How to start an accountancy practice

After years spent studying and working to become a qualified accountant, you’ve decided that you want to do it yourself and set up your own accountancy practice.

This article looks at the pros and cons of setting up a practice, as well as practical tips on how to go about it.

Here’s what we cover:

Why you’d want to start your own practice?

It’s a big step to set up your own practice.

And the essential thing to remember is it’s like starting any small business and requires a lot of thought and preparation.

That being said, there is a clear pathway to setting up an accountancy practice, compared with many other new business ventures. And there’s significant potential to build up a viable, sustainable practice, if approached correctly.

Why you decide to make the move may vary.

For John Carolan, who set up his accountancy practice, Solve, 15 years ago, misfortune led to opportunity. He was made redundant from a construction company during the 2008 financial crash and decided it was the time to kindle his entrepreneurial spirit.

Advantages and disadvantages of starting a practice

In terms of advantages of setting up yourself, as with any other business, you’re your own boss.

And having the freedom to run your business the way you choose can be very energising.

“You’re in charge of your own destiny, you dictate your own time frame, your schedule, and you can make your own decisions, says John.

“You have the opportunity to try different things. You’re building a business, you’re building a team around you, you’re working with good businesses, you’re learning from them and in turn, you’re also making a positive impact on their businesses.”

On the negative side, by venturing out on your own, you’re taking on all the responsibility.

And while your expertise may be in accountancy, you’ll also have to become an expert in HR, marketing and other business admin tasks.

Also, while your personal money may not necessarily be at stake, your reputation will be.

How much does it cost to start a practice?

Depending on the approach you take, the costs vary.

A key cost in setting up a practice is where you’ll work.

Are you going to start your business working from your home? Or are you going to rent or buy a dedicated premises?

However, whether you’re starting small or big, there are certain costs you have to consider.

To establish an accountancy practice, you generally need to be a qualified accountant, and you must pay yearly fees to your accountancy body for both membership and a practising certificate.

You may also need several certificates, depending on your service offering.

That being said, these fees are moderate, with each only costing a few hundred euros.

However, there is a caveat.

In order to be granted a practising certificate, you must have professional indemnity insurance and this can be a considerable cost. There are requirements about the level of cover required, depending on your practice’s fees.

Other potential costs apply to most new businesses.

You need to consider what type of equipment you need, such as computers (including software licences), printers, scanners, network system, data storage, phone system and payment system.

You may also want to invest in marketing, including setting up a website and establishing a brand and logo.

What qualifications do you need?

In theory, you don’t need any qualifications to set up an accountancy practice, unless you’re offering certain services such as auditing.

However, in reality, it’s very much expected that you have a qualification and are a member of an accountancy body, as this shows your clients that you are trustworthy and competent.

The accountancy bodies in Ireland are:

• Chartered Accountants Ireland
• Association of Chartered Certified Accountants
• Chartered Institute of Management Accountants
• CPA Ireland
• Association of International Accountants
• Chartered Institute of Public Finance and Accountancy.

In February 2024, members of Chartered Accountants Ireland and CPA Ireland voted in favour of a proposal to amalgamate the two organisations, and this process is ongoing.

As discussed above, your accountancy body provides you with a practising certificate.

Also, additional permission or authorisation may be required if your practice intends to offer auditing, investment advice or insolvency services.

Steps to take to start your practice

Decide on your service offering

First things first, you need to consider what services you are going to offer.

Especially for a smaller practice starting up, it can be difficult to offer the full range of accountancy services and it’s preferable to find a niche and be clear on what your focus is.

For John Carolan, his background and training was in industry and his practice offers related outsourcing solutions such as payroll, bookkeeping and management accounts.

Of course, your practice can offer other more typical accountancy services such as audit, tax, insolvency and new business formation.

Your offering can also be targeted towards a specific industry, such as construction or something as niche as taxi drivers or medical practices.

Whatever your offering is, it’s important to understand the sector and then build your offerings around it. You need to also understand the challenges your sector faces and what solutions you can offer.

Create a business plan

It’s important to have a business plan that sets out your business goals and includes financial forecasts, such as expected spending and income.

A good business plan will help you focus on the specific steps necessary to be successful, both in the short and long term.

Also, if you need to apply for a loan, a business plan will be required and needs to include particulars such as detailed background of key staff, including their skills and abilities, as well as the practice’s area of expertise.

Choose your business structure

You need to think carefully about what ownership structure is most suited to your practice.

The structure you choose will have a bearing on everything about your business, from day-to-day operations, to taxes, to how much of your personal assets are at risk.

