for small to medium sized companies.

Learn more about Charles Hall