There are a number of reasons to start your own accounting practice. While setting off on your own can seem daunting, running your own business has many benefits. You call the shots about how to operate your practice, how much you charge and what clients to take on. But where do you start?
This guide will show you how to set up an accountancy practice through the following steps:
- Make sure you’re qualified
- Research the market
- Define your target clients
- Choose the appropriate insurance
- Set up your practice
- Select your accounting software
1) Make sure you’re qualified
If you’re a more seasoned accountant, you may wish to skip this step. More than likely, you’ll already have the right qualifications, as well as sufficient knowledge of the system and methodologies you need to do the job.
However, if you’re new to accounting, the first step to starting your own practice is making sure you have the right qualifications. An accounting degree gives you useful theoretical knowledge, but you don’t necessarily need one to become an accountant.
There are other vocational qualifications you can take, which even people with degrees need to get. Professional accounting bodies to consider include:
2) Research the market
Before setting off on your accounting adventure, it’s a good idea to research the market to find out where there might be a gap that you can fill. The higher the demand and the lower the competition, the more likely you are to succeed.
Remember that accounting services can be provided by:
- Qualified accountants working in practices of all sizes
- Unqualified people offering more basic services like bookkeeping
- Online accountancy businesses (these businesses often charge competitive fees)
- Banks providing personal tax return and planning services to customers
Scan your local area to identify how many businesses like these already exist and how you can differentiate yourself from your competitors. Maybe you can offer a more specialised service or set lower prices to draw clients to you.
If you can, find out how much your competitors charge for their service packages, as it will help you set reasonable and competitive prices for your business. It’s also good to investigate how other practices of similar size to yours are set up. For example:
- What services do they offer?
- How large is their team?
- What’s their office setup?
Researching the market and your competitors will help you create a service package that sets you apart from your competition and appeals to your target customers.
3) Define your target clients
There is an old saying: “try to please everyone, and you’ll please no one”. You have a higher chance of making clients happy if you:
- Know who you want to target
- Tailor your service offering to meet their needs and demands.
When starting a new accountancy practice, your initial client base might include local businesses, societies, charities, clubs and private clients. These clients’ needs will be different from, say, owners of giant enterprises.
Knowing who you’re targeting makes it easier to ensure you’re offering services that your ideal clients actually need and want.
4) Choose the appropriate insurance
It’s important to remember that your clients will see you as an authority and rely on you to be precise with your figures and calculations. However, mistakes can happen, which is why it’s important that you protect yourself with the appropriate insurance.
Professional indemnity insurance can cover mistakes such as professional negligence, unintentional copyright or confidentiality breaches, lost documents or data, and defamation.
You might also consider:
5) Set up your practice
If you’re already a trained accountant, especially if you serve small business owners, you’ll likely have good knowledge of how to set up an accountancy practice. However, if you’re new to the field, here are a few steps you need to take when starting a new business:
- Choose a legal structure: will you run your practice as a sole trader, set up a limited company or form a partnership with someone else?
- Write a business plan: the more thorough your business plan, the more you can focus your efforts on tasks that will help grow your practice. We have a separate guide that teaches you how to write a business plan.
- Set up to pay tax with HMRC: as you’ll be aware, you’ll need to register with HMRC and ensure you pay the correct taxes.
Learn more about how to register as a sole trader and as a limited company with HMRC.
6) Select your accounting software
If you plan to launch your own accountancy practice, it’s crucial to choose accounting software that’s efficient, easy to manage, and that clients can easily connect to and use.
Accounting software like Countingup that connects directly to clients’ Countingup business current account allows you to save time on bookkeeping admin, giving you more time to focus on growing your firm.
Manage client accounts effectively with Countingup
Countingup’s free accounting software is built specifically to help you manage your self-employed and sole trader clients faster. Our software is MTD-compatible and full of features for accountants to review and manage client accounts efficiently, with direct access to their real-time, structured data. Find out more here.