Members in Practice

richiebkerry

How much can an MIP earn in a year?

I understand that new MIP's = new business... and that most new businesses don't even breakeven in the first couple of years etc etc.... location must also be a factor.

Does anybody know the average MIP salary?
Do people have any stories or links of successful MIP's? I saw a great article in the magazine a while back but always feel that these small articles always leave me wanting to find out more and ask further questions!

Has anybody recently taken the leap into the MIP world?

Thanks

Rich

Monsoon

MIPs can be higher rate taxpayers, for sure. It's hard work, but as with any business you get put what you put in. Different people also have different goals and different ideas of whatthy consider 'good money.'

There was a MIP earnings survey recently on email but it only asked about turnover which as we all know is just vanity - profit is sanity! Depending on business model, net profit % can vary wildly so turnover is not a good indicator. Read my blog!

burg

Depends what you can make of it.

As a new MIP you need to be able to find the work. I built up my practice part-time at first and then took the risk of leaving employment to make my practice work.

When talking potential there are all sorts of aspects to consider. There are many different clients to target. It depends if you are going to do just bookkeeping or offer accounts and tax returns as well.

A realistic charge out rate is £50 - £75 per hour for doing accounts and tax work. If you do a 37 hour week you won't make all of it as chargeable. Lets say you can get 25hrs (you may do 30 if you get things right).

So 25hrs x £75 = £1,875 a week. Take 4 weeks holiday and you potentially can do £90,000 before expenses. Expenses are key though as if you don't control these then you may not have any profit left. Do bear in mind though at this level you would be managing 180 £500 fee clients which is quite a lot for one person.

I have around 100 accounts clients plus a few bookkeeping and VAT Returns. I could still take on some more but when you add in phone calls, emails, meetings, etc time becomes limited.

If however you are prepared to take on staff and premises then who knows what the potential is. Whatever you make it really!

JodieR

I don't think there's an easy answer to 'what does the average MIP earn' as there's so many factors to consider and profits will vary wildly from someone who makes just a couple of grand a year right up to and even beyond burg's figures.

If you're working from home without any staff then the overheads aren't too high. You'll have to pay for computer equipment, software, subscription fees, CPD costs, insurance, phone, stationery and probably a bit of advertising. If you're a full time MIP even if you're struggling in your first year you should be able to make enough to cover these costs and therefore shouldn't make a loss. Of course if you were to prepare management accounts including a market-value salary for yourself it may look a bit grim in the first few years!

You're right that it is essentially the same as starting up any other business. Techinical knowledge is of course essential before you even consider becoming an MIP, but it's your business savvy which will determine how quickly you streamline your business into showing a profit in the afforementioned management accounts.

Personally I found it ridiculously hard in the first few years - I didn't really know what to charge and often underquoted fixed prices for jobs which ended up taking days rather than hours but I've stuck it out and every year it does get easier and better than the last. I still think I've got a couple of years to go before I've got everything just as I want it. I don't honestly think that setting up a business is somehting you can read a book about and instantly be an expert on, it's something that requires a combination of guts and hard work, a good network, personal support, compromise, innovation and a bit of luck here and there.

I've been doing this for 6 years now and up til last year could probably still have been earning more in employment but although I work more hours than I would as a full time employee it is worth it for the flexibility it gives you and the feeling of control over your life. I'm not the kind of person who deals well with the red tape imposed on employees so I know that I'm on the right path!

paulstafford

Some really good replies from experienced MIPS.

Rich - I started out as an MIP 6 months ago and can confirm with the above comments that becoming an MIP is not a get rich quick scheme!

richiebkerry

Thanks for all the comments. Absolutely great responses, I applaud those of you who have taken the leap into becoming a MIP. Good luck to Paulstafford especially.

Rich