You must (legal requirement carrying jail time and unlimited fine if you are not) be registered for MLR (either through your professional body or directly with HMRC).
You must tell HMRC your status (self employed / director of own limited).
You will need to set up as an agent to represent your clients. That is not just one setup but a setup per service which, if you are offering accounting services will be quite a few of them (VAT, PAYE, Corporation tax, etc.).
If you are offering accounting services to clients they will be asking you these sort of things (i.e. how to set up with HMRC, what is the best legal form (and why), etc.) so really you should know them before you set up yourself.
Which professional body are you trained with? Some of them require that you have a practicing certificate through them, some expect you to have their MLR, others are more flexible. If you are with the ACCA there are very severe restrictions on what you would be allowed to do pre practice certificate.
For your clients you will need a letter of engagement. Most professional bodies have a very rough one. Thats one of the few documents that bookkeepers and accountants are adverse to sharing with each other as if anything goes wrong its a document that you will depend upon in court.
Talking of legal matters you will need to have PII (Professional Indemnity Insurance) in place. Its not a legal requirement (although it's often a professional body requirement), however, it's really sensible to have that insurance as if you get anything wrong the client can expect to be put back in the position they would have been in had the action not been taken or advice given not heeded.
Even dealing with only the smallest companies its advisable to have at least £50k cover as insufficient cover could cost you your house.
You will also need software for your practice. I use VT Transaction+ and VT Accounts but you may find that your clients dictate the software that you need to use. In addition to bookkeeping and accounts software you will also need Payroll software. Try out 12pay and Moneysoft Payroll to see which you like. Both are much cheaper than Sage.
Hope that helps get the ball rolling,
kindest regards,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
ALso I am not fullly qualified so would this affect the my business
It would all depend upon which professional body you are with. Some of them such as ACCA would severly restrict the services that you are permitted to offer.
You need to say which body and how far through qualification you are.
There's no issue as your posts cannot be traced back to a person so you're not really giving anything away.
kindest regards,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Talking of legal matters you will need to have PII (Professional Indemnity Insurance) in place. Its not a legal requirement (although it's often a professional body requirement), however, it's really sensible to have that insurance as if you get anything wrong the client can expect to be put back in the position they would have been in had the action not been taken or advice given not heeded.
Even dealing with only the smallest companies its advisable to have at least £50k cover as insufficient cover could cost you your house.
Just out of interest Shaun. On some examples of Engagement letters I've seen the wording to the affect that liability is restricted to the cost of the service provided. So eg if the accountant charged £1000 that would be the maximum liability in the event of the client sueing. Is that valid or is the client entitled to sue for the amount they have lost out by.
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
this is one of those area's that I think that some firms may jump on an idea like lemmings running for the cliffs edge.
If it goes to court (the bigger the variance between the cap and the claim the more likely that is) then the court may judge :
1) that the cap in the contract was insufficient for potential claims and remove it as a clause in the contract.
2) judge that the claimant did not understand what they were signing sufficient to make the clause binding which would render in null and void.
If the court judged that the amount was sufficient for the type of claim expected and judged that the claimant should have understood what they were signing (the wording was clear, explained properly and seperately initialed) then it should stand.
What is a reasonable level of cap would be judged against industry norm which for bookkeeping is generally a minimum of £50k, for general accountancy firms a minimum of £100k and for top table accountancy forms £250k so if the amounts in the contracts are less than that the caps are likely to be deemed null and void.
Can you see the link developing here between the PII and the contract cap?
What should happen is that the contract sets the limit at a reasonable amount to protect the firms from claims of more than their PII limit. It should not be deemed to be a replacement for the PII.
£1000, or even limitation to fee's charged, would be deemed wholly unreasonable.
The reasonable cap must also be accompanied by evidence that the clients attention has been drawn to the cap.
Hope that makes sense John.
kindest regards,
Shaun.
p.s. professional legal advice should be sought rather than depending upon the above answer.
-- Edited by Shamus on Monday 30th of November 2015 06:28:42 PM
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
p.s the legislation for this is the Unfair Contract Terms Act (1977)
The clause that you need is : "in the case of any other loss or damage, a person cannot so exclude or restrict his liability for negligence except in so far as the term or notice satisfies the requirement of reasonableness".
