Calling all self-employed CAs, starting a practice

If you've been there, done that, worn the hat, muddied the boots, I'm looking for your advice...

Didn't find your answer?

Good morning all

Long time listener, first time caller... always wanted to say that.

After 5 years of working in practice, I have come to the realisation that in order to do what I really want professionally, I will likely have to start my own practice.  Now, I am well aware of the compliance requirements (practicing certificate, PII, HMRC Agent Account, registering for a self-assessment, convincing my wife...), so I suppose I am seeking something closer to your personal experience/opinion of it.

For some context: I am an ICAS Chartered Accountant based in Edinburgh, currently working (and, well, always have) for a regional sized firm (12 partners, 140 staff).  I have 5 years experience (2 years post-qualified) and am probably best described as a general practitioner specialising in OMBs and individuals as opposed to a particular service line such as accounts or tax (although, perhaps, given the nature of OMBs, tax is usually the driver).  I started off in accounts then moved to audit (before escaping) then tax where I currently sit.  My day-to-day is a good mix of advisory (IHT/succession planning, share/business valuations and all the other ad hoc work that comes with small businesses) and oversight of the compliance work for my assigned client list (accounts, tax returns etc.).

Anyway, the future at my firm looks like taking over a retiring partner's client base and, driven by worries around servicing abilities, being somewhat discouraged from going out and getting my own clients.  Effectively, my capacity should be retained for servicing existing clients.

Objectively speaking, my dream and motivation for getting into this racket of ours is to build a client base close to home, drive down the local high streets and be able to point at every 3rd shop and say, "That's a client" - this won't be possible at my current firm for the avoidance of doubt.

Any advice/thoughts/comments on my plans from those of you who have done (or are doing) what I'm seeking to achieve are most welcome.

 

Thanks

 

JHF CA

Replies (17)

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By Matrix
13th Jun 2024 08:22

There are loads of threads on this if you do a search. I wouldn’t target shops and you don’t have to have a niche but I would work out what you enjoy doing and who is your ideal client.

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By JHF CA
13th Jun 2024 08:28

Thanks - The shop comment was more metaphorically than literal. I want to be part of the community.

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Replying to JHF CA:
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By Matrix
13th Jun 2024 08:40

That sounds great. When you are able then join local networking groups and facebook groups.

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Replying to JHF CA:
By ireallyshouldknowthisbut
13th Jun 2024 13:51

JHF CA wrote:

Thanks - The shop comment was more metaphorically than literal. I want to be part of the community.

Well when I drive around my local area I act for quite a large number of individuals in each local village or area, often the "big houses". I was out two weeks ago with the kids and did the "I work for them", "this house too" down one of the more prosperous roads in the area. It was a bit silly if I am honest, but it can happen. Fundamentally if you are decent at what you do and especially if you have a niche, then you will become well known.

Networking is key. I talk to a lot of other accountants. For example on a handover I will take the opportunity to talk to the outcoming/incoming accountant about what they do, and what we do. As a result I get quite a lot of referals, and for work I dont want, I send them to other firms. Its keep everyone happy.

What I would say however is with only 2 years PQE you are but a youngen. you might like to keep making your mistakes on your current clients before going on your own. Also you need quite a lot of ££££ in the early days, it takes an awfully long time to build a decent practice. I started with a lot of advice as the compliance work is painfully slow to covert to cash, albeit wher the profit is longer term IMO. You can take 2-3 hours to close one tax return by the time you factor in the one or two you didnt get, and you dont get to file it for 6 months and then not again for 18 months.

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By Tasnim Mustafa
13th Jun 2024 08:44

I started with zero clients and zero practice experience, so you're already at a better starting point than me!

I would say pick a niche, service the clients better than others in your area and then grow by referrals. Keep your costs down, but don't be afraid to pay for specialist advice when you need it.

In terms of growing your team, hire slow, fire fast!

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By Roland195
13th Jun 2024 10:09

I'm not sure the life you are yearning for exists anymore - toddling off down the street to get your hair cut, pick up the cashbook for the greengrocers and stop outside the bank for a chat with the Manager? I think I'm describing the opening of Dad's Army.

I know you weren't speaking literally, but how confident would you be in acting for the greengrocers for instance? Will you be able to provide the day to day services that such a client will need - payroll & pensions, VAT & book-keeping? Will you be able to do that at a fee level that they are willing to pay and will keep your wife in the standard she is accustomed to?

These days you can build your own client base anywhere and arguably it's better if this isn't close to home.

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Replying to Roland195:
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By I'msorryIhaven'taclue
13th Jun 2024 11:32

Ahh, but could you tolerate your greengrocer client's rudeness? Will you mind the undertaker not paying your fees and the butcher taking up your valuable time with his interminable tales?

And are you willing to AML report that amiable cockney who sells nylons and whisky from his suitcase? Or Mr Godfrey's sisters for their illegal jam-still!

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Replying to I'msorryIhaven'taclue:
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By Roland195
13th Jun 2024 11:53

Brought this on myself - Stupid Boy.

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Replying to Roland195:
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By JHF CA
13th Jun 2024 12:14

I was thinking Goodnight Mr Tom. I do see your point though. With the advent of technology, there will inevitably be a reduction in human contact that would have existed historically. I do, however, believe that there is still a place for the local CA: I think some business owners still want someone local they can sit down with and answer their questions.

