When Amy Northard, CPA, left a traditional accounting firm to open her own practice geared toward self-employed creative types, she had no idea if there was enough demand to keep her busy.
Six years later, her Indianapolis-based firm--marketed online as "accountants for creatives"--has carved out a niche serving creative entrepreneurs from working artists to wedding photographers and web designers. The firm has doubled in size every two years and now employs three other full-time workers, including two additional CPAs, and a part-time staffer to handle the tax needs of clients from across the country.
"I didn't ever think the business would be big enough to basically support four adults full time," Northard said. "I'm just excited to see where it goes."
Northard's firm has tapped into a growing piece of the American labor market: those who work as independent contractors or freelancers or are otherwise self-employed. Nearly 42 million Americans were classified as independent freelancers or contractors in 2018, with 3.3 million reporting income of more than $100,000 a year, according to a 2018 report from consulting group MBO Partners.
Sometimes referred to as the "gig economy," the growth of contracted services and jobs can mean people's livelihoods are coming from a range of places. On the lower-skilled end, it's people who are driving for Uber or Lyft to bring in extra cash, serving as virtual assistants, or renting out their houses on Airbnb. On the other end of the spectrum are highly compensated individuals like business consultants or federal government contractors performing key tasks.
U.S. economists Lawrence Katz and Alan Krueger found those working in nontraditional arrangements--defined as self-employed, freelancers, contractors, on-call workers, and temporary help agency workers--rose from 10.7% of the overall workforce in 2005 to 15.8% in 2015, according to a working paper published by the National Bureau of Economic Research.
While it's hard to make any sweeping statements about a group present in every industry and at every skill and income level, this growing segment of the labor force by and large can mean opportunities for interested CPA firms, given that individuals' tax situations become more complex once they come off a payroll and become their own boss.
Following is advice from Northard and other CPAs on how to attract and serve this subset of clients.
Expect clients who are new to working with CPAs
Many come to...