MIP possible earnings

stevo5678

Hi everyone,

I know it may be a sensitive subject but I am thinking about going into practice for myself in the future after getting my ACCA practicing certificate (I am a newly qualified ACCA and qualified AAT about 5 years ago).

(Also I know the issues regarding not being able to practice until I get my ACCA PC etc)

Although money is not my only motivation for going it alone (the main one is the desire to be my own boss and to have my future in my own hands) I want to know if I am comparing apples with apples and not apples with pears.

I know it varies greatly but i want to gauge what may be average and what may be possible earnings wise. I know this is sensitive for some so appreciate any ball park ideas.

Basically I am currently earnings around £30k gross and will comfortably be on £30k to £40k if I stay with my current employer long term.

I want to gauge whether I could be in a similar ball park park if I go it myself and it obviously works out successfully.

I plan to go p/t at work or find sub-con work for 2 days a week initially and then if it all takes off put both feet in. I would work from home to start and if all goes well move into low cost premises after 3 years.

Any ideas guys? Thanks for any advise.

Regards

burg

The thing is to break it down. You could sensibly work 35 hours per wk. o an 80/20 rule for chargeable to admin then that gives 28 chargeable hours per week. Assuming 4weeks holiday that gives 48 weeks per year. So a tots chargeable hours per year of 1344.

Then you need a sensible charge out rate (somewhere between £50 - £100 per hour). That gives total fee income of £67k - £134k.

With typical costs for a sole practitioner running around c£10k then the level of income you want is achievable.

This though all depends on your local market, the rates you charge and the way you develop your practice.

Obviously even bigger earnings are possible when you consider staff as well.

Best of luck.

stevo5678

Thanks Ian, always valuable to learn from others experiences.

Just need to plan on building the clients next!

reader

burg wrote: »

With typical costs for a sole practitioner running around c£10k then the level of income you want is achievable.

I have only recently got my MiP licence and have absolutely no clients yet so forgive me for my ignorance but I have budgeted around £3.5K re:expenditure.

£1,000 re: computer software/equipment (VT, Moneysoft, TaxCal, Good printer)

£1,500 re: professional fees (Insurance, AAT Licence, AAT AML, Data Protection Register, Abbey Tax/CCH, CPD)

£500 re: stationery and advertising (Letter heads, Website, Leaflets, Business cards)

£500 re: Other (Phone, Travel, Subsistence, Bank charges).

I was wondering what areas of expenditure I have missed out or what underestimates I have made?

Thanks in advance for any help.

burg

Reader,

Everyone will have different budgets and actuals on running costs. But for a full time sole practitioner with income of c£60-150k then £10k maybe a good guide.

I prefer to keep my working hours down so I can spend time with my children so I spend more money in some areas than others might on time saving software etc.

My software budget is more like £3k.

Even with a paperless office my stationery spend is more like £1k.

Advertising costs are around £3k but new business from each source cover the outlay each month.

My travel costs are around £2k per year but this can vary depending on your set up and location.

Your costs for a start up might be about right but for a full time practice these will increase. Then with more growth there is the thought of staff.

stevo5678

Hi Ian,

How did you manage at the start working from home with the littles ones? I imagine this is a challenge!

stevo5678

Reader,

Out of interest how are you making the jump. Are you leaving a full time job and going in with both feet or maybe working somewhere part time to start?

I am planning for about 12 months without significant client levels.

Another big consideration will be when do I plan to move to rented premises, guess this is something wo worry about later!

burg

The first house we were in when I started meant the office was quite seperate from the rest of the house. I was only working about 20hrs a week as well which meant there was plenty of time even if money was tight.

Two years ago we moved to a new house and converted the garage. This had its own seperate entrance but was right next to the stairs and the back part was my sons bedroom. With the increased client numbers I was working core school hours and evenings but I had to be disappointed at times.

My wife is at home anyway so I'm not looking after the children per se but they re still a distraction. Since feb we have moved to offices and although it is a 30min journey it is good to seperate home and work.

We are still very disiplined on when we work. My wife does 2 days of 9:30-2:30 and I do 3 the same and 2of 9:30 - 6ish. But we also offer evening meetings on these 2days. Overall I work around 35hrs a week. Apart from summer holidays I don't work half terms which clients are happy with given the evening meetings and the type of clients we choose to work with. I'm off to the office in a min for the first time since Friday to do 2payrolls and 2 vat returns but then won't be bk until monday. It works for us as I get to see our kids a lot.

stevo5678

Sounds like it's worked very well and you've made it work for yourself. To make a business for yourself at the same time as bringing up a young family and getting married is quite an achievement.:thumbup1:

I have alot to think about as we don't have the biggest house but definitely want to give it a go.

I imagine it's very rewarding being your own boss and reaping your own rewards.

Something for me to look forward to

reader

stevo5678 wrote: »

Reader,

Out of interest how are you making the jump. Are you leaving a full time job and going in with both feet or maybe working somewhere part time to start?

I am planning for about 12 months without significant client levels.

Another big consideration will be when do I plan to move to rented premises, guess this is something wo worry about later!

I'm planning on staying with my current firm while I study for ATT and while I get all the various programmes (VT, Moneysoft and Taxcal/ftax) installed on my home computer.

Hopefully around December time I will start leafleting/advertising etc and do my MiP work in the evenings and weekends during 2013.

During 2014 I will probably go off and get a part-time job somewhere and spend the rest of the time working for my own business.

And then go full-time re: my own business during 2015.

As you can probably tell I'm in no real rush to go MiP. I basically just want to test the waters over the next 3 years to see whether or not running my own business will only give me a bit of pocket money or give me substantial, sustainable income.

Are you going to quit your job? How many years of experience do you have?

stevo5678

reader wrote: »

Are you going to quit your job? How many years of experience do you have?

I think your idea sounds sensible, I am looking to do something similar.

I have just turned 29 and have 10 years experience within Chartered firms. I completed my AAT in 2007, ACCA in 2011 and looking to finish ATT this year.

That should be me done with studying then!