The cost of beginning an accounting business varies based on your budget, the type of facilities, and the amount of office space you require.
Starting one's own accounting business in London is an exciting possibility for anybody in the industry. Every year, many accountants working for top UK accounting companies opt to take on the challenge and start their firm.
Important Steps To Start An Accounting Business In the UK
What are your objectives and goals?
If you're thinking about starting your accounting firm, it's critical to share your goals with your partners. Creating an accounting business with partners makes no sense if you have different goals and timeframes. If you plan to manage your business as a sole owner, you should put out your objectives and see the company in a few years.
It's also crucial that you and your partners have similar beliefs and ethics because you'll be basing your company on them. Although this will take more time, you must discuss it sooner rather than later to ensure that you are on the right track.
It's also crucial to assess each partner's strengths and flaws. Don't give up because of your weaknesses; alternatively, your partner can fill in the gaps, or you may enlist the assistance of someone from another organisation. It might include deciding when to hire new employees, outsourcing certain tasks to a freelancer or another firm, or even welcoming a new business partner.
Obtain the Correct Accounting qualification
You don't need a degree to become an accountant if you're starting from scratch, yet an accountancy degree will provide essential theoretical understanding. Professional courses are available, and university graduates are frequently required to pursue these courses. The following professional organisations should be considered for your accounting qualifications:
- AAT: The AAT is the entry-level qualification for a career in accounting.
- ACCA: This certification qualifies you as a qualified accountant. It implies you can provide a wide range of accounting services.
Know What You Do Every Day
Your everyday responsibilities as a private practice accountant are as follows:
- Financial statement preparation, business plan preparation, and budgeting
- Preparing financial statements
- Accounts auditing
- Managing the income and spending of clients
- Providing tax advice and submitting tax returns
- Profit and performance forecasting
- Assisting firms who are having financial difficulties
- Fraud investigation
Because you will be dealing with figures regularly, numerical and analytical skills are essential for this position.
Recognise Your Company's Structure
Choose the business structure you and your partner(s) wish for the company. It includes a partnership or a limited business, and there is no right or incorrect response.
If you want to start a Limited business, you'll need to agree on the directors, shareholdings, and office address before registering. The next significant step is to write the company with Companies House, but there is one crucial action to take first!
Obtain a Practice License
Is a licence required to work as an accountant in the United Kingdom? Yes. It implies that every member in public practice must get an ACCA practising certificate before running.
Audit and other regulated activities are not included in the ACCA's definition of public practice. Except for bookkeeping services, it consists of all forms of work normally associated with an accounting firm.
It implies that you must have a practising certificate to prepare yearly accounts and personal or company tax returns. Still, it is not necessary if you merely provide bookkeeping services.
The ACCA defines bookkeeping services as:
- Bringing a company's accounting records up to trial balance
- Maintaining track of clients' payroll and employment taxes
- Keeping basic sales tax records, including VAT, is essential
Let them know that you have all of the essential experience when applying for an ACCA practising certificate for the first time. After that, you must complete the practising certificate experience form and submit it to the ACCA Authorisation Team for verification.
The clearance process takes around 28 days. You'll need to renew your practising certificate every year after being issued.
Pick a Company Name
The sixth stage in starting an accounting firm is to develop a company name. It might be not easy, but you must choose the sort of name you want and its meaning. Many accounting companies have more popular titles, such as XYZ & Partners, while others may prefer more odd words, and it all depends on what the clients desire.
You may check the availability of your desired company name at Companies House if you are a limited company. In any case, you should double-check that the URL is available for the firm. There are several internet websites where you may accomplish this.
The email and website domain are two things to think about before deciding on a business name. Will the name you chose be simple to remember and spell? Make sure it's not prone to misspellings, as this will cause communication problems in the future and slow down the website's progress.
Have A Shareholder Contract
If you wish to incorporate a little business, I recommend having a shareholder agreement prepared early in the process. It may appear official, but you must have it on hand to cover all eventualities.
It may not be overly complicated, and you may opt to skip hiring a lawyer and instead utilise a downloadable online agreement that you customise to your company's needs.
You will decide on various aspects of the business in the agreement, including how you will handle the company, the number of earnings shared, and what will happen if one of the partners wants to leave. Once you've established an agreement, all you have to do now is sign it and periodically review and change the conditions as your firm expands.
Consider Getting Insurance
Professional indemnity insurance is necessary by law for all ACCA practising certificate holders to protect themselves against any lawsuits arising from professional negligence. It's also critical that a participating insurer provides the insurance that your accounting organisation has approved.
It might be beneficial to obtain quotations from various insurance companies since I observed that prices and levels of insurance coverage varied greatly. You should also think about joining other organisations to see if you can receive an insurance discount.
Additionally, company insurance is suggested to safeguard against theft or damage to your or another's property and injuries in the workplace. We propose that you look into cyber and data insurance and employer's liability insurance if you have employees.
Meet the Regulatory Body's Requirements
What are the legal implications of founding an accountancy firm in the United Kingdom? If none of your partners is ACCA-qualified, you are in an excellent position to form the firm's regulatory body. It may be accomplished by determining the control point.
If you have three directors with equal shareholdings in the company and two are ICAEW qualified, but only one is ACCA certified, ICAEW will regulate the firm.
However, suppose the business has two equal-shared directors, one of whom is an ICAEW and the other an ACCA. In that case, the firm becomes an equal split, and HMRC becomes the regulating authority.
Notification of Incorporation
Following the establishment of your accounting firm, you must notify ACCA by completing and submitting the incorporation notification.
The form includes information on the directors and shareholders, business continuity, the AML supervisory body, insurance, and the services you want to provide to your clients. The form must be filled out and sent to the ACCA Authorisation team. You'll allow them around 28 days to process it, after which your company will be assigned an ID number.
Identify customers
Years ago, an accounting company could have relied on a stable set of core clients, but nowadays, switching accountants is simpler.
It presents both a difficulty and an opportunity for new businesses to get into the market; you can't always rely on repeat consumers, but as a startup, you may gain new customers by being proactive.
Conclusion
Accounting businesses in London give services that will never go out of style. Every day, new companies pop up worldwide, and they will hire an accountant or outsource their accounting, tax, and auditing to accounting firms. There will be enough customers to go around. Starting your accounting firm will take time, but there is a great opportunity for agile organisations that provide something unique.