Whether you want to grow the biggest firm possible or just run a small 1-person shop that provides you with a great lifestyle…
Having the right firm structure is crucial.
In this post, we’ll dive into the different structures and share tips on how to make the most of them based on your firm’s revenue.
Let’s get started!
Table of Contents
- What Is An Accounting Firm Structure?
- Why Is An Accounting Firm Structure Important?
- Common Roles in a Modern Accounting Firm Structure
- The Best Accounting Firm Structures (Based on Revenue)
What Is An Accounting Firm Structure?
An accounting firm structure sets up how everyone’s roles, duties, and workflows are organized.
It lays out the hierarchy, decision-making processes, and task delegation, which define how the firm runs and serves its clients.
There are two main types of accounting firm structures: traditional and modern.
Overview of Modern vs. Traditional Accounting Firm Structures
This overview highlights the key differences between traditional partnership models and modern accounting firm structures, focusing on scalability and efficiency.
Traditional Structures
The typical traditional firm organizational structure is a partnership model, where the partner is doing sales, marketing, team management, review of client work, etc.
In the traditional firm structure, all work must flow through the partner / firm owner for review & approval.
It’s extremely challenging to scale using this model because, as the business grows, the amount of work the partner has to do grows, as well.
At a certain point in the partnership model, the partner / firm owner almost always becomes the bottleneck of the business, which slows the firm’s growth and negatively affects the firm owner’s lifestyle.
Modern Structures
A modern accounting firm structure is when the firm is structured like a corporation. This structure involves the use of department heads who are responsible for overseeing certain business functions.
For example, accounting firms can hire a Director of Sales & Marketing – which means the partner / firm owner no longer has to be responsible for bringing in new clients.
The modern firm structure allows the firm owner (you!) to divest of functions you don’t enjoy or are not skilled in, which gives you more time to focus on your zone of genius – and reduces your stress and improves your lifestyle.
I’m a big believer in the modern firm structure.
It’s the structure I followed in my own firm, and it’s the structure I recommend in my program, Future Firm Accelerate.
Why?
Because time and time again, I’ve seen that a modern firm structure leads to a smooth systematized firm that runs like clockwork…
And the traditional structure typically leads to overwork and overwhelm for the firm owner.
And yet…
Most firm owners stick to the traditional firm structure.
Usually because they don’t realize they have another option.
Why Is An Accounting Firm Structure Important?
Let’s discuss the primary reasons why establishing the right accounting firm structure is essential for enhancing efficiency, fostering growth, and achieving a better work-life balance.
Wrong Structure Leads to Bottlenecks and Overwork
In a traditional firm structure, the firm owner (i.e. partner) has to review ALL work before it’s finalized.
They have to review the tasks done by the firm’s managers, accountants, and bookkeepers overseeing client portfolios.
Some of this work includes:
- Sales
- Marketing
- Day-to-day tasks
- Quality control
- Client relations
- File work
As the accounting practice grows and takes on more clients, the firm owner has to work more and more just to keep up.
At a certain point, their workload becomes unmanageable. Their lifestyle takes a hit.
They can’t spend as much time with their families. They don’t sleep enough.
They’re not able to take care of themselves like they want to.
Etc.
Bottom line:
In the traditional structure, the firm reaches a cap on how much it can grow, simply because the firm owner isn’t physically able to take on any more work.
Right Structure Provides Work-Life Balance and Reduced Workload
In a modern firm structure, the firm owner hires other skilled team members to handle the day-to-day office operations – including completing and delivering work to clients.
This means that, in a modern firm structure, the firm owner does NOT have to review work before it’s finalized.
… which allows the firm to grow much more easily than in a traditional structure. Because as the firm takes on more clients, the firm owner is able to hire more team members to fulfill the work.
As a result…
The firm owner can step back from the day-to-day functions of the business and focus on working ON the business, rather than IN it.
These are some advantages that modern firm owners enjoy:
- Enhanced Work-Life Balance: Partners / firm owners can focus more on their preferred work and passions.
- Increased Productivity: More work is finished as partners and team members are playing to their strengths.
- Reduced Stress and Workload: Delegating responsibilities helps in balancing the workload among team members.
- Better Client Service: Increased efficiency creates a better customer experience.
Common Roles in a Modern Accounting Firm Structure
Let’s check out the key roles in a modern firm structure that boost collaboration and efficiency.
