How to Start an Accountancy Practice in the UK

Is Starting an Accountancy Practice Right for You?

Demand for accountancy among small businesses is steady and getting more complicated, which favours practitioners who can explain things plainly. Every new limited company needs accounts and a Corporation Tax return, sole traders and landlords are being brought into Making Tax Digital in stages, and most business owners would rather pay someone they trust than learn it themselves. Practices that do well tend to pick a type of client, speak that client's language and make compliance feel handled rather than frightening.

The realities are different from employment. In a firm, work arrives, is reviewed and is billed by someone else. On your own, you win the work, do it, review it, chase the fee, keep your own CPD and supervision records and answer the phone during the January rush. The first year is usually slow, because clients change accountants at year ends and recommendations take time to land, so people with savings, a part-time role or a few clients who come with them have an easier time.

Most people open a practice after qualifying and spending several years in a firm or in industry, which is roughly what the professional bodies expect before they grant a practising certificate. Bookkeepers often start under an AAT licence and grow into accounts and tax work as their qualifications allow. If you are still studying, the realistic route is to qualify, gain the post-qualification experience your body asks for, and take on clients on the side only where its rules and your employment contract allow.

Qualifications, Registrations and Rules

• Membership and a practising certificate. The title accountant is not protected in UK law, but the professional bodies require members who offer services to the public to hold a practising certificate or, at AAT, a licence. ICAEW, ACCA, ICAS and CIMA each set experience requirements, continuing professional development rules and an annual renewal, and practising without the certificate is a disciplinary matter. Check your own body's current rules before you take a fee.
• Anti-money-laundering supervision. Accountancy service providers, including bookkeepers, tax advisers and payroll agents, must be supervised under the Money Laundering Regulations. Most professional bodies supervise their licensed members, and everyone else must register with HMRC, which approves the owners and managers and charges an annual fee. GOV.UK says trading unregistered is a criminal offence, and the government intends to move this supervision to the Financial Conduct Authority, so check the current position.
• Professional indemnity insurance. Every body requires practising members to hold professional indemnity insurance at a minimum level of cover set out in its regulations, usually in place before the certificate is issued, and most expect run-off cover when you stop practising. Clients and software partners may ask to see the certificate. Use a broker who understands accountancy practices and tell the insurer honestly which services you will offer.
• Continuity arrangements. Several bodies require a sole practitioner to have a written arrangement with another practitioner who would look after clients if you died or became incapacitated. ICAEW calls this an alternate and ACCA a continuity of practice agreement, and ICAS asks sole practitioners to confirm their arrangements each year. Finding a willing counterpart takes time, so start the conversation early, ideally with a practice of similar size.
• Engagement letters and professional enquiries. Your body will expect a signed engagement letter for every client setting out services, responsibilities and fees. When a client moves to you from another accountant, write to the previous firm, with the client's permission, asking whether there is anything you should know before accepting. The letter is often called professional clearance, although the outgoing firm cannot refuse, and it is where unpaid fees and unfiled returns surface.
• Agent registrations and reserved work. Filing for clients needs an HMRC agent account and each client's authority for each tax, plus your own Companies House access for company filings. Statutory audit is reserved work requiring registration with a recognised supervisory body, and insolvency and regulated financial advice are licensed separately, so new general practices usually refer them on. Clients in Scotland or Wales bring devolved income tax rates and property taxes into play.

