Last month, how setting up a new accountancy firm in the UK helps you cover the structure of the firm, name and regulatory considerations such as practising certificates and determining the regulatory body of the practice and picking a name for the practice.
I will leave systems and software until the next issue, instead of focusing on many other practicalities in this article. Planning to start your own practice in UK? Here is how to go about it.
ICO data protection registration
The Information Commissioner’s Office (ICO) is the UK’s independent body. It was established to uphold information rights in the public interest.
If you process any personal information in your business then you are legally required to register with the ICO and pay an annual data processing fee. You will then be added to the public register of businesses.
An online application form that has to be completed which is relatively straightforward. You then need to pay the fee at the end and, in our case, this was £40 (or £35 if you pay via Direct Debit). The fee is dependent on the size and turnover of the business and there are three tiers of fees ranging from £40 to £2,900 per annum.
You need to renew the payment every year or you could be fined up to £4,000.
Early in the setup process, set up a bank account for the firm. Consider these things for the account setup:
- ease of set up
- ease of access and support
- bank costs and charges
- other facilities such as credit cards.
In our case, we opted for one of the newer ‘digital banks’ because it was quick and easy to set up and it is easily accessible both online and via its mobile app.
The set up was really fast – we had an account set up the same day with the whole application being undertaken on my mobile phone. In the past, this could have taken weeks!
In order to deal with HMRC on behalf of a client, it is necessary to register with HMRC as a tax agent.
Once you register as an agent, your clients can then each authorise you to act on their behalf for specific services such as PAYE, VAT and corporation tax.
The tax agent registration can be all done online through the HMRC website; you need your Government Gateway User ID and password to register. Once you have registered, you must enrol for each service that you need to use.
Once you have enrolled, your clients can then authorise you to act on their behalf for each service. Thereafter, you will be able to use the online service from HMRC for a range of services including filing their VAT returns and updating a client’s details.
Registering for VAT
When you set up a new accountancy firm there is no requirement to register for VAT as you will not have crossed the VAT threshold at that stage. However, this is something you might decide to do early if you feel that clients will expect you to be VAT registered. It will allow you to reclaim VAT on some of your costs (where applicable) and also it will avoid you having to add 20% to the total costs to clients at a later date which can be expensive for non-VAT registered clients.
VAT registration with HMRC is straightforward and can be done online via the HMRC website. You need to provide details such as your turnover, business activity and bank details. Once your application is processed, HMRC will issue the business with a VAT number and you can then sign up for an online HMRC VAT account.
Anti-money laundering (AML) is an area that needs to be addressed early when setting up an accountancy practice as there are a number of considerations. ACCA has a lot of information to help you with AML.
When you register your firm with ACCA, they automatically send an email providing you with a link to the AML Risk Assessment Questionnaire which all firms must complete and this is then processed by ACCA.
As a firm, you must work through the AML guidance on ACCA’s website and the AML review process. There are a number of considerations that need to be addressed. You must ensure that your AML training is up to date for you and your team and several online training providers are available.
You may also opt to subscribe with an organisation to assist you with AML compliance and risk management such as Mercia, SmartSearch or AMLCC. These organisations guide you through the process and it is also possible to conduct the verification checks through them.
If you do not opt to subscribe, there are online tools to allow you to undertake AML checks on clients such as Veriphy and Credit Safe; these organisations then will issue a report to show the outcome of the ID check which you can store with your client’s records.
It is mandatory to have a letter of engagement in place with all clients; this should be completed when you take on a new client and it will detail the work that you will complete for them and the fee.
ACCA has extensive guidance on this and provides standard engagement letters, covering letters, privacy notices, schedules of services and standard terms and conditions of business.
Services and pricing
It’s essential to decide on the services that your practice is going to offer. We’ll also help you decide how to price this work. Although you do not need to go into the fine detail at the time of setting up, you need to have a basis for winning work and pricing it early so you are ready for the first client to onboard.
We will cover the proposal and pricing software in a later issue but consider now how you are going to charge for work. Will you work on an hourly fee basis, per job basis or will you have a fee structure as a package where the client pays an agreed monthly amount for a specific bundle of services?
Also how your price is up to you but this will not be set in stone and will be something that you revisit regularly throughout the lifetime of the firm.
You may also decide to start with a limited range of services and add to these as your firm grows and develops. This may be because you discover your clients need other services that you did not anticipate or because you find there are certain types of work you enjoy more than others.
It is really important to establish the core values of your firm. Your values are what you believe in, what you stand for; these then drive how the business grows and develops and feed into the overall culture of the practice.
It is very common for firms to publish their values on their website as this will be of interest to potential clients and also potential new team members. Values are often mentioned in social media posts as this is also a good way to tell people a little about the firm and what is important to you. Your values will often resonate with others who have the same or similar core values and so are attracted towards working with you either as a client, business partner or new team member.
It is a good idea to set out your values early when setting up your firm as these then feed through into everything that you do. Try not to have a huge long list of values but limit these to the key ones that represent who you are and what you believe in as an organisation.
Designing your logo
Designing your business logo is an important step that you need to do early because this will feed into all your stationery, online communication and social media.
Your logo is something you can design yourself using an application such as Canva or you could have it designed for you. In all cases, the logo should be something that represents your firm and knowing your core values really helps your design and the colour choices.
If you have your logo professionally designed, the designer often can go on to create your social media templates, letterhead and email footer. This ensures that you have a consistent logo, fonts and colour palette on all your material which is then used by all members of your team and can be a real time saver.
There is a lot to consider when setting up your own firm and in the next issue we will start to look at the systems and the software that you need to consider when establishing an accountancy practice. This concerns both the practice and also the technology you use for your clients and these are important considerations when setting up a new firm.
You want to start your own practice in UK and if even after this article you have any more queries or unanswered questions then you can always get in touch with our accountants. We can have an in-depth conversation regarding starting your own practice in UK.