June 24, 2018

Should You Be a Freelance CPA?

Companies like The Siegfried Group have been poaching people from accounting firms for years, offering them 10% raises and quarterly bonuses. But for many of you, there’s an even better deal than they can offer.
If you work for just 3 months next busy season, can you make 75% of an employee’s annual income as a contractor?
The answer is yes. Here’s an example using a good friend of mine was a Manager at Ernst & Young. He made $90,000 a year, then quit to start his own company. After about a year he decided he need to jumpstart his cash flow as starting a business takes time. He did that by negotiating a $90/hr rate including straight pay for overtime hours.
Here are the financial details starting with his previous EY annual salary:
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This same concept applies to any level of accounting work; senior, senior manager, etc.
Now, even though the calculation says ~66,000 and 75%, we all know how things work in public accounting — Deadlines get pushed back, clients stall, and what happens? You end up working even more hours.
But unlike when you’re salaried, every additional hour is paid.
My friend also got all of his travel, room, and food covered by the firm and would be traveling about 70% of the time.
Admittedly, this strategy isn’t for everyone. If you want to make partner or become CFO of a sizeable company, paying your dues in Big 4 and jumping to a full-time position when you are ready is probably the best route. But that’s not the plan for most of us.
Why would the firm go for an arrangement like this? Because it’s a lot cheaper than you think.
Most of the revenue accounting firms make is during busy season. For the rest of the year, they are trying to find things for many of their staff members to do.
With a contractor, they don’t pay benefits: no healthcare, no 401k contributions, minimal training, no internship, etc. Big savings for a firm.
What’s the catch? Will you pay more taxes? As a 1099 contractor, you’ll be able to deduct business expenses and a carefully planned budget could reduce your effective tax liability to the same or less than what you would have as a full-time employee.
Here are some other pros and cons of contracting:
  • More freedom
  • Increase pay by hour
  • Opportunity to organize your profit and loss statement
  • Less responsibility and pressure
  • Time to start your own business
  • Time to spend with your kids
  • Self employment tax
  • Lack of a clear career path
  • Lack of regular pay
  • Lack of investment from the firm into your skills
  • Potential for decreased annual pay
  • Likely to be put on challenging jobs
Why would the firm go for an arrangement like this? Because it’s a lot cheaper than you think.
So, is contracting the right move for you? Does anyone have any experience as a contractor for a CPA firm or other business?

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Job of the Week: Do You Have a Preternatural Ability for GAAP Disclosures?

hire me2.jpgSince there seems to be some unhappy campers out there we’ll take a moment of your day to tell you about a position that might make you less miserable or hopefully better compensated:
Company: Morgan Stanley
Location: New York
Title: Associate/Manager
Description: Associate or Manager for our Legal Entity Accounting & Disclosure Group. Responsibilities will include gaining an understanding of the firm’s equity financing products, derivatives and securities lending business in order to assist in producing and analyzing many of the division’s financial accounting disclosures.
Skills Required: BS or BA in Finance and/or Accounting, CPA preferred; 3-5 years of experience in Public Accounting and/or financial services industry; Must have thorough understanding of FAS 133, FAS 140, FIN 46, FAS 157 and FAS 161 FASB pronouncements
See the full description at the GC Career Center and if this position doesn’t tickle your get your ass off the couch/ship-jumping bone, go to the main page and find your next temporary dream job.

Recruiting: Considering the Non-Big 4 Employers

BelushiCollege.jpgAs recruiting continues this week, we’ll put out the idea of opting to starting your career with a firm or company as opposed to starting at a Big 4 firm. Regardless of the Big 4’s dominance of the BW list, there are several smaller firms that make good offers and all businesses need number crunchers to track all the bloody money.
And this year, since many of the Big 4 don’t appear to be making as many offers, going with a national or regional firm or private company becomes a serious option for many recruits.
For the recruits out there, are you giving serious consideration to taking a position with a non-Big 4 firm? For the rest of you, is starting your career at a Big 4 the only way to go or can relative happiness and success be found elsewhere?
Discuss in the comments.