- CEO: Oversees the firm’s overall strategic direction and management.
- Director Of Sales & Marketing: Leads the development and execution of sales and marketing strategies.
- COO: Manages day-to-day operations, ensuring efficiency and alignment with the firm’s goals.
- Head Of People: Responsible for talent acquisition, employee development, and promoting a positive workplace culture.
- Head Of Client Services: Oversees client relationships and service delivery.
- Head Of Technology: Manages the firm’s technology strategy and infrastructure.
- Senior Managers: Lead specific departments or projects.
- Onboarding Manager: Facilitates the onboarding process for new employees.
- Head Of Tax: Oversees tax planning and compliance.
- Managers: Supervise teams and projects.
- Accountants / Bookkeepers: Handle financial record-keeping, reporting, and compliance.
- Senior Accountants: Responsible for complex financial tasks and providing guidance to junior staff.
- Senior Bookkeepers: Managing and overseeing bookkeeping tasks, ensuring accuracy and compliance.
- Junior Accountants/Bookkeepers: Entry-level accountants and bookkeepers assisting with basic financial tasks and learning from senior staff.
The Best Accounting Firm Structures (Based on Revenue)
Please note that the org charts I used below are intended for illustrative purposes only and may not be fully scaled to fit your specific firm.
Team Structure For Firms Up To $250k
As you can see in the org chart below, there are three key roles:
The Accountant/Bookkeeper handles the core financial tasks, the Manager acts as a bridge between the CEO and the operational staff.
Then, at the top, the CEO is responsible for the firm’s overall strategic direction and decision-making.
My core advice at this stage is:
Hire experienced team members early.
Most accounting firms hire multiple junior accountants/bookkeepers before they consider hiring a manager.
My recommendation is to hire a manager as early as you can.
Hiring more junior team members means you’ll still have to “look over their shoulders” with everything they do. Whereas a senior team member can function with more autonomy – which allows you to move work completely off of your plate.
When I started, this was the approach I took.
I won’t sugarcoat it – hiring more experienced staff early on is not the easiest path. It means your margins will likely take a hit.
But I found that the free time I gained from being able to completely delegate many of my day-to-day tasks was well worth it…
And it allowed me to focus on bringing in more clients, which helped fix our margins pretty quickly.
Team Structure For Firms Up To $500k
You may have noticed that this org chart is similar to the one above, except for a couple of additional staff under the COO/Manager.
The Accountants/Bookkeepers are still responsible for handling most of the client work, the COO/Operations Manager oversees the staff, and the CEO handles the overall direction of the business.
As your firm grows, managing the day-to-day operations becomes more challenging.
Rather than trying to handle this on your own, I suggest hiring someone to oversee firm operations.
I often refer to this as a COO, though for smaller firms, titles like Operations Manager, Head of Operations, or Office Manager could be better suited.
The goal here is to shield yourself from parts of the business where you don’t bring much value, allowing you to better leverage your time and skills.
Team Structure For Firms Up To $1 Million
A manager can only oversee so many team members. So as your firm grows and you hire more accountants/bookkeepers to perform client work…
It makes sense to bring on more managers, as well.
Depending on how your firm operates, it may also be helpful to bring on specialized roles like Head of Tax and Head of Technology.
Notice that all of these roles report to the COO – not the CEO (you).
The role of the COO is to shield you from the day-to-day operations of the business and bridge your strategic vision to the team.
Team Structure For Firms Beyond $1 Million
Past 7 figures, a modern accounting firm should look something like this:
Senior Managers oversee Managers who oversee Accountants/Bookkeepers and Payroll/AP/AR Specialists.
Additionally, you have specialized roles to fulfill key areas of the business – Head of Tax, Head of Technology, Onboarding Manager, etc.
Then, you have department heads who report to the COO.
Utlimately, your firm’s structure will depend on the unique needs of your organization, but the main idea is this:
As your firm grows, hire team members to fulfill the work – and then hire team members to oversee that work and shield you from daily operation of the business.
What Accounting Firm Structure Should Your Firm Use?
My opinion:
A modern accounting firm structure will save you time and improve your lifestyle…
While a traditional accounting firm structure will eat away at your time and your lifestyle.
And the specific setup your firm will need depends on your current level of revenue.
What are your thoughts on modern vs. traditional firm structure?
Which does your firm use?
Have you tried making any of these changes in your firm?
Share your thoughts in the comments below!
