Starting an Auditing Business

Starting an auditing business can be a great way to capitilize on your expertise and experience. Are you the expert in finding overcharges on your phone bill? Do you agonize over the amount of waste in your current job? Do you love tracking down the proof and finding the savings or refunds? Then perhaps starting an auditing business is the perfect business for you.

There are many types of audits: financial statement audits, contract audits, compliance audits, process and fraud audits, energy audits, utility bill audits, risk management audits, safety audits, tax audits. Some of these may require special training and certifications, and some may not. You will have to do some research to determine the regulations/requirements for your business. Even if there is no special certification required, you may still want to work for an auditing firm to get some experience.

Once you have decided on the type of audit you will specialize in, the next step, as for any business, is to write your business plan. Be sure to determine how you will bill your clients. If you are performing compliance audits, for example, you will probably want to charge either an hourly fee. Or you may want to charge a flat rate for the level of audit you will perform. If you are auditing utility bills for overcharges or billing errors, you may want to charge a percentage of the refund obtained if you find an error.

Auditors do usually earn their salary through commission payments. Clients will usually pay them as much as 50% of any overcharge or financial deficit you find, such as utility bill overcharges, employees’ salary overpayment, or over paying taxes. Keep in mind though, that you will probably not get paid until your client actually receives his refund. Be sure to stash enough cash aside to cover the lean times until your commissions start coming in.

You will also want to form some type of corporation such as a limited liability corporation as the legal form for your business. Since you will be performing a professional service, you will want to limit our legal liability and incorporating will provde that protection. Many small businesses form limited-liability corporations because of they are simple to start. Incorporating will also provide some tax advantages for your business. Your business plan should lay out the legal form of business you will establish.

There are several professional associations for auditors that will provide information and support as you start and grow your auditing business. As always, I recommend you join some of these. I have always found most professional groups to be an invaluable resource. You can find them online by searching for professional auditor associations. There are simply too many to list here.

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