Setting Up the Business

• Sole practitioner, partnership or limited company. You can practise as a sole trader, a partnership or a limited company. Many sole practitioners incorporate because clients see a company as more established and the bodies permit it with the right practising arrangements. Each route has different tax, liability and filing consequences, and your body may need to register the firm itself, so take advice from an accountant who acts for practices, even though you are one yourself.
• HMRC registration and VAT. Register for Self Assessment or Corporation Tax when you start trading, and think about VAT early. Most accountancy clients are businesses, many of them VAT registered, so registering voluntarily before you reach the threshold published on GOV.UK rarely costs you clients and lets you reclaim VAT on software and equipment. Keep your own filings exemplary, because a practice that misses its own deadlines will struggle to explain it to clients.
• Business banking and your own books. Open a business account before the first invoice and run every subscription and fee through it. Use the bookkeeping software you will recommend to clients for your own practice, so you know every screen they see. If you will ever hold client money, your body has specific rules on separate client accounts and reconciliations, and many new practices simply decide never to hold it.
• Practice, tax and bookkeeping software. A small practice typically needs practice management software for deadlines, engagement letters and client records, accounts production and tax return software, bookkeeping software clients can share with you, payroll if you offer it, and a secure document portal. Making Tax Digital for Income Tax brings sole traders and landlords into digital records and quarterly updates in stages from April 2026, so choose compatible products and check the timetable on GOV.UK.
• Data protection and the ICO fee. You will hold identity documents, payslips, bank statements and tax records for every client, so data protection is central. Most practices must pay the data protection fee to the Information Commissioner's Office, publish a privacy notice and secure devices, email and the portal properly. Set retention periods knowing that the Money Laundering Regulations require due diligence records to be kept for at least five years after a client relationship ends.
• Anti-money-laundering procedures. Supervision is only the start. Before the first client you need a written firm-wide risk assessment, policies and procedures, client due diligence for every new client including identity checks and an understanding of their business, ongoing monitoring, training records even if the only staff member is you, and a named money laundering reporting officer. Your supervisor can inspect all of it, and the sanctions for a thin file are real.

Start-up Costs and What You Need

The start-up costs of a practice are modest compared with a trade, but the recurring ones are not. Budget for your body's practising certificate and membership, anti-money-laundering supervision, professional indemnity insurance, the ICO fee, a laptop, second screen and scanner, and the software subscriptions, which are usually priced per client or per user and grow as you do. Add an identity-check tool for due diligence, a professional email domain, a business phone line and a website.

The larger cost is time without fees. Clients tend to join at a year end or when something has gone wrong, monthly fees build only as the client list does, and the first year's accounts for a new client are often paid for in month twelve. Plan for several months of living costs on top of the practice costs, and for the CPD, training and body events you must keep up regardless of income.

List everything by month rather than guessing a total, because almost all of it recurs. Price the software from the vendors' sites at the client numbers you expect in year one and year two, add a contingency for a replacement laptop or a deadline that forces an early purchase, and treat the result as the base your fees must cover before they pay you anything.

Pricing Your Work

Most small-business clients now expect a fixed monthly fee covering a defined bundle: bookkeeping or review, VAT returns, year-end accounts, Corporation Tax, payroll for a set number of employees and the directors' personal returns. Build packages from your real costs and the hours each service genuinely takes, then add the work that is easy to forget: answering questions, chasing records and software time. Time-based billing still suits one-off work, investigations and advisory projects with uncertain scope.

Whatever the model, the engagement letter should state precisely what is included, what is extra and how you will charge for work outside scope, because scope creep is how new practices end up working for nothing. Collect monthly fees by direct debit from the start, take payment on account for one-off work such as a backlog of returns, and set out your payment terms and what happens when records arrive late.

Resist undercutting the local firms to win the first clients. Low fees attract the clients with the worst records and the slowest payments, and they are hard to raise later. Price for the client you want, review each client's fee against the hours actually spent at their first anniversary, and be willing to let go of the ones who cost more than they pay.

