How do I start my accounting business? Starting an accounting firm in London, UK is very easy if you have all the requirements from the regulatory body and government. However, It becomes complicated if you lack all the requirements to run.
How Much Does It Cost To Start An Accounting Firm In London?
The cost of starting an accounting firm in London varies from one person to another depending on your budget, the kind of facilities and office space you want for your firm.
Starting their own accounting firm in London is an exciting prospect for anyone in the sector and every year many accountants working for top accountancy firms in the UK decide to take up the challenge and start their own firm. However, there are a lot of considerations and steps which must be taken – and a lot of red tape too!
11 Steps To Start An Accounting Business In London, UK
Recently, i started an accountancy practice with a new partner and in this articles I will share our amazing journey with you and what to be careful of so that it can help you when making decisions about your business.
1. What Are Your Aims And Objectives?
If you are thinking of starting your own accounting business, it is very important to communicate your aims with your partners if it is a partnership business. It doesn't make any sense to start an accounting firm with your partners if you have different personal long-term plans. Having similar goals and timescales is very important to help you concentrate on the task ahead. But if you are going to run the business alone as a sole proprietor, it is also important to write out your goals and where you want to see the firm in few years from now.
It is also important that you and your partners have similar values and ethics because you need to build your business around your values. Although this will take longer time but you need to talk about it at the earlier stage to make sure you all are not on cross-purposes.
It is also important to check the strengths and weaknesses of each partner. You don't have to give up because of the weaker areas, instead, your partner can fill the voids or you can get someone from another organization to help. This may mean planning on when to hire a new staff or outsource some jobs to a freelancer or another company or even admitting a new business partner.
2. Acquire The Right Accounting Qualifications
You don’t need a degree to become an accountant if you are starting from the scratch, although with an accountancy degree, you will get useful theoretical knowledge. There is a range of professional courses you can take, and in fact, university graduates often need to take these courses too.
The professional bodies to consider for your accounting qualifications include:
- AAT (Association of Accounting Technicians): the AAT qualification is the minimum you need to start a career in accountancy.
- ACCA (Association of Chartered Certified Accountants): with this qualifications, you become a qualified accountant. This means that you can offer great number of accountancy services.
Aside the two qualifications stated above, there are also the ICAEW, CIMA, and AIA qualifications which you can explore towards starting your accounting firm in the UK.
Experience is the most important qualification. If you have the qualifications and years of experience working in an existing firm, you should have a good understanding of how the system works and techniques required to run your own accounting firm.
3. Know Your Everyday Job
For a private practice accountants, your core daily duties are;
- preparing financial statements, business plans, and budgeting
- preparing accounts
- auditing accounts
- managing clients’ income and expenses
- filing tax returns and offering tax advice
- forecasting profits and performance
- helping businesses that may be battling with their finances
- investigating fraud
Since you will be working with numbers on a daily basis, being numerically and analytically skilled is a key requirement for the role.
4. Understand Your Business Structure
Decide on the type of business structure that you and your partner(s) want for the firm. This also involves partnership or limited company and there is no wrong or right answer to this.
If you choose to form a limited company, you need to have an agreement on the directors, shareholdings, and the office address to register. Afterwards, the next big step to take is to register the firm at companies house but there is one key step to take first! Read on.
5. Get A Practising License In London
Do you need a license to practice as an accountant in the UK? The answer is YES. One of ACCA requirements is that any ACCA member who is a principal partner in an accountancy firm must have an ACCA practising certificate. This means that any member in public practice must have an ACCA practising certificate before they can run.
The ACCA’s definition of public practice is not limited to audit and other regulated work. It also include all types of work generally associated with an accountancy practice except book-keeping services.
This means that, you are required to have a practising certificate if you are preparing annual accounts, personal or corporate tax returns but not required if you are doing only pure book-keeping services.
ACCA defines book-keeping services as including:
- preparing accounting records of a business to trial balance level
- keeping clients’ records on payroll and employment taxes
- keeping basic sales tax records, including VAT.
When applying for an ACCA practising certificate for the first time, let them know that you have all the necessary experience which they need. You then you to filling the practising certificate experience form and return it to the ACCA Authorisation Team for validation. The approval period is about 28 days. After the certificate has been issued, you will need to renew your practising certificate yearly.
6. Choose A Business Name
The sixth step on how to start an accounting firm is to agree on a brand name for the company. This can be complicated but you need to decide on the type of name you want and the meaning to be associated with it. Quite a few accountancy firms have more common names like XYZ & Partners; while others can decide to have more unusual names and it is all boils down to what the individuals want.
Provided you are a limited company, you can go ahead to check the availability of your chosen company name at Companies House. In all the circumstances, you should also check if the URL is available for the company. You can do this through lots of online websites.
One factor to consider before agreeing on a business name is the email and website domain. Will the name you choose be easy to spell and remember? Make sure it is unlikely to be liable to mis-spellings as this will eventually give rise to communication issues in future and cut the website's stride.
7. Have A Shareholder Agreement
I recommend that you have a shareholder agreement drafted early in the formation process if you want to create a limited company. This might sound very formal but you need it to be available to cover all occurrences.
It might not really be complex and you may decide not to involve a lawyer and, instead, use a downloaded online agreement from the internet and tailor to your company's needs.
In the agreement, you will decide on a number of factors about the firm such as how the business will be managed, the shares of profits percentage, what will happen in cases such as when a partner wants to exit. Once an agreement has been reached, all you need is to sign the agreement and then check regularly and update the terms of the agreement as the business grows.
8. Consider Insurance
All ACCA practising certificate holders are required by the law to get professional indemnity insurance cover against any potential claims which may arise due to professional carelessness. It is also very important that the insurance is from a participating insurer authorized by your accounting body.
It would be useful to get quotes from a number of insurance providers as I discovered that these varied significantly in price and the level of insurance cover. You can also consider other associations you belong to as you can possibly get a discount on insurance (example; through the Federation of Small Businesses).
Furthermore, business insurance is also recommended for protection against theft or damage to your or someone's property and to protect against injuries in the office. I recommend you to consider taking cyber and data insurance and, you will require employer’s liability insurance, if you are employing staff.
9. Meet The Requirements Of Regulatory Body
What are the regulatory aspects and considerations of starting an accountancy business in the UK?
If all your partners are not ACCA qualified then you are in a good position to establish the regulatory body for the firm. You can do this by establishing where the control lies.
For instance, if you have three directors with equal shareholdings in the business and two out of the three are ICAEW qualified and only one is ACCA qualified, then ICAEW will regulate the company.
However, If there are two directors in the firm with equal shares and one is ICAEW qualified while the other is ACCA qualified, this becomes an equal split, then HMRC becomes the regulatory body.
10. Incorporation Notification
After you start your accounting business, it is necessary to inform ACCA through completion and submission of the incorporation notification.
The form gives full details of the directors and the shareholders, business continuity, AML supervisory body, insurance in addition to the services you intend offer to your clients. The form must be correctly completed and submitted to the ACCA Authorisation team. You will give them about 28 days so they can process it, once processed, your firm will be issued an ID number.
Please try to submit your form to the ACCA well ahead of time as, you cannot practise until you have receive the ID number.
11. Finally – find clients
Years ago, an accounting firm may rely on a stable set of core customers, but today it’s easier than ever for business owners to switch accountants.
This becomes a challenge and an opportunity for new firms to penetrate the market – it means you can’t always rely on old clients who keep coming back for your services, but as a startup, you could get new customers by being proactive.
How To Get Accounting Clients In London, UK
These are some of the things you can do to find new accounting clients:
- Make it easier for clients to refer you to their network or associates. Personal recommendations are often the most effective way to get more clients.
- Stay up-to-date with marketing and business trends in the industry.
- Use traditional methods of marketing, such as newspaper ads, handbills, posters and banners.
- Utilize online marketing tools like website, master social media and online review sites.
- Send email newsletters to client and prospect database, offering them useful tips on accounting, taxation and budgeting.
- Carry out work community services – you could sponsor charities and local events.
Conclusion: How To Start Accounting Business In London
The services provided by accounting firms in London will never go out of fashion. There are different businesses springing up everyday across the world, and they will hire an accountant or outsource their accounting, tax, audit to accountancy firms. Hence, there will be enough clients to go round. Setting up your own accountancy business will take time, effort, and dedication, but there’s a huge opportunity for nimble firms who offer something different.