Also section 11(4)
Where by reference to a contract term or notice a person seeks to restrict liability to a specified sum of money, and the question arises (under this or any other Act) whether the term or notice satisfies the requirement of reasonableness, regard shall be had in particular to: (a) the resources which he could expect to be available to him for the purpose of meeting the liability should it arise; and (b) how far it was open to him to cover himself by insurance.
As can be seen above, the clause factors in the expectation that reasonable (see my reply above) insurance exists to service the claim.
Therefore a clause specifying an amount less than generally accepted PII insurance levels would not be a valid clause in the contract.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Im doing Acca i had some exemptions from uni started my exams. Im mainly focusing on bookkeeping and small sole traders. As i had 1 and half years of experience. I am nt fully qualified acca.
As you are ACCA then you are faced with regulation 8.
You are only allowed to do bookkeeping to trial balance, VAT and Payroll work.
No accounts, no advice, no tax work.
You will need to get your MLR cover direct from HMRC.
You will not be allowed to do accounts work until you are a full member (passed all exams including the post exams ethics module and have three years signed off experience) and ALSO you will need to gain three years post qualification experience working for an employer that is certified to offer ACCA practice certificate training (Generally that will be an ACCA or ICAEW practice although some others have gained training status approval).
Practice certificate supervision does not start until you have gained membership although one of the years from gaining membership status can count towards post qualifications experience if such meets the practice certificate supervision criteria.
So at a minimum thats going to take five years suitable experience before you can offer accounts and tax as a service.
I apprecate that it seems unfair but just remember that you are studying the very best and it will pay in the long run. Don't get expelled from membership for the sake of earning a few extra pounds now. If you can though make sure that your employer is practice certificate supervision certified and if not that may be good reason to change employers.
You can offer basic bookkeeping services and hand over the accounts and tax to an accountant but that adds a level of expense that many smaller businesses are unable to bear as they generally expect a one stop sollution.
This may make the idea of starting a business now a non starter dependant upon whether you believe that you will be able to attract enough business where you are only working up to trial balance.
Sorry to be the bearer of bad news,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Interesting is the word. I reckon they should cover more law related issues in the bookkeeping/accounting training at certain levels. I almost did a Law degree but ended up in Corporate Banking instead, although I also had to do two years of Law as part of the Banking exams and was forever involved in reviewing contracts etc. Biggest problem I see (apart from people signing them without reading them) is when people try to cobble together a contract using parts from several other contracts, although I am probably guilty of that at some point in my career.
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Realy nice answers. How about if I am AAT level 4 student? Is it possible to start SE/LTD of my own? If in future I want to do ACCA, will it be a problem to have SE/LTD while studying towards ACCA?
many thanks for the kind words and welcome to the forum.
yes, I'm affraid that ACCA takes presedent over any other body that you are a memer of regardless as to what that other body permits you to do.
If you are (say) an MAAT MIP handling the accounts of SME clients thats fine, but, if you then become a student of the ACCA you will be restricted by regulation 8 to only offer services up to trial balance (plus VAT & Payroll work).
Sorry to be the bearer of what you probably didn't want to hear there,
kindest regards,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
If you are either a SE accountant, or you're in employment, together with working as a SE accountant, the best options, to remain out of trouble is to either study CIMA, or study ATT, then CIOT. That's assuming you're after the chartered badge. Definitely don't try ACCA if your SE. When ACCA find out, I use when, as an oppose to if! You'll be expelled, and fined. No other self respecting body would ever allow you to register with them after that.
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Johnny - Owner of an overly-active keyboard.
A man who can read, yet doesn't, is in no way wiser than a man who can't.
Hi
I differ somewhat with Johnny's approach as you can be S/e with ACCA, as long as you dont go beyond Trial Balance, which yes means you cant use chunks of what you learnt via the AAT just now, but the skills arent lost and you can make a very good living just doing that, by being choosy with your clients.
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
So, at the moment, if I want to work as a SE (or LTD), while studying AAT, all I need is to register with HMRC (+PPI,ICO,MLR) and work. There is no similar thing as a REGULATION 8 with AAT? And then, when I finish Level 4, I can use the experience gained as a SE(LTD) towards MAAT/MIP and continue doing the same thing as a MIP?
