Matt Dickstein

Business Attorney

Making legal matters easy and economical for your business.

Matt Dickstein, P.O.Box 3504, Fremont, CA 94539-5856

Matt Dickstein

Business Attorney

Making legal matters easy and economical for your business.

39488 Stevenson Place, Suite 100, Fremont, CA 94539 510-796-9144.


Lawyer for Accountants, Accountancy Corporations and Group CPA Practices

Legal compliance checklist for an accountancy corporation

By Matt Dickstein

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In my last article, I ask the threshold question, Should you incorporate your accounting practice?  In this article I give you a legal compliance checklist for your accountancy corporation. Incorporating an accounting practice can feel overwhelming. There are so many unknowns to cause you anxiety. I write this checklist to fill in the unknown. This checklist gives you a bird’s eye view of legal compliance for your start-up accountancy corporation.

Let’s start at the beginning – incorporation.

Form the Accountancy Corporation. Your basic choices are a C corporation or an S corporation (you may not use an LLC for an accounting practice). The law is tricky for accountancy corporations, so use an attorney who knows accountancy corporation law to draft your corporate documents (articles, bylaws, stock certificates, etc.). In particular, the bylaws and stock certificates need special language and legends. Further, the Accountancy Act restricts who can be a shareholder, director or officer, and has complex provisions for non-licensee shareholders.

As for limited liability, read: Reduce your personal liability from your business to learn how to protect your personal assets from business risks.

Fictitious Names. The Accountancy Act is as clear as mud when it comes to fictitious names. A fictitious name is a dba or some name other than the accountancy corporation’s legal name, for example, the firm of Smith & Wang Inc. might want to do business as “Abacus.” In brief, a firm may only practice under the name for which the Board of Accountancy has issued a permit to practice; the Board will not issue a fictitious name to an accountancy corporation or accountancy partnership. The name on the articles of incorporation must match the name on the license application.

Register the Accountancy Corporation. You must register the corporation with the Board of Accountancy.

Shareholders / Buy-Sell Agreement. If your practice has more than one owner / accountant, seriously consider getting a shareholders / buy-sell agreement to govern your relationship with your partners. These agreements save you a lot of money if partner relations go bad. A buy-sell agreement resolves disputes between the partners, including exit provisions if the partners can’t work together anymore. I call this the partners’ economic divorce. For more info, see Shareholder buy-sell agreements for accountancy corporations. The buy-sell agreement also will contain provisions required by law for disqualified accountants (deceased accountants or those who’ve lost their license).

Get a Federal Employer Identification Number (EIN). You can call the IRS for your EIN or get it from the IRS’ website. I’m sure you know how to do this.

Bank Accounts. Once you have the articles of incorporation plus EIN, you can open bank accounts.

Choose a Location. First decide on a general location, then check local zoning requirements to be sure you can operate an office there. Visit your local planning / permits department for this and other local requirements for your location.

Real Property Lease. One of the most important contracts you’ll sign is the lease for your offices. The lease will bind you for years to come, and you’ll have to continue paying rent even if the practice doesn’t perform well. This is another area where you need a lawyer.

Local Business License. Get a license to do business from your city.

Employer Filings and Withholdings. If you have employees, file form DE-1 with California EDD. This starts the never-ending process of employment law compliance. Hire a payroll company to handle your employee wage withholdings.

Workers Compensation and Other Insurance. Once you have employees, get an insurance broker for workers compensation insurance. Workers comp is required by law. Use an experienced broker to purchase your professional malpractice insurance.

Malpractice Insurance. Buy malpractice insurance. The Accountancy Act requires malpractice insurance, or else it makes all shareholders jointly and severally liable for the group’s malpractice liabilities.

That’s it for this bird’s eye view of the start-up of your accountancy corporation. I hope this checklist has been helpful to you.

Call me to schedule a legal consultation