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Start my own Accounting Practice

Start my own Accounting Practice

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Hi All,

I understand there are many posts on this website folks asking about starting their own accounting practice, however, I have to ask the similar question tailored to my situation

Background:

I have in total 5 years experience in a global manufacturing organisation, where I started as a Finance Placement moved on to be a Finance Graduate, then to Financial Analyst, and in the end as a Senior Financial Analyst. I qualified for CIMA and quit my industry job to move into Financial Services industry for a change. I currently work as a business partnering role in one of the top British retail & commercial Bank. I consider my self as a people person with strengths in Business Partnering i.e. advising business to improve commercially, cost reductions etc. My technical accounting skills are between good to strong for a corporate organisation. However, I only have some experience in small business accountancy when I was looking after the accounts for a Social Club, included PAYE, VAT and Year end accounts.

I am really not enjoying being an employee anymore, specially in a financial services industry due to culture. Also, we have always been living pay cheque to pay cheque which we are tired of as it is affecting our lives. I always wanted to start my own business and have a lot of respect for people who have done it. I don't have savings to quit my job, so I want to start something on a side but as it would pick up I want to leave my job and dedicate all my time to it. 

In terms of the business:

1- I know what would be the name of my business

2- I am in process of building a website myself using one of the free websites builders

3- I know that I would need to get PI Insurance, register business, get domain name, have some social media presence, get Marketing material ready i.e letter heads, Welcome Pack etc, decide on Software, decide on Pricing. I also need to apply to get Members in Practice Certificate.

4- The services I am looking to offer are, Bookkeeping, VAT, PAYE, Payroll, Budgeting, Accounts Submission, Cashflow, Business Improvements and Probably Tax

Advice and Guidance:

Below are the questions I have in mind and need some advice and guidance in:

1- Have I missed out anything from above which I must do before I start thinking about finding clients?

2- In terms of Pricing, I am thinking of calling local accountants to find out how much are they are charging and use that as a benchmark. To win new clients I would have pitch lower prices to win the business, is this the right strategy?

3- By being member in Practice for CIMA, can I sign off the accounts or do I have to take on extra qualification? Also, is there any comprehensive training available which I could do accounting for specialising in small businesses?

4- What is the best way of finding new clients apart from networking? I will be taking part in local networking events.

5- Software: Should I get Sage? this seems to be widely used by a lot of accountants and would it help if any clients would like to transfer to our firm? Is there any better software you could recommend?

6- I am looking to start this part time and will work from home whilst keeping my day time job, has anyone else done that and how do they manage clients calling them between 9-5?

Thank you all in advance for your opinion.

Also, I am looking for a Mentor in Buckinghamshire/Northamptonshire area. If you would like to help someone get on the feet please do let me know.

Many Thanks,

Replies (21)

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By Phil Yaboots
27th Dec 2015 18:19

Contract?
I'd be amazed if that wasn't a breach of your employment contract. (May or may not be enforceable but what would you do if they dismissed you?)

"I want to start something on a side but as it would pick up I want to leave my job and dedicate all my time to it. "

I can't see how your experience to date would enable you to start a practice; it doesn't look like you have the necessary knowledge or experience. Not a criticism; just how it looks.

Thanks (1)
Replying to memyself-eye:
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By [email protected]
27th Dec 2015 20:34

Thanks

Hi Phil,

Thanks for your response.

I agree it would be breach of my employment contract but I am thinking of declaring it to my employer. The employer allows you have a side business if it does not contradicts with their core business. I am aware of some individuals with side businesses.

In terms of my experience, good part of my experience was in Financial Accounting team where I was doing Recs, Journals, Revenue Recognitions, Expenses posting. Hence, I have good understanding of accounting rules + looking after Social club I had to deal with HMRC with VAT, PAYE and my CIMA qualification has helped me as well. 

I already have someone who is ready to hand over his business to me look after and I have seen the work undertaken by their current accountant which looks very simple. I am not expecting to take on larger/complex clients. I am only looking to take on small businesses which I can handle and develop on that.

If contract is not an issue, does it look like I am on the right track?

Thanks,

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Out of my mind
By runningmate
27th Dec 2015 20:01

Potential clients

You need to ask yourself what services your potential clients want (rather than simply what services you could provide).  For most small businesses the popular services are likely to be tax return & annual accounts.  Those are not the focus of your offering.

So if you do want to offer the services you describe (a) you may need to search a larger catchment area for clients, and (b) you will not be competing with those accountants who do not offer the services which you provide.