Finding Your First Customers

• Your own network first. Former colleagues who have gone freelance, friends who run businesses, relatives with rental property and the contacts in your phone are where most new practices find their first clients. Tell everyone what you now do, be specific about who you help, and ask each early client to introduce you to one other business owner.
• Small businesses outgrowing their set-up. Sole traders going limited, owner-managers whose bookkeeper cannot do year-end accounts, and landlords being pulled into Making Tax Digital are actively looking for an accountant. Local business groups, co-working spaces and trade associations put you in front of them, and a short talk on a topic they fear, such as quarterly updates, often brings enquiries.
• Referrals from other professionals. Solicitors, financial advisers, mortgage brokers, bank managers and web designers are asked for an accountant constantly and like having a reliable name to give. Introduce yourself, explain the type of client you want, send them work when you can and stay in touch, because the referrals follow the relationship rather than precede it.
• Software partner directories. The major bookkeeping platforms list accountants and bookkeepers who hold their certification in a public directory that business owners search when they set the software up. Certification is usually free or inexpensive, improves your competence on the product, and the listing brings enquiries from exactly the clients who already keep digital records.
• Search and reviews. A business owner who has been given your name will search for you before calling, and some simply search for an accountant in their town. A complete Google Business Profile, early reviews and a website that says who you help and what it costs turn both into a conversation, and getting found on Google takes months, so start early.
• Subcontracting while you build. Larger firms and other sole practitioners often need overflow help around deadlines and will pay you to prepare accounts or returns under their review. It pays less than your own clients, but it keeps money coming in during slow months and sometimes brings referrals of clients they do not want.

Your Website and Online Presence

Clients choose an accountant slowly and compare several, so your website has to do the work a shop front would. It should say which clients you specialise in, give each service its own page, show your packages or at least how you charge, name your professional body and anti-money-laundering supervisor, and make booking a discovery call effortless. Photographs of you rather than stock images matter, because people are choosing a person to trust with their finances.

Have it live before you tell your network you are trading, because the first referral will search for you that evening. A startup website checklist helps you gather the practising details, privacy notice and terms you need before launch, and the site can start with five strong pages and add guides, a portal login and recruitment pages as the practice grows.

When you are ready for a website, our startup accountant website design page explains what a new accountancy practice needs on day one, our accountants website design page covers the full picture for an established business, and accountants website design prices sets out what it costs. Startup websites start from £2,400, and our startup website checklist lists what to have ready.

Mistakes New Accountancy Practices Make

• Taking on a paying client before the practising certificate, supervision and insurance are all in place, which puts your membership at risk from day one.
• Accepting every client at any fee, then spending the first year on the messiest records for the lowest-paying people.
• Skipping the engagement letter or the professional enquiry letter because the client was a friend, and discovering the unfiled returns later.
• Treating anti-money-laundering as a form to file rather than a process, with no risk assessment, no due diligence records and nothing to show an inspector.
• Letting your own accounts, returns and CPD slip because client work came first, which is the one failing clients and your body will not forgive.
• Relying on word of mouth alone, with no website, no profile and no reviews, so the referrals you earn have nowhere to land.

Your First 90 Days

1. Confirm with your professional body that you are eligible for a practising certificate or licence, apply, and check what it requires on insurance, continuity and CPD.
2. Arrange anti-money-laundering supervision with your body or register with HMRC, and write your firm-wide risk assessment, policies and client due diligence procedure.
3. Take out professional indemnity insurance at your body's minimum level and keep the certificate where clients and partners can ask for it.
4. Choose sole practitioner, partnership or limited company with advice, register with HMRC or Companies House, and decide whether to register for VAT now.
5. Open the business bank account, set up your HMRC agent account and Companies House access, and choose your practice, tax and bookkeeping software.
6. Pay the ICO data protection fee, write your privacy notice and engagement letter templates, and agree a continuity arrangement with another practitioner if your body requires one.
7. Design two or three fixed-fee packages from your real costs, set your terms and direct debit collection, and write down how you will charge for out-of-scope work.
8. Choose a domain name and get a website live with your services, packages, professional details and a booking link, then complete your Google Business Profile.
9. Tell your network you are trading, get certified on your bookkeeping platform and join its directory, and introduce yourself to three professionals who could refer clients.
10. At ninety days, review where each client came from and how long the work really took against its fee, then adjust packages and marketing before the next year-end rush.