Before you get started and undertake the challenge of starting your own practice it’s important to know what your day to day role and responsibilities will be. The National Careers Service says that private practice accountants usually have the following day-to-day duties:
preparing financial statements, business plans, and budget reports
managing clients’ spending and costs
filing tax returns and giving tax advice
forecasting profits and performance
helping businesses that may be in financial difficulty
You will be working with numbers day in and day out, so being very numerically and analytically skilled is a natural prerequisite for the role.
Having the right qualification is an absolute must for starting your own practice, there’s a whole range of vocational qualifications out there and a lot of the time, people who have studied at university often need to take the same exams. The most important qualification of all, is experience. Whilst it can be difficult to get experience if you’re training, knowledge of how to run an accountancy firm will help you to hit the ground running. If you have an AAT qualification and a few years’ experience in an existing firm, you should have a good understanding of the systems and methodologies needed to run your own business.
Getting up to speed legally is an important step before you take on your first client, it is a requirement that any personal or any firm providing accountancy services is registered with and monitored by a recognised supervisory body (like AAT!). These reporting bodies may require you to hold a practising certificate when running your own business.
You also need to have formal authorisation from HMRC to deal with them on your client’s behalf, you have to get an authorised agent code or reference number for each type of agent authorisation.
You should understand the industry guidelines and regulations. This includes data protection regulations and anti-money laundering regulations.
Consider insurance. Your clients are going to rely on you to be precise with your figures and calculations, but sometimes mistakes occur and so it’s important to make sure you are protecting not only yourself, but your clients too. Professional indemnity insurance is likely to be your key cover. It’s an important consideration for any business that gives professional advice.
For accountants, professional indemnity insurance can cover mistakes such as professional negligence, unintentional breaches of copyright or confidentiality and loss of data.
Other covers to think about are public liability insurance, employers liability insurance and buildings insurance.
The steps you need to take
If you’re an accountant already, it’s likely you’re already versed in what you need to do when setting up a business. But remember, there are a number of things to do when starting up a new company which include:
Choosing a legal structure; are you going to be a sole trader, set up a limited company or form a partnership with someone else?
Writing a proper business plan; your business plan is the roadmap you can use to chart how your business will grow and succeed. It forces you to research your competitors and identify how your business will be unique.
Setting up with HMRC; you’ll also need to pay your own tax by registering with HMRC
If you’ve run through these steps and are confident that you would still like to set up your own practice, it’s time to establish if you are going to offer conventional accountancy services or if you’re going to offer something different. There isn’t necessarily anything wrong with being a generalist accountant and offering your services to a range of clients, but this might make it more difficult to stand out from the crowd.
Your difference might be a specialist focus. For example, I specialise in working with female entrepreneurs and influencers. Once you have established your niche your can build a reputation for providing those services and clients will recommend you to their own specialist network.
Another differentiator might be the type of service you’re offering, like specifically offering bookkeeping or tax advisory services. And with tax as an example, you can drill down even further into Capital Gains Tax, VAT or tax planning within your marketing.
Historically, an accountant was for life not just for Christmas but its now easier than ever for clients to shop around and switch accountants. This is both a challenge and an opportunity for us as business owners. It means that you can’t always rely on repeat business, but as a start-up you could take a slice of the market by being proactive.
Finding your niche, as we have looked into, would give you a head start on capturing a market. You can then target your marketing more effectively by having a much better understanding of the clients your trying to win.
COVID-19 has brought with it many challenges for many people but for certain industries it has provided opportunities for growth and scaling. Within the accounting industry we’ve seen location no longer as a barrier to clients where it was previously which has meant that potential client base has expanded indefinitely. With location no longer a barrier, client are focussing much more on quality, service and price. So if you’re able to pitch at the right point, you will reap the rewards.
Setting up your own accountancy practice takes time, effort and dedication but there’s a huge opportunity out there for agile firms who offer something different to the market.
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