RM

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Replying to memyself-eye:
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By [email protected]
27th Dec 2015 20:56

Hi RM,

Thanks for your response. I am looking to offer Annual Accounts, book keeping, VAT returns, PAYE and Payroll services. However, I would like to add other services where I have personal interest, such as, offering small businesses areas for improving their financial performances & possibly commercial advice etc.

With above in my mind do you think am I on the right track?

Regards,

H

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By GR
27th Dec 2015 23:33

1. Letter of engagement, AML procedure, T&C's, complaints handling procedure, becoming an authorised tax agent with HMRC, have some sort of client management system (e.g. excel spreadsheet with all deadlines, etc), letterhead, email signature, continuity of practice arrangement, etc. Also, it's a little alarming that you will "Probably tax"- this is one of the most important fee generating areas for practice accountants (especially CIMA's who can't do audit).

2. Yes- maybe a reduction of 40% of average price in year 1 (then 30% in year 2, and 20% in year 3, etc)- you can always increase fees later on subject to your T&C's. You should be able to afford to offer a large reduction given that you don't have a premise, employees and will still be working full time.

3. Your clients may need signed accounts for mortgage purposes and assuming you have a practising certificate signing them should not be a problem. You should probably consider studying for the ATT (a tax qualification which covers the basics in tax for small businesses).

4. Word of mouth/referrals (offer your existing database of clients referral fees if they pass on new clients to you). Google/SEO/PPC/Adwords are also important but not as powerful as word of mouth/referrals in my opinion. You could mail shot local businesses in your area- although they may treat your emails as SPAM. Have you thought of what sector you want to specialise in and how to break into and penetrate that sector and who you could partner with?

5. Don't get SAGE immediately. A combination of an Excel spreadsheet, VT and the HMRC website will suffice for bookkeeping, accounts and tax for the time being. Should a client use Sage you can get this at a later date.

6. You will need to let your clients know that you can only offer an evening and weekend service to begin with, and hope to offer a weekday service in the near future (they shouldn't have a problem given the smaller fee). They will probably be busy with their customers during weekdays anyway!

Thanks (1)
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By tom123
28th Dec 2015 09:23

It will be a massive jump.

I work full time in industry, and like you am CIMA qualified (15 years). However, I don't believe the CIMA qualification on it's own is that much help to you in running a small practice. There are, of course, lots of CIMA members who work in practice, but it is a minority sport.

Your day to day work, whether in financial services or other setting, revolves around the regular (probably monthly) reporting in a business large enough to need a dedicated finance department. And one where regular journals and reconciliations are needed. 

I also look after five clients as a 'side' business - although in reality this is almost a hobby rather than anything else. 

Even so - I decided to complete ATT in recent years, to get up to speed on tax.

The focus of the smaller business owner (ie one who needs an external accountant) is naturally to run the trade part of his or her business.

Accounts, to them, really just mean tax compliance - which is generally a once a year activity, unless you involve VAT.

Assuming you get clearance from your employer, you need to think about the following:

1) Registration with CIMA as a MIP, and for money laundering supervision. Check you can meet their MIP requirements, eg alternate etc.

2) PII insurance.

3) Engagement letters.

Then you can think about the fluffy things like websites etc.

You mention Sage, which of course is popular software for historical reasons in small but not micro businesses who have been around a while.

Modern new starters are more likely to have signed up for online offerings.

Do not underestimate the complexity of a small business - especially one run by one person. They may not have separate business bank accounts, you may need to get to provide lots of admin support - which you may struggle to earn much for.

 

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By Ken Howard
28th Dec 2015 11:42

"Probably Tax" !!!!

That comment really worries me.  Most small clients only want their tax sorted out - they don't give a stuff about management accounts etc.  Unless you have a niche, "tax" will be your bread and butter work and the book-keeping/accounts will only be a means to the end of getting the tax return sorted.  A small client won't want you to do their accounts, VAT and PAYE and have to hand it over to another firm to do their tax returns.  Tax is at the heart of a small practice.

As for software, most smaller clients won't need and won't pay for SAGE - they'll want something a lot cheaper and easier to use.  So, don't waste your money on SAGE unless you start getting larger clients who do need it.  In the meantime, get something cheap and cheerful like VT.

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By Tim Vane
28th Dec 2015 11:49

@OP - it sounds like your thinking is rather muddled, and that you just don't have the experience or breadth of knowledge to start a viable practice. You would be doing yourself and your potential clients a disservice to even try.

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By Moonbeam
28th Dec 2015 11:54

Good luck to you

Your whole approach is absolutely excellent.

It will be hard, but you will manage.

