Newly qualified ACA - have practice ambitions

Dear everyone,

This is my first message in this forum.  I am a recently qualified ACA (qualified in Dec 09) and am keen to start my own practice in the near future.  I know I need to have 2 years post qualification experience to get a practicing certificate prior to starting.  I have qualified with a mid tier accounting firm and work in their audit department.  I have a few questions at this stage that I am seeking guidance on:

1.  I am planning to move to the tax dept. within my company to understand the tax side of things inorder to service any client that comes to me in my practice.  For this purpose I am also pondering to do the CTA.  I wanted to know whether this would be a useful qualification to have in practice ?  Are clients sufficiently complex that they require the knowledge a CTA might possess ?

2.    I have spoken to some practice managers but did not get a good idea of the profitability of having ones own practice.  I want to know what are they average profit margins overall in this business. For e.g. for a turnover of GBP150k ?

3.  What are the main challenges in starting a new practice and whether anyone is able to be a mentor to guide new budding entrepreneurs in this field.

More questions to follow but Id appreciate any views on these.

Many thanks,

Mo.

Comments

Do the CTA exams if you can be bothered

chatman | | Permalink

If you can be bothered then do it. You will always get people coming to you for tax advice, and the CTA will make you a better tax adviser. Also, two years after qualification as an ACA, your tax knowledge will be a little out of date; with the CTA qualification you will be bang up to date.

The accounting side is easy for an ACA, it is the tax that can be challenging.

Marketing

chatman | | Permalink

The main challenge for me, and probably for many accountants is marketing. However good you are, you need to get clients before you can make a living. There is a lot of advice in AnyAnswers about marketing. My strongest piece of advice would be not to use paper directories, like Yellow Pages.

Toni Hunter's picture

CTA

Toni Hunter | | Permalink

Our CTA qualified Tax Partner is also a CIOT lecturer and CTA examiner, he regularly takes on ad hoc assignments from other practices, basically outsourcing the specific question/case without jeopardising your relationship with the client.  He enjoys this aspect of his work as it provides a different challenge that allows him to use his expertise.

We have a similar arrangement with a VAT specialist because we don't have the expertise in house and have not yet found need to employ or train in this area.  I believe we can't be all things to all men and should stick to our core strengths.  This also helps from a marketing perspective.  A general practitioner could be construed as an average practitioner.

When you explain to a client that the Tax situation in their circumstance is complex and you would like to involve a specialist they will commend you for having the integrity to know what is best for them, not necessarily for having all the answers.

Also, it's not just about passing the exams, have you got the time whilst developing a new practice to keep up the necessary structured CPD and read publications like Taxation every week?  I would suggest that when your practice starts up, you will attract a high volume of small clients where the scope for high level tax planning is limited.  Obviously over time this will (hopefully) change to lower volume, higher fee client base.

To summarise, as long as you have adequate Tax knowledge to identify opportunities or possible tax pitfalls (in other words, keep up with CPD offered by ICAEW et al), you will be just fine.  Seek an alliance with a well respected Tax expert and utilise them until you have enough scope to warrant the additional training.

Just my opinion, I hope it helps.

Bob Harper's picture

Start-up

Bob Harper | | Permalink

Build your strategy first (now) and then decide if you need to do CTA. Your margins will be driven by your strategy in terms of your choice of target market and pricing policy.

Without knowing you I cannot be sure but it is likely to be getting clients and cash through the development of the practice, specifically keeping the growth as you become busy.

I offer a Mentor service, so does Jason Dormer and I think Mark Less does and you can always talk to the 2020 guys. 

Bob Harper

Portfolio Marketing

Jason Dormer's picture

Starting out

Jason Dormer | | Permalink

Thanks for the mention Bob.

Mo

In answer to your questions in turn:

1. Do you need to do CTA?  Depending on your target market I would have though that AAT would be more than sufficient to cover all the tax issues that will arise from the small business sector.  You can distance learn whilst you build up some practical experience within the tax dept of the company that currently employ you.   As and when tax issues arise that are outisde of your knowledge / experience you could always use a specialist.

2. Without further details is will be impossible to gauge your profitability.  Will you be doing the work yourlsef or will you have employees? If employees how many and at what level?  Will you be working from home or renting / buying an office?  What is your target market, service offering and pricing policy?  With answers to these questions will be able to give you an indication of the profit that you could expect on a 150k turnover.

3. The main challenges that face people starting an accountancy practice are:

 - Marketing - getting (the right) clients;

 - Putting the right systems in place;

 - Cashflow / insufficient capital  / billing / credit management / credit control

 - Knowing when to say no / dealing with people / trying to to be all things to all all people

 - Pricing (and scoping) correctly

 - No support network in place

 - Getting the name known before referrals start kicking in

 This is not exhaustive but are some of the areas where start ups struggle. 

Hope that helps and good luck should you decide to proceed.

Regards

Jason Dormer

Seahorse (UK) Ltd - For Accountants & Bookkeepers

www.seahorseuk.co.uk

 

 

 

 

 

Toni Hunter's picture

Did you mean ATT Jason?

Toni Hunter | | Permalink

If so, I agree that this qualification will provide adequate knowledge and ongoing CPD to cater for the majority of SME clients. 

Bob Harper's picture

Advanced Tax Planning

Bob Harper | | Permalink

Our research indicates that firms (depending on their strategy) need to embrace what I call Advanced Tax Planning. I am not sure the ATT will go deep enough so I'd suggest get the strategy sorted first and then think about qualifications. 

Personally, I'd suggest learning more about business, specifically strategy, marketing, pricing, management and sales so you are better at being a business owner and advising/coaching clients.

Bob Harper

Portfolio Marketing 

Why ATT?

chatman | | Permalink

The OP is an ACA and is going to get experience in his firm's tax department. What would ATT add? 

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