Starting Your Own Accountancy Practice

What are the regulatory aspects and considerations of starting your own accountancy firm in the UK?

For someone to start their own company, it is an interesting opportunity and every year several accountants in London opt to take the plunge and set up their own firm. There are, still, a lot of requirements and a range of actions to take, and a lot of red tapes too!

I have recently started an accountancy practice with a new business partner and I will tell you about our path in this series of articles and what to look for so that if you wish to start your own practice, it will benefit you.

Aims and objectives

It is important to explore what you and each of your business partners wish to do while discussing the chance to start your own practice. If you have separate longer-term ambitions, there is no point in starting a business and you both must have common goals and common timescales. It is also critical that you have comparable values. When you run an organization, these are particularly important since you need to genuinely believe in your principles and build the foundations of your organization around them. These will take some time and some effort to finalize, but in order to ensure you are on the same page, they should be chartered accountants in London early in the process. Each of your strengths and weaknesses must be examined as well. Identify areas of overlap where you have important strengths and regions where you are less powerful. Such weaker areas are not a reason to give up or a reason to avoid, but they are where you need the input of another individual or organization to assist. This can mean that when you get another business partner, a new employee, or when you outsource the job to another business or freelancer, you start planning.

Structure of the business

Early on, it is vital to determine what framework you and your business partner(s) want for the venture. This really boils down to a limited corporation or association, and there is just no right or wrong response.

In our case, as we have both run a limited company before and favor this direction, we opted for the limited company route.

If you plan to become a limited company, you will need to settle on the directors, shareholdings, and address of the registered office, so registering the company at Companies House will be the next step, but first, you have one important step to do!

Have you got a practicing certificate?

ACCA allows an ACCA certificate of practice to be held by any ACCA member who is a partner (principal) of an accountancy practice. In other words, an ACCA functional credential must be held by any participant involved in public practice. The public practice in the concept of ACCA is: Beyond audit and other supervised work, ACCA's concept of public practice work expands to cover all forms of work commonly associated with accounting practice, but not book-keeping services.

Therefore, if you are conducting annual reports, personal or business tax returns, you would require a professional credential, but not if you are simply performing basic book-keeping services. Book-keeping services are described by ACCA as including: The preparation of trial balance process accounting reports Maintaining the records of customers with regard to payroll and job taxes Maintenance of such basic sales tax records as VAT.

When you first apply for an ACCA practice credential, it is important to prove that you have all the necessary training you need. You must then complete the knowledge form for the work credential and submit it for review to the ACCA Authorisation Committee. Please make sure you give up to 28 days to be approved. When released, you will then have to periodically update your certificate of practice. Students from ACCA do not operate and operate the London accountants firm and do not hold a certificate of practice. If you choose to offer audit services, a different professional credential is required.

Business name

The next step is to settle on a name for the company. It may be complicated because you have to know what kind of name you want and what you want to say. Some accounting companies have more common names, such as XYZ & Partners; others have more unusual names, many of which are due to client tastes.

Shareholder agreement

Getting a shareholder agreement drawn up early in the process is also significant. This will sound rather formal, but to protect all eventualities, you need to have it in order. It doesn't need to be cumbersome and you can accept that you don't need to get a lawyer's opinion and just use an online document that you can import and modify to your specifications from the internet.

Insurance

It is a condition that all holders of an ACCA credential have occupational compensation insurance policies against all possible professional error lawsuits. It is therefore appropriate for the policies to come from a participating insurer that has been certified by your accounting body.

It is worth getting quotations from a variety of vendors, as I noticed that the price and standard of cover differed very considerably. It is also worth remembering the other organizations you are a member of since you will often get an insurance discount (such as with the Small Business Federation).

Regulatory body

If you have partners who are not all ACCA-qualified, so you will need to set up the company's regulatory agency. This is measured by deciding where the power lies. For example, if you have three directors who each have an equal shareholding in the company and two are qualified by ICAEW and one is qualified by ACCA, then ICAEW may control the company. If you have two directors who are equal owners and the ICAEW governs one and the ACCA governs the other, so this is an equal separation and the governing authority will be HMRC.

Incorporation notification

When you start up a new business, by completion and submission of the incorporation notification, you need to remind ACCA of this.

Information of the directors and employees, company continuity, AML supervisory authority, insurance as well as the services you can offer are provided in the report. It is necessary to complete the form and to send it to the ACCA Authorisation team. Please give 28 days for registration, and you will be provided with an ID number for your firm once completed.

Please note that you apply your form well in advance to the ACCA, as you will not practice until you have obtained the ID code.

We will look at the more steps and activities to be undertaken in order to start up the accounting business in the next post, and then we will look at the processes and practicalities that you need to remember while starting up the organization in article three.