I agree with tom123 that ATT is a excellent qualification to give you much more of a solid academic feel for tax, and VAT. It was only after I got my ATT letters that I felt I stood a chance of doing any good quality tax work.

You are absolutely right in looking for a mentor. They don't have to be based anywhere near you because most mentors won't want to spend too long with you, so email is probably best. You will need their help when a few things go pear shaped and you discover reality was not covered in any exam paper.

You will learn tons of stuff just by logging into Aweb every day. A few years ago another accountant who wanted to go out on their own set themselves a target of being able to answer all the tax technical questions on Aweb as another way of training. That may not be relevant to you in your first years but it does show what breadth of subject matter we have on Aweb.

Facebook is a good place to get new clients, as if you are quite good on the technology side and willing to do regular postings you should do quite well. Client quality may unfortunately not be very high (which is why I don't bother with this) but it could be a quick way to build up your business, after which you can target better quality business.

Xero is the "flavour of the month" option at present and cheaper than the Sage option. I would go for Xero first off, and worry later about Sage Line50 option (no other Sage products below that option are worth looking at).

Some of your new clients will take you out of your comfort zone. Some may not want to pay you for all sorts of amazing reasons, claim that your tax calculations are wrong because someone "down the pub" pays less or have no desire to submit details of cash receipts. Always get paid in advance with no exceptions.

One of the advantages of Aweb is you can tell us the latest tall story you've been given and we'll chip in with even more bizarre experiences. So you need not feel alone!!

Thanks (4)
Replying to Moonbeam:
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By SNOOPDOG
08th Mar 2018 13:38

Moonbeams
You are a star and I salute you. You are positive and helpful with unremitting encouragement.
Life is a learning process - learn as you go.

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By Manchester_man
28th Dec 2015 17:21

@Moonbeam, what a really kind and we'll structured post, the contents with which I agree entirely.

Merry Christmas

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Glenn Martin
By Glenn Martin
28th Dec 2015 18:10

Some good advice above from Moonbeam
I was in similar position to you although I had initially trained in practice for 12 year then 13 in industry.

I decided that I wanted to return to practice so did the ATT to get my tax knowledge up to speed as I had become very specialist in the area my FD role covered.

I started building part time work up whilst saving up to take the final step and leave my job.
Tax is a big part of what you do as a general practioner, however if you have CIMA skills you may want to try and put together some part time/virtual FD offering as you might enjoy it more and that
Is where your skills lie.

I am competant at tax but I dislike having to deal with HMRC too much so would not want to specialise in it, my skills lie in getting a business running well and making more money so that is where I try and focus what I offer.

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By [email protected]
29th Dec 2015 12:46

Hi All, 

Hi All, 

Greatly appreciate your advise & for sharing your experiences.  There are certainly things, recommended on the above posts, I will add now on to my plan.

Probably Tax: (Big mistake :))

The reason I said 'probably tax' was because that is the area I feet least knowledgable in. I can certainly do it. Based on your response this is the areas I must focus on to get the main business and build on the client relation to offer my other services.

I am looking into ATT, it is another 3 years qualification. Do I have to be qualified or can I just read the books and learn from it? I am not shying away from it, I know I would need to do it, but just want to weigh cost/time vs benefit at this particular time?

 

Clients: 

I will look into Social Media i.e. Facebook, and other main stream ways. However, I didn't think too much about the specific Sector? Is it good to focus on specific sector or go get any client I can get to start with and as I have base business align myself to sector specific 

 

Mentor& Guidance:

I have been a member of Aweb for a year or so, but never really used it. I must agree with Moonbean you could learn so much by just reading the questions from various fellows on this forum. They are very helpful, I am sure I will stick to it for long time. 

Moonbeam: Special thanks for the kind words of encouragement. 

Grennzy: Part time / Virtual FD sounds really good and that is where my Skills lie. I love driving the businesses and make them more profitable. We could team up if you are close by!

Once again Thanks all for your help.

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Replying to ketteringUK:
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By v.knazevs
29th Dec 2015 13:34

ATT

<a href="mailto:[email protected]">[email protected]</a> wrote:

I am looking into ATT, it is another 3 years qualification. Do I have to be qualified or can I just read the books and learn from it? I am not shying away from it, I know I would need to do it, but just want to weigh cost/time vs benefit at this particular time?

You do not need to study for 3 years to get ATT qualification. You need to pass 3 exams (out of choice of 6 available).

Or you can buy all the relevant study materials from Tolley and that will get you up to speed with tax.

