Starting Practice

jmorgo7
jmