UK Setting up a small Accountancy Practice


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Hi

I'd like to set up a small accountancy practice specifically targeted towards small businesses with a turnover of less than 1 million. High turnover low complexity stuff.

I am an IFA by trade, not an accountant so the business model would simply be me focusing on client aquisition, marketing and running the company with an employed accountant in charge of the accounting side of things.

Whilst I will be studying to a certain level myself, any discussions, advice or services provided will be by the qualified accountant I employ.

I have been given conflicting advice on the things I do or don't need to do in order to achieve the model I have described above. Please bear in mind we are only providing simple accounting services such as VAT, Tax returns, Payroll etc and not in the realms of complex tax advice.

I'd really appreciate it if someone can tell me if this is achievable and the steps I need to take to set it up. I have gleaned the following from various discussions I've had but I've had so many confusing conversations with different governing bodies I'm not sure what's right and what's wrong!!!

Something along the lines of AAT level 4 with practice experience should be sufficient for the type of uncomplex accountancy work outlined above.

Whilst a practice certificate is desirable it is not mandatory at this time and you can still file end of year returns and provide small business accountancy services without it.

Consumer credit license, anti money laundering regulations and PI insurance are a must. I think you can sort the anti money laundering side of things out via a professional body or directly from the inland revenue from what I've been told.

To summarise. Can I set up the business model as I'd like, what's the easiest way to do it, and what are the things I need to have in place before we commence trading.

The main problem seems to be that I am not an accountant myself but then I am not the one that is going to be doing the accounting.

Many thanks to anyone that can help.
 
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I did this four years ago and now employ me full time and two part timers. I suspect you'll find it's not as easy as you think.

Building up a customer database is not easy and takes time. You will also have capital expenses to kit out an office (two desks, chairs, computers, printers and a filing cabinet at the minimum).

Annual expenses you can expect to incur are

Salary for AAT - £19K-27K per year (not including NI)
Rent - £5,000
Telephone - £600
Advertising - Yell.com is about £500 per year
Stationery - £500
PI insurance - £250
Software - £500-£1,000

This is just the basics which taking lowest AAT salary means you will need a turnover of £29K (ish) at least and I haven't even included a salary for you at all. Realistically you will need a turnover of at least £40K to get started and that's paying you a minimum wage.

If I tell you that I charge between £150-£250 per tax return, and between £500-£1,500 for statutory accounts it will give you a guide as to the number and type of customers you need to attract. My daily charge out rates are £150 per day. We deal primarily with SMEs and we have to charge prices that they can realistically afford.

It's doable but it's not easy starting from scratch. I did it with a loan of £4K from my parents and a desk, chair and filing cabinet gifted to me by a company who were making me redundant. My own personal computer was "sold" by me to my new company.

Would I do it again? Yes, in a heartbeat. Has it been easy? I've loved it but there are weeks when I worked 60-70 hours a week and it's been stressful.

BTW, I know a David Yates who is an IFA in St Albans. It's not you, is it?
 
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Hi

Thanks for the feedback and the detailed breakdown. Very useful. I'm glad the hard work has paid off for you. Did you start off as an accountant yourself?

I'm thinking of starting slowly and scaling up gradually. Employ a part time accountant to start with, working from home. Then increase the hours and move into an office as we grow. We can go out to see clients in the short term.

The client aquisition bit hopefully I'll be ok with. I've got a strong background in networking and marketing, particularly the web based side of things.

The bit I'm struggling with is the regulation. Being an IFA I'm used to the FSA regulating everyone and everything. No one seems to be able to tell me if I can set up a small accountancy practice being a non accountant myself as long as I employ a qualified accountant to do the work. I want to have some form of regulation within the business and have the support of an accounting body but I don't know whether I can get this via the employed accountant by them being affiliated to an accounting body or whether it has to be the business itself that is affiliated. Any guidance would be much appreciated.

Also, is there a tick list of things you need to have in place to trade such as Consumer Credit License, Ant Oney Laundering etc?

Thanks again.

David

P.s No, that must be a different IFA:)
 

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