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By Moonbeam
29th Dec 2015 13:28

ATT etcetera

Although I took and passed the ATT exams, because I didn't take the VAT paper,  I recently paid for a Tolley course for paper 6 VAT. Tolley do mock exams. I won't be sitting the exam itself as I don't need the letters. The big drawback with ATT is that you can no longer buy a few books, as the only way to get uptodate study material is to sign up to a Tolley home study course, much of which is not needed. 

You are right to think about specific sectors for marketing reasons. This is a massive subject area on its own.

I market my business to startup limited companies for everything including tax and am having a second website built to market to 10-15 person companies who need management accounting skills.

You need to work out what sector of the market you will do best in, bearing in mind your skills, and then think of an avatar representing a typical MD of that area. Then tailor your website and marketing material to that avatar. Get a few books on marketing.

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Replying to SXGuy:
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By [email protected]
29th Dec 2015 18:34

The markets I would like to penetrate are small size limited companies, Start ups and Self employed individuals. Fingers crossed, I might have a potential client who is ready to handover his accounts to me. As he is in Haulage industry he know many driver contractors as well who he could refer to me. 

 

By Sector, I meant more Industry sectors, such as, Healthcare, Property, Food and Beverages etc. Do you think I should be specific to any particular industry or should I take on all companies which come under the small limited companies?

 

Thanks 

 

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By tom123
29th Dec 2015 20:57

Small Ltd, start ups, self employed

That sounds like 'everyone' to me - or at least everyone who would consider working with a small 'one man band' accountant.

My advice would be to start with straight forward trading businesses, dealing in products you can understand.

Try and avoid anywhere with unknown unknowns - if you get my drift.

You might, for example, choose not to deal with anyone with overseas trade for example.

I know, for example, that ministers of religion, MPs, fishermen, and Doctors/Dentists have special rules, as do Solicitors.

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Replying to SteveHa:
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By Chris Maslin
30th Dec 2015 10:16

This

tom123 wrote:

That sounds like 'everyone' to me - or at least everyone who would consider working with a small 'one man band' accountant.

I imagine it's a mistake many of us fall into.  ~7 years ago before I started I met with another accountant and he stressed to me how important it was to get a niche.  Doesn't matter what niche, could be by trade (eg dentists, plumbers) could be by demographic (eg I know one person who specialised in older, divorced women...you may scoff, but it seemed there was a juicy market), could be by software package they use.  Being young and cocky, of course I knew better, why would I be so stupid as to rule out 50-95% of businesses out there from using me?

My first couple of years were a real struggle.  Then, more by accident than careful planning, I fell into the niche of FreeAgent using freelancers/contractors.  It's a much bigger market now than it was ~5 years ago (FreeAgent has rocketed in popularity), but at the time, it was a small, but brilliant niche.  It was fairly new, so my competition was minimal.  FreeAgent users were typically IT savvy intelligent people, so them working with me online wasn't an issue (meaning geography wasn't an issue).  From a marketing perspective, it meant people found me "You're that accountant that knows FreeAgent really well, right?" rather than "I'm also talking to 20 other accountants who I might use, explain to me why you're better than them".

I think that ship has largely sailed now so I'm not recommending you copy...but I would reiterate the advice given to me before starting (which I ignored but later realised was good), that you should find a niche.  Trying to appeal to everyone typically means you don't appeal to anyone.  Small businesses is NOT a niche, it's 95+% of the businesses out there.

Good luck with it :)

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By chrisdxuk
30th Dec 2015 10:33

Know your clients

I set up almost ten years ago. Like all newbies you chase the clients, thinking with every new one this is great. Well I picked up a good number of clients and one real pita.

Constantly calling and demanding this that and that. Always droning on about the cost of this or that service. Long story short, they were sued by another supplier, the claim went to court, lost and declared their firm insolvent. Yours truly had to sort the mess out obviously with an insolvency specialist. Did not get paid but eventualy got rid of them.

All this within 18 mths of setting up.

Lesson learned. I choose the clients they don't choose me.

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By Robert Lovell
30th Dec 2015 11:12

Start up advice on Aweb

The Start Up In Practice page is a good place to start for regular news and guidance:

https://www.accountingweb.co.uk/startup-practice

I'd also recommend having a read of Aweb's Start Up In Practice Guide, which you can download here:

https://www.accountingweb.co.uk/accountingweb/sep14/563402/2014-practice...

Best of luck!

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By SNOOPDOG
08th Mar 2018 13:27

I say go forth and flaunt yourself in the pursuit of assisting small businesses in accounts preparation and self assessment tax
compliance
We all learn as we meet different cases and it's about having confidence and honesty. Most of the work is basic run of the mill stuff.
Remember for every debit there must be a credit. LOL.

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