6 practice management considerations needed at set up
When you are starting up in practice it is important that you are aware of the options to consider. Often the first steps are the most difficult ones. Our Setting up in practice pages will help by pointing you in the direction of answers to some key questions.
1. What will I call my practice?
You will need to inform ICAEW of your firm’s name and details. This is important because firstly ICAEW needs to know member firm information and secondly ICAEW is regulator for Practice Assurance Standards and other regulatory areas as well as being Money Laundering Supervisor for member firms.
There is guidance on icaew.com as to which names are not permissible.
2. Names and letterheads
You may wish to ensure that the letterhead you use for example on headed notepaper complies with the ICAEW requirements. ICAEW is happy to help by checking this for you.
3. Where will you work?
Many people start by working from home. This has many appealing advantages such as the ability to work flexibility around school events. However, ensure that work and home life are divided and that family interruptions do not become a problem to your work. It is also important that you are able to shut the work away at the end of the day.
There is a temptation to work longer hours if you are based at home. There is a real difficulty in preventing clients from visiting you when it suits them which may be in the evenings. You may want to make it clear that you can be visited only during work hours.
However, part of the USP of many smaller firms is their very accessibility. Carefully consider at the outset whether you wish clients to have such access and what the impact may be on your family life. If you are happy with clients visiting outside office hours, you may want to make it clear that this needs to be agreed before the meeting (to prevent clients dropping in).
If you work from home, you also need to consider tax implications as using your home partly as an office has business rates implications.
If you intend to operate away from your home, the normal alternatives for a smaller firm include leasing offices, operating from serviced office buildings and sharing an office with another accountant.
Leasing offices obviously means you are entering into a lease agreement which you need to consider carefully, particularly from the perspective of flexibility of space as your firm expands.
Serviced offices can be attractive as they include the advantage of having shared secretarial and telephone reception areas with the ability to use meeting rooms which can be pre-booked if your office space does not contain enough room for client meetings.
You might benefit from having other accountants in serviced offices. This can be useful for consultation and to provide you with an informal ‘support network’ of people who have been where you are in the early days.
A third alternative may be to share an office with another accountant until your firm grows further. This has attractions, particularly if you can share secretarial resources and know someone is around when you are on holiday, but it may mean that your firm’s individual standing seems to clients to be part of (or linked to) another firm which may not be your desire.
Part of the decision about where to work can involve client access. If it is in the centre of town, is it difficult to reach and park? A client bugbear can be difficulty in accessing your offices to drop off records. Parking can be very important to staff too, if your plans are to expand.
4. How much will you charge?
Whether you agree the fee on the basis of time, on a fixed-fee basis or on performance, always price your work for profit. Anything else is unsustainable beyond the short term (see our Fees and charge-out rates page.
Of all the issues that impact on practice profitability, pricing has the biggest effect. Increasingly, clients expect fixed fees quoted in advance. For a specific assignment, assuming the price is accepted, every additional pound quoted goes straight to profit. Every pound of discount given comes straight out of profit.
The quote may be influenced by perceptions of what the client will pay instead of what the assignment will involve. If there is a trend, it tends to be towards under-quoting rather than over-quoting, which can have significant consequences on the quality of the work and/or the assignment’s recovery. Having first quoted low, it is then very difficult to increase the price significantly, thus perpetuating the problem year on year.
5. Data Protection Registration
You will need to consider the requirement to be registered under the Data Protection Act (DPA) 1998 as it is highly likely that the work you will be involved in will include the retention of client information.
The registration form is on the Information Commissioner’s website. Though there is a great deal of detail as to specific requirements the majority of firms conclude that they require registration.
While there are agents who provide this service at a greater cost, registration with the Information Commissioner is easy and bears no additional cost.
ICAEW publish a helpsheet covering the Data Protection Act and accountancy.
It will be timely to register both as an agent with HMRC and to notify them of the commencement of your business - see HMRC's page Client authorisation: an overview
You will need to notify ICAEW that you have set up in practice so that we can monitor your firm and supervise you for anti-money laundering (if your firm meets the definition of an ICAEW member firm).