I'm cautiously confident about the actual servicing side, as well as being able to be competitive yet profitable with the fees. As you say, the danger is satisfying the wife and 6 month old!

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Replying to JHF CA:
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By FactChecker
13th Jun 2024 13:07

You may have, however flippantly, put your finger on one of the key aspects in your last sentence.

Warning: this is about me nearly 40 years ago and some things (like technology) have changed out of all recognition ... but the thing that made the decision easy for me was when my wife turned to me and said "If it makes you happy, do it".

Of course you need skills and luck (and the personality traits to drive you on), but you also NEED a rock/foundation on which you can rely (trying to avoid all the clichés of 'has your back' etc) ... and if you're in it (the marriage) for the long-haul then a joint level of commitment is essential.

I doubt she envisaged the hours and weekends for which I became 'unavailable' (any more than I did), but her support remained unswerving (if occasionally robust) - without it I'd have thrown in the towel on more than one occasion.

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Intercity
By Mr Hankey
13th Jun 2024 10:52

When I first started on my own I used my own phone, so now all my personal & work contacts have the same number for me and it's too much faff to re-do it now.

If I was starting again I'd buy a seperate work phone, so I could turn the damn thing off outside of office hours!

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Replying to Mr Hankey:
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By JHF CA
13th Jun 2024 12:15

Practical - cheers.

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By CJaneH
13th Jun 2024 11:24

Having retired last year I would like to comment what drove me out was increasing compulsory computerisation. I had a pool of clients who on the whole would use a business bank account for most transactions, keep invoices and some not all would keep records on paper or spread sheets. Teaching them to use bookkeeping software was a step to far for me. If you wish to serve the smaller business you will need to guide them as to which software to adopt and probably have to teach them how to use it. You are probably much more savvy than me at this area but be aware of this problem.

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Replying to CJaneH:
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By JHF CA
13th Jun 2024 12:23

I think it's a fair comment and definitely something to bear in mind - thank you. I also think there's an element of that's what we're here for. If the technology is something they don't want (or can't) deal with directly, it's certainly a service to offer. Similarly, if there's a desire to use it with training and guidance as necessary - there's another service. One door shuts, another opens type thing!

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Kitten
By Hazel Accounts
18th Jun 2024 11:03

Don't rush into this - I am a sole practitioner but had over 15 years of practice experience before I started on my own - not saying you have to wait that long but 5 years doesn't seem that much.

Also you need a way of supporting yourself financially as it takes time to build up. I was fortunate that I started when my kids were small so I only wanted to work part-time and my husband mostly supported the family. At the beginning I also did some contract work including credit control which I hated, but needs must so you must be prepared to do things you may not want to initially.

With one of my first clients (found via social media) I started as a morning a week just book-keeping but the contacts I made there have lead directly and indirectly to over 15 of my current clients (some quite sizeable) and they are also still a client over 10 years later and I do all their accounts and tax now. You never know where things may lead. It also is how I met the wonderful lady who is now my go to book-keeper for client's who need one aswell as helping me with adhoc bits and payrolls.

Do not underestimate non-billable time - training, compliance and just admin generally!

Manage client expectations from day one that you do not answer queries out of office hours (for me that's all evenings and weekends unless there are special circumstances). If you choose to work that's different, and I do if there's not much else happening at home, but I never call clients and I set any emails I prepare for delayed send on next working day.

Know when to seek outside help - I bowed out of one client recently when some complex offshore issues arose. (I am happy with basics but this was just too risky and needed very specialist knowedge as residence was unclear with a possible loss of domicile of choice). You have to know what you do not know!

But then go for it - I enjoy it (well a bit less now HMRC are so difficult) - as they say Life is not a rehearsal!

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paddle steamer
By DJKL
18th Jun 2024 12:19

Is this an all or nothing re current employer?

I am guessing existing employer has restrictive covenants within your contract (Your indication re their size suggests this will be the case). If this is the case a plunge into practice with no client base and a family to support is daunting, having savings to cover living costs for possibly quite a long time is likely essential.

I first took plunge age 34 ,just as we had our daughter and my wife was on maternity pay I was made redundant (Retail Clothing business where I was FC), not great timing as after x weeks on SMP what she received back then was not much.

I had left my previous practice role four years earlier age 30, however I had left on good terms and accordingly landed a decent amount of subcontract work from that firm, even then I was still back as their employee within a year. (Redundancy money only goes so far covering erratic fees)

My second foray was when back in industry, I set up a part time practice, a lot easier when the fees are not feeding you. My employers agree to relax my restrictive covenants provided my client activities did not eat into my working day for them- I told clients not to call me during 9-5

I suspect with your current employment you are between a rock and a hard place, and with limited experience (2 years PQ) a partnership will not arrive quickly.

Maybe a move to a smaller firm that know you seek a partnership in the future might be a stepping stone, someone looking to retire in a few years- it will be a lot easier if you have money to buy them out, same applies trying a flying start just buying a block of fees.

p.s. Am also in Edinburgh though I no longer practice.

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Pile of Stones
By Beach Accountancy
25th Jun 2024 20:01

Being willing to do bookkeeping while you build up your practice helps with the cashflow (and also may gain you exposure to accounts packages that you haven't used before).

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