I have seen other post: www.book-keepers.org.uk/t61542325/starting-up/ , have a similar situation, mostly will be working with SE returns/refunds at the beginning. MIAB or HMRC, if MIP at the end?
Then, if after chartered (ACCA), if now start as SE, would need to close SE or limit it, and if now start as a LTD, would it be possible to study if I appoint a nominee director and be a shareholder only?
we are not making statements about your legal form but the legal form of the clients that you would be allowed to work with and what you would be allowed to do for them.
AAT will still place restrictions on you such as not being able to mention AAT at all in your marketing until you are a MIP, restricting the services that you can offer to those that you are experienced in, and I believe that they place restrictions on working with limited companies.
There is a new AAT bookkeeping practice certificate that seems designed for students who have yet to complete theioor level IV. We have recently spoken about it on the site, see here :
If you moved on the ACCA that would restrict the services that you could offer to less than you could as an AAT student but there woul;d be no need to close your business down.
Johnny and Joanne raise interesting points in relation the ACCA vs CIMA.
If you went down the CIMA route you would not be so restricted whilst studying. The qualification is at a similar level to ACCA but does not cover as many subjects. ACCA covers wider ground covering both management and financial accounting (including Tax and Audit) in depth where CIMA concentrates more on the management accountancy side of the fence.
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Yes Joanne is of course correct. Having said that, if it was me, I don't know if I could stop at TB - Knowing I could at least manage self assessments, technically. Also knowing I could earn more too. If you have self restraint then for sure, operate a pure bookkeeping business whilst studying ACCA. If you feel you'd be tempted, choose CIMA ;)
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Johnny - Owner of an overly-active keyboard.
A man who can read, yet doesn't, is in no way wiser than a man who can't.
I don't know if I could stop at TB - Knowing I could at least manage self assessments, technically. Thats the thing, plus I know what you mean - once capable, you want to just get on with it. Although it does depend on ultimate goal, as sometimes there is a need to take a step backwards before taking a step forwards.
Also knowing I could earn more too. Ah, but could you? Thats a hard one to assess, and based on what 'press'comment you see ie bookkeepers advertising how cheap they are, or indeed job adverts for bookkeepers from companies paying a pittance, would leave you to think that. But I was talking to a pal who has been doing Accounting for years and it turns out as a (mere) bookkeeper only going to TB, my lowest rate was already considerably higher than their normal rate. Of course we all have an acceptable minimum, the sky is the limit love to be paid, but ideally would like £x amount, without saying what Im one, I am happy to say Im well above that ideally would like to have and Ive had the best and increasing last three consecutive months.
so if its a means to an end I If you have self restraint then for sure, operate a pure bookkeeping business whilst studying ACCA. If you feel you'd be tempted, choose CIMA ;) Oh yes - if you are likely to be tempted to break ACCA regs, dont go there as they will find you out,
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
All valid points. I think much is how we use the variables we are given. How well do we sell, where we live, the clients to aim for, how dedicated we are, etc. It has always been my assumption that small businesses use one person to complete all of the compliance work. Then again, that falls back to who you market to. I suppose if I lived further south, a niche like aiming for the creative industry would be a good catch. Young, fresh and vibrant. Definitely go with ACCA if you can show restraint. It is the best qualification to have, if ACCA recognise you at the end of it all. It's tricky to decide, they all cost a small fortune to study.
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Johnny - Owner of an overly-active keyboard.
A man who can read, yet doesn't, is in no way wiser than a man who can't.
Oh yes, its making the variables count, plus (if you can) spotting any of the extras you can do too, sometimes unrelated to accounting as you can get paid a lot more for that. Your assumption about small businesses is probably correct in a lot of cases, especially sole traders, but there are loads of Limiteds out there who use both. I work with companies who also use ACCA and ICAEW accountants as well as little old me.
Oh be careful with some of the young 'creatives'. Those are often the ones who think they can do it themselves via mobile phone apps, although get them at the right time and they could be great business - more often than not when they have not done the books for ages because their work has got in the way or they have made a mess and need bailing out. Ive recently met a couple of such lads, whilst at a mutual clients. They are not quite at that 'oops I need someone stage', but you can see it coming from a mile off and they have my phone number (plus my client regularly nagging then them to get me in!).
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