The key is to choose a business structure that gives you the right balance of legal protections and benefits.

A sole trader or partnership structure can be a good choice for a low-risk business.

Meanwhile, a limited liability company protects your personal assets from liability, and if the company should become insolvent, it’s generally only the company assets that will be used to clear debts. On the downside, a limited liability company comes with more onerous reporting requirements.

While the structure of accountancy practices have traditionally been partnerships, today more and more practices are limited liability, as they look to be protected from risk.

In the case of John, he started Solve as a sole trader, but as his practice expanded and took on staff, it became a limited liability company.

Open a business bank account

You should open a business bank account, rather than just using your personal account (this will help you to keep track of business income and outgoings, which will be useful come tax return time).

And it’s advisable to shop around before making a decision on one particular bank, as their offerings can be different.

For instance, some banks offer incentives to startups, such as zero fees for the first year.

Other facts you should consider would be whether the bank has a good app, what processes are automated, and if there’s the capability to generate user-friendly reports.

Price your services

It’s advisable to have a clear pricing strategy, with a menu of services you provide that is laid out in simple language.

Fixed fees are increasingly the norm, with payment often by standing order or direct debit. This helps to manage cash flow for both your practice and your client.

Chartered Accountants Ireland also has some practical advice on its website regarding fees.

For instance, it advises against offering lower fees the first year, just to get a job, as first year’s fees are effectively a quotation for all future years.

Find clients

Finding clients can be approached in several ways.

For instance, you can buy a practice from a retiring accountant, complete with their client list, or you can build your client list up from scratch.

Then there’s using marketing as a way to find clients for your practice (think adverts in local magazines and newspapers, online ads, social media, and so on).

In the longer term, there’s also the possibility of joining an accountancy network, which works on the lines of a franchise and could help you save on marketing and branding costs, while also giving you access to contacts and expertise.

John did it the hard, but more affordable, way and built his client base up from scratch.

He tapped into any existing contacts he had and he also joined the networking group BNI (Business Networking in Ireland) and found it very helpful in terms of making new contacts and letting people know what he was about.

With 15 years now under his belt, he still considers business networks to be very important and is now a member of Venture and attends a meeting each week.

Hire staff

Staff are the single most important investment you can make in your practice and its success will be dependent on the quality of your staff.

During the current economic climate, it can be difficult to recruit quality staff, and you’ll need to ensure that your practice is an attractive place to work to ensure interest.

This doesn’t necessarily mean higher salaries. Other incentives such as flexible working hours, potential for career development and a positive culture can also be a draw.

Including a section on your website outlining why your practice is a good place to work can be a practical way of signalling to potential candidates that staff wellbeing is something you take seriously.

You should also consider whether your practice will offer official training for accountants. This may be a wise move, because they could become key staff members in the future.

Promote your business

In today’s business world, a strong digital presence is key.

You should prioritise setting up a website, as it is often the first point of connection for a client and if the website looks outdated, it may give the impression that your practice is also outdated. So, a contemporary design and look are very important.

Features should include a team profile page outlining your staff’s qualifications and experience, as this helps build trust and credibility with potential clients.

A blog page on your website offering relevant advice and insights is also worth considering, This helps to show potential and existing clients that you’re on top of your game and up to date with current issues.

Using a web analytics tool such as Google Analytics will also help you understand what type of users are visiting your site.

In addition, your digital footprint should also extend beyond your website to social media platforms such as LinkedIn.

Beyond the online sphere, attending local business and networking events are a way of getting your name out there.

Get business insurance

As discussed above, generally you’ll need professional indemnity insurance.

In addition, there are other insurance costs that you have to consider. For instance, while employers’ liability insurance is not mandatory, it’s advisable.

Also, consider the level of cover you need for your business premises, as well as for your equipment.

Use software to manage your processes

Modern business owners are highly tech-savvy and they expect the same from their accountant.

So, it’s important that your practice is using technology to its best potential.

This should include accounting software, client management software and practice management software.

In addition, automating processes within your practice can free up time, so that you can spend more time offering clients higher-end advisory services.

Final thoughts: Put in the hard work

It takes time to build up a successful accountancy practice.

From finding clients to offering a great service and providing the support required – both to your clients and your team – there’s plenty to do.

John says: “There’s no silver bullet that I’m aware of. You have to commit to starting, work hard, and build relationships. And go from there. Day by day. Week by week.”

But there are lots of positives to consider.

Helping your clients with their business challenges and becoming a trusted adviser to them is a big one. Another is pursuing and fulfilling your dream of running your own business.

Still want to run your own practice?

Follow the tips covered in this article and give it your best shot. Good luck.