This article offers insights into what it means to be a self-employment account and offers a step-by-step guide on becoming a self-employed accountant.
Becoming a self-employed accountant
Freelance accounting might be quite different from your current experience of working full-time within an accountancy firm or in an in-house department.
Your current job may not be all-encompassing when it comes to servicing clients’ financial affairs. The first item on the menu is to consider whether you possess all-around knowledge to assist an individual or a business with all their tax affairs.
The next challenge is marketing your services. Competition among self-employed accountants is extremely high, and unless you have a network of existing client contacts already, you will need a solid plan on how to get the first few customers on board.
Regarding prospective customers, you’ll need to think about who they are and why they would pick a self-employed accountant over an established accountancy firm. The reason is usually cost or the reluctance to pay a retainer. In other words, you’re likely looking at small businesses, traders, and individuals with potentially complex tax affairs.
The job of a self-employed accountant
The range of tasks and responsibilities you may undertake for your clients is diverse, including:
- Analysing spending and budgets
- Managing payroll
- Preparing and filing accounts and tax returns
- Dealing with HMRC on behalf of your clients
- Submitting VAT returns
- Auditing financial information
Unless you have experience in all the above and more, you’ll need to consider updating your knowledge or, alternatively, partnering with someone who can provide a complementary skill set.
How much does a self-employed accountant make?
Your freelance accountant's salary hinges on your experience level and the industry you choose to specialise in.
Freshly qualified accountants usually start at about £30,000 per year on average, whereas a chartered accountant might be making around £85,000 a year.
Working for yourself will allow you to set your own rates, but you’ll need to do some research on your competition. Other self-employed accountants often advertise their services on platforms such as Bark or Upwork.
Have a look at more established accountancy firms. They tend to publish a very clear monthly pricing structure and extra charges for additional work, such as a stand-alone tax return, etc., on their websites.
Advice on how to become a self-employed accountant
This guide goes through the all essential steps that every partially or fully qualified accountant will need to consider to become independent.
1. Do you have all the qualifications?
If you’re already a fully qualified chartered accountant, you can probably skip to the next step. Anyone else who’s not at that stage yet will need to consider the minimum qualifications required to become a self-employed accountant.
As you are probably aware already, the level of your qualifications will dictate what services you’ll be able to offer and the type of clients you’ll be able to work with.
The better the qualifications and size of your clients, the better financial prospects for you.
Therefore before going independent, consider whether you have an opportunity to up your qualifications before leaving full employment. Studying while running a business is often very difficult, and you’ll have to fund it yourself.
2. Form your company
As an accountant, you already know the advantages and disadvantages of different self-employment types.
Starting out as a sole trader is usually quick, and simple and can always be changed to a limited company as and when your business grows.
3. Register with the Information Commissioner’s Office (ICO)
In your professions, you’ll be processing personal information and as such, you need to register with the ICO. It is easy to do online, and the cost for a one-man band is very low.
4. Register with an authority
In the UK individuals and businesses offering accounting services must be registered and regulated by a recognised supervisory authority. Make sure which you need to be registered with and their membership requirements before setting up your business.
5. Pick the right niche
Doing a bit of everything for everyone rarely works, and will likely put prospective clients off. Think about where you are, your experience to date or the industries you are interested in.
It will help you plan your business more precisely, create the right messaging and give a clear direction to your marketing plan and online presence.
Your niches could be based on:
- Where you are. For example, “best accountant in Manchester”
- Your client type. For example “accountant for contractors and freelancers”
- Your speciality. For example “accountant for online retailers”
7. Use accounting technology
Having some accounting software is a must these days. You can still carry out accountancy services without technology, but you’ll soon find how time-consuming it is and how restrictive in terms of your own business. They are worth the investment.
In your job, you have probably come across some names such as Freeagent, Xero and many more. Research the market, and see the new kids on the block and what they offer. Many allow a free trial, so play around to see which one might work for your business.
“Check live feed integration capabilities.”
8. Open a bank account
The wait times to open a bank, especially for businesses offering financial services, can take a while, so put in your application early.
9. Be clear on your pricing structure
Knowing what you want to charge and how it fits with the rest of the market is important. Your prospective clients will expect you to be clear and upfront.
For example, having the nicest website is of no use to a prospective client if they can’t get an idea of how much your services will cost them.
Before setting your fees, consider all costs - technology, registration fees, website, bank account fees, professional indemnity insurance for accountants, etc As an accountant, this should be your domain, and you should be able to quickly work out what makes sense.
10. Establish your online presence
The competition is stiff, and you’ll need to stand out if your customers are to find you. Even if you are aiming to become an accountant for your local community, they’ll need a way to quickly access your details or be able to share a link to your website or social media account with others.
A simple website which says something about you, your expertise, location/contact details and values is important. It needs to support your personal brand, and ethos and show that you're a trustworthy and reliable choice for your prospective clients.
The choice of social media profile will depend on your niche. For example, if you are targeting tradesmen, there is little point in being on LinkedIn. Facebook might be a better choice.
Social media can be quite time-consuming so don’t set up a profile on every single platform. Choose what’s relevant and manageable.