How to start an accountancy business in the UK: a guide

Wondering how to start an accounting business but don’t know where to start? We’ve got you covered.

Whether you’re starting from scratch or you have experience working for someone else under your belt, this guide covers the basics – from qualifications to how to market your business.

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Making the leap to starting an accounting firm yourself can be rewarding, but there are seven things you need to think about first. Check them out below.

1. Know your day-to-day job

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
• producing accounts
• auditing
• managing clients’ spending and costs
• filing tax returns and giving tax advice
• forecasting profits and performance
• helping businesses that may be in financial difficulty
• investigating fraud (forensic accounting)

You’ll be working with numbers day in and day out, so being very numerically and analytically skilled is a natural prerequisite for the role.

How much can you earn running an accountancy business?

It depends on factors like whether you’re working on your own or taking on staff, your qualifications and experience, the region you’re working in, the hours you work, and how much time and energy you’ve put into building up a client base.

Depending on your experience, your clients, and how smoothly you work, as a sole practitioner you might expect to earn between £50,000 and £100,000 a year.

2. Get the right qualifications

If you’re starting from scratch, you don’t need a degree to become an accountant, although it can give you useful theoretical knowledge. There’s a range of vocational qualifications you can take, and in fact people who have studied at university often need to take these too.

The professional bodies to consider for your qualifications include:

• AAT (Association of Accounting Technicians): these qualifications are the minimum you need to start a general career in accountancy
• ACCA (Association of Chartered Certified Accountants): these qualifications let you become a qualified accountant, meaning you can give the full range of accountancy services

There are also the ICAEW, CIMA, and AIA qualifications you could explore on your way to starting your business.

The most important qualification, though, is experience. While it’s difficult to get experience if you’re training, knowledge of how to run an accountancy firm will help you hit the ground running.

If you have the qualifications 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.

3. Get up to speed legally

It’s a requirement that any person or any firm providing accountancy services is registered with – and monitored by – a recognised supervisory body. Supervisory authorities include the bodies mentioned above (AAT, ACCA, CIMA). These 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 agent code or reference number for each type of agent authorisation.

You should understand and fully comply with industry standard guidelines and regulations. This includes data protection regulations (because you’re going to be keeping information on your clients) and anti-money laundering regulations (to follow these, you’ll need to register with a supervisory authority).

4. Consider insurance

Your clients rely on you to be precise with your figures and calculations, but mistakes and accidents can happen.

Professional indemnity insurance is likely to be your key cover. It’s an important consideration for any business that gives professional advice.

For accountants, it can cover mistakes such as professional negligence, unintentional breaches of copyright or confidentiality, loss of documents or data, and defamation or libel.

Other covers to think about are:

• Public liability insurance: this can cover you if someone is injured or their property is damaged because of your business
• Employers’ liability insurance: this is usually a legal requirement if you have employees
• Buildings insurance: this can cover your building, whether you run your business from home or from a premises like an office

5. Set up your accountancy business

If you’re an accountant already, it’s likely you’re versed in what you need to do when setting up a business. But remember, there are a number of things to do when starting any new company. These 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? We have more info on choosing a legal structure for your business here
• 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. Read more about writing a business plan
• Setting up to pay tax with HMRC: you’ll need to pay your own tax by registering with HMRC

6. Work out how your accountancy firm will be different

Are you going to be like the rest of them or are you 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 a crowd all doing the same thing.

Your ‘difference’ might be a specialist focus. For example, what if you choose to focus on providing services to a particular trade, like doctors, dentists or vets? Then you can build a reputation for providing a niche, specialist service, and clients might be more inclined to recommend you to their network.

Another differentiator could also be the type of service you’re offering, like specifically offering bookkeeping or tax services. And, with tax, you can drill down even further, like explaining that you’re a Capital Gains Tax, VAT, Inheritance Tax planning, or investigations specialist in your marketing.

7. Finally – find clients

In previous years, an accounting firm might rely on a stable set of core clients, but it’s easier than ever for people to shop around and switch accountants.

This is both a challenge and an opportunity – it means you can’t always rely on repeat business, but as a startup, you could take a slice of the market by being proactive.

Finding your niche, as above, will be a start. Then you can target your marketing more effectively by having a better understanding of the clients you’re trying to win.

These are some of the things you can do to find clients:

• Make it easy for clients to refer you to their network. You could try things like giving them a voucher for a free hour of your time to hand out to people they know. Personal recommendations are often the most effective way to win clients
• Stay up to date with marketing and business trends (and put them into practice)
• Use traditional marketing methods, like newspaper ads and flyering
• Use online marketing – build a great website, master social media and use online review sites effectively
• Send email newsletters to a client and prospect database, giving them useful information on budgeting and tax
• Carry out work in the community – you could sponsor charities and local events

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.