Bookkeeper/MIP referral arrangement.

dantraydantray Feels At HomeRegistered Posts: 72
Hi,

I am after some advice:

I am currently studying Tech level with final exams next month (I already hold provisional full membership). On completion I plan to progress onto ACCA. I currently work at accountancy firm.

The end goal is to have my own practice under ACCA. I am aware that I can't be an AAT MIP whilst studying ACCA and also that to practice under ACCA requires 3 years post qual experience. However, this will be five or six years from now at the very very earliest and I don't want to wait that long to be up and running.

What I've been thinking is to set up providing the permitted book keeping/payroll/VAT services whilst studying ACCA and once time is served then will be able to set myself up in a fully licensed practice. Hopefully by then I will have an established client base and the transition from employed to self employed shouldn't be too much of a problem.

Until then I am conscious of the limited services my clients would be able to receive from my practice and it is this that I would like some advice on because I have an idea and am not quite sure if it would work, or even if it is permitted.

What i was thinking is I could set up as a book keeping practice but establish a relationship with an MIP whom I could recommend my clients to once book keeping is complete for further accountancy/tax work.

(Subject to negotiations) I was thinking that if could find an MIP who would allow my clients a discounted service and pay me a comission for referring them in the first place then I could create a service that would be beneficial for all.

Now the following is an example and of course figures can be negotiated:

I complete all book-keeping up to trial balance and as I am not permitted to take the work any further, I recommend my client uses MIP X as they can get a 20% discount for services.

MIP grants my clients a discount of 20% from the normal charge of service in example say £250
From the remaining £200 left over, (the amount of money paid by my client), the MIP retains 80% (£160) and pays the remaining 20% (£40) to me as commision for referral.

That way the client gets a discounted service, I earn a commision and the MIP would take 64% of the money that they wouldn't have seen otherwise.

I would like to hear the opinions of MIPs regarding this: Would this be something that you would be interested in? Is it prohibited by accounting bodies, or am I just talking crazy in even thinking this would be a possible working agreement?

Maybe it wouldn't be suitable for your particular practice but if you have any advice that you feel i may benefit from I would really like to hear it.

Thank you in advance and enjoy the weekend!
Dan.

Comments

  • MonsoonMonsoon Font Of All Knowledge FMAAT, AAT Licensed Accountant Posts: 4,069
    Good for you for thinking practically.
    dantray wrote: »
    I complete all book-keeping up to trial balance and as I am not permitted to take the work any further, I recommend my client uses MIP X as they can get a 20% discount for services.

    MIP grants my clients a discount of 20% from the normal charge of service in example say £250
    From the remaining £200 left over, (the amount of money paid by my client), the MIP retains 80% (£160) and pays the remaining 20% (£40) to me as commision for referral.


    That way the client gets a discounted service, I earn a commision and the MIP would take 64% of the money that they wouldn't have seen otherwise.

    I would like to hear the opinions of MIPs regarding this: Would this be something that you would be interested in? Is it prohibited by accounting bodies, or am I just talking crazy in even thinking this would be a possible working agreement?

    I don't think you can do both.
    1. Accountancy is not a service whereby people are attracted by discounts. Tried it, no-one cared.
    2. I don't mind paying a commission for referals, but I don't want to discount my fees as well. Id now be making £160 out of a potential £250. That's less than 2/3 of a normal fee.

    I don't think it's a problem regarding accountancy bodies, yes I think it's a possible working arrangement for the right people (eg a work from home MIP who's just starting out and needs more clients).

    It doesn't fit with our business model so I wouldn't take you up on it, but good luck :)
  • BluewednesdayBluewednesday Font Of All Knowledge Registered Posts: 1,624
    Have you factored in the 3 years with an approved practice to get your ACCA certificate.

    If so then I would start looking now, apparently ACCA don't provide a list of approved practice - extremely helpful!!
  • dantraydantray Feels At Home Registered Posts: 72
    Hi Monsoon - the figures can be worked out. my main aim is to get my clients using the same MIP time and time again. Even a slight reduction would be an incentive not to take the TB to one of the chartered accountants in town.

    Blue - No, this would be strictly a part time practice whilst studying ACCA and gaining the required experience. Really just to get my name about and make myself known to the local businesses.

    I'm currently working on the approved practice element of this issue so the book keeping would also suppliment any cut in pay that may be necessary.
  • burgburg Experienced Mentor GloucesterModerator, FMAAT, AAT Licensed Accountant Posts: 1,427
    The problem you are going to encounter is that knowing you would be moving onto offering all services any accountant forming an arrangement with you would potentially lose the additional work in a few years time.

    Offering a discount to you effectively and also offering to pay you commission is a bit of a cheek.

    An avenue that may be more acceptable is to form a relationship with a local accountant. Start by having their normal fees (maybe a slight reduction) then the agreement could go along the lines of as the accountant becomes familiar with the manner in which you work they may be willing to reflect this in their pricing. If your work is of a high standard and requires little work to correct then this will obviously help.

    Good idea in principle but would need a little work to work in practice.

    Best of luck!
    Regards,

    Burg
  • anniemanniem Experienced Mentor Pewsey, WiltshireRegistered Posts: 1,325
    Something else to think about:

    Are you currently working in an accounting practice?
    Are you wishing to set up on the same doorstep as that practice?

    I know that we had a clause in employees' contracts concerning "setting up a business within a XX mile radius within XX years of cessation of employment with the organisation".

    Might just be worth double checking if you are now/are looking at employment in practice setting!
    FMAAT - AAT Licensed Member in Practice - Pewsey, Wiltshire
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