How to become a self-employed accountant

What do accountants do?

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)

Accountants work with numbers day in and day out, so it’s important to be numerically and analytically skilled.

What qualifications do I need to become an accountant?

You don’t need a degree to become an accountant, although it can give you useful theoretical knowledge. Instead what’s needed are vocational qualifications (people who have a degree usually 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, but you’ll have to progress to others to become fully qualified
• ACCA (Association of Chartered Certified Accountants) – you can become a qualified accountant with ACCA, letting you give the full range of accountancy services

You can also become a qualified accountant with institutions like the ICAEW, CIMA and AIA.

Don’t discount experience when it comes to your training, as many people study alongside a full-time position in the industry. Knowledge of how to run an accountancy firm will help you hit the ground running.

To become a chartered certified accountant with ACCA you’ll need to study for their qualification and have three years’ relevant work experience. To become a chartered accountant with ICAEW, you'll also need to complete at least three years of on-the-job training.

If you have the qualifications and a few years’ experience in an existing firm, you should have a good understanding of the systems and skills needed to be a self-employed accountant.

How long does it take to become an accountant?

Qualifications take a number of years to complete. It takes up to four years to do the ACCA qualification, for example.

During this time, you might be working in an accountancy business to build up experience. This work experience usually counts towards achieving chartered status, so be sure to find a relevant role.

Taking the leap to self-employed accounting

If you’ve got experience and now want to be a self-employed accountant or freelance accountant, first you need to decide what type of business you want to run.

Becoming a freelance accountant

Freelance accountants generally work with small businesses – those who can't yet afford to bring in full-time accountancy employees. They provide tailored services to clients, including producing annual accounts, looking after VAT returns, and managing payroll.

Often, freelance accountants also deal with HMRC on their clients’ behalf. This could be as simple as filing accounts. But in worst case scenarios it could also mean the accountant will have to attend visits from HMRC, if a client is the subject of an investigation.

Should I do freelance bookkeeping?

Many accountants are also bookkeepers. Bookkeeping involves keeping records of financial activity, for example through adding payments and receipts, as well as income. These records are then used to prepare the accounts.

Many smaller businesses choose to do their own books to keep costs down, but others use a bookkeeper. When you become a freelance accountant, you should consider whether or not you'll also offer bookkeeping services. It can be a good way to boost your income, but remember that it's also time-consuming.

Choosing your niche as a self-employed accountant

It’s OK to be a generalist accountant and offer your services to a range of clients. But this might make it more difficult to stand out from the crowd.

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

Another difference could be the type of service you’re offering, like bookkeeping or tax services.

And with tax you can drill down even further. Could you be a capital gains tax, VAT, inheritance tax planning, or investigations specialist?

Setting up an accounting firm

As you take on more clients and your business grows, you might want to hire staff. You’ll be on your way to becoming a full-fledged accountancy practice. If this is your ambition, make sure you detail your goals in your business plan.

What's the self-employed accountant salary?

According to talent.com, the average freelance accountant salary in the UK in 2022 is £53,625. Entry level accountants can expect to make £32,156. Experienced accountants could make a lot more.

Be sure to use this as a guide only, as self-employed people will earn different amounts depending on where they’re based and the type of clients they have. If you end up running a full accountancy practice, you’ll have to take the cost of hiring employees and having proper business premises into account too.

As a freelance accountant you'll set your own rates, so research average accountant rates in your area and set yours accordingly.

If you work with small businesses, a full accounting service (covering tasks like annual accounts, bookkeeping, and corporation tax returns) can cost them anywhere between £60 and £250 a month, according to unbiased.co.uk. The fees depend on factors like the size of the business, turnover, and location.

Accountants often charge on top for additional services such as completing directors’ tax returns.

You could also offer services where you charge a one-off flat fee, for example to complete a Self Assessment or year-end accounts. According to unbiased.co.uk, accountants charge between £150 to £250 for Self Assessments, depending on the complexity of the business.

Set up your self-employed accountant business: step-by-step

If you’re an experienced accountant who has worked with businesses already, it’s likely that you’ll be familiar with these steps. But it can be useful to have it down in one place, with links to helpful free resources you can download to make it easier.

1. Build your self-employed accountant business plan

With any new business it’s tempting to dive right in, but creating a business plan can only increase your chances of success. There are questions you should answer before you start, plus putting your goals on paper helps to give your accountant business direction.

Download our free business plan template with prompts to help you write one.

2. Sort the legal side of being a freelance accountant

Any person or firm providing accountancy services needs to be registered with (and monitored by) a recognised supervisory body. These include the bodies mentioned above (AAT, ACCA, CIMA, and ICAEW). They need you to hold a practising certificate and have professional indemnity insurance, plus you should be doing continued professional development.

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).

3. Your self-employed accountant business’s legal structure

If you’re experienced, you’re probably already aware of this step. But keep in mind all that you have 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 on choosing a legal structure for your business
• setting up to pay tax with HMRC – you’ll need to pay your own tax by registering with HMRC
• choose your business name – if you’re a limited company you need to register with Companies House, but this step is important for all business structures as your name will be part of your brand (which is important to protect legally)

Read this guide for more steps on starting your business.

4. Self-employed accountant insurance

Your clients rely on you to be precise with your figures and calculations, but mistakes and accidents can happen, so you should think about accountant insurance.

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 include:

• 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. Finally – find clients for your accounting business

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 is 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 – demonstrating your expertise and giving them useful information on budgeting and tax
• carry out work in the community – you could sponsor charities and local events

Read more about advertising your business.

How are you getting on with setting up your business? Let us know in the comments below.

Read more:

• Business Name Generator
• Self-employed tax changes 2022-23
• Download your free cash flow forecast template
• What type of business insurance do I need?