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How to Start and Operate an Auditing Business

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Written by Bobby Scott   



If you like working with numbers, you will enjoy starting and operating an auditing business. Auditing is a process in which economic events and processes are verified as correct. As an auditor you will be inspecting business records and financial statements. You will also be gathering, evaluating, and reporting this information to many business professionals and the general public in some cases. The audits that you perform must be in compliance with Generally Acceptable Accounting Principles (GAAP) also known as GAAP. The amount of money you make will be determined by your skills and abilities to perform the work accurately.

Things You’ll Need:

Strong math, reading and writing skills.

Ability to read financial statements.

Proven oral communication skills

Step 1: Audit Training and Skills Development

Decide how much money you can afford to spend to help you start and operate an auditing business. Be honest with yourself and do not exceed your budget. You will need audit training and you have to develop auditing skills to become successful. Determine what type of auditing company you want to start. Work at that auditing company for at least six months as a volunteer and learn how the business operates. Read the book “The Basics of Quality Auditing” by Ronald Blank. This is a good tool to use to help you understand how audits are conducted.

Step 2: Audit Business License and Tax Certificates

Visit the municipal building in your city and apply for an audit business license. Follow all the instructions that you receive from the clerk. Register the business as a sole proprietorship on the business license application. Contact your state’s department of Revenue and put in a request for a business tax certificate identification number for an auditing business. Call the Internal Revenue Service at (800) 829-4933 and apply for a federal tax identification number. It is very important that you obtain these tax numbers so that you can pay your taxes. Keep in mind that authorities can fine or place you in jail if you operate a business without a license.

Step 3: Develop an Audit Business Plan

Develop a business plan that will explain how you will operate the business everyday. Design a marketing plan that will help you get clients. The financial plan needs to show you how to monitor your income and expenses. Study the book, “Successful Business Plan: Secrets & Strategies” by Rhonda Abrams. Review the sample plans to help you learn how to make money running this type of business. Use the Small Business Administration’s website as a resource to help you write the business plan and make business decisions. Ask individuals that work in the industry how they started their auditing business.

Step 4: Operating Your Auditing Business

Go to your local office store and purchase all the office supplies you will need for your business (i.e., your business cards, copy paper, invoice forms, writing pads, etc.). Seriously consider investing in auditing computer software to complete audits faster. Grow your business by making phone calls to any business that may need an audit. Make at least 100 phone calls per day to potential clients and sell your services by telling them what you can do to improve their numbers. This is how you start and operate an auditing business.

Tips:

Obtain auditing certification to increase your knowledge. Become a Certified Public Account (CPA) and you are on the fast-track. Join Accounting and Auditing Organizations to network and increase sales. Conduct seminars about auditing issues and perform subcontract work.

Warnings:

Take extra precautions by contacting your state’s securities department and the Securities Exchange Commission to make sure you are operating within the law. Always complete audits on time and get help for larger projects. Be honest with clients and never cook books or make an audit look fantastic when you know there are problems. Do not violate any federal, state or local laws.

Reference:

AICPA

http://www.aicpa.org/download/members/div/auditstd/au-00150.pdf

Journal of Accountancy

http://journalofaccountancy.com/Issues/2006/Apr/StartYourOwnPractice.htm

Resources:

Small Business Administration:

Starting A Business

http://www.sba.gov/category/navigation-structure/starting-managing-business/starting-business

Small Business Administration:

Preparing Your Finances

http://www.sba.gov/category/navigation-structure/starting-managing-business/starting-business/preparing-your-finances

 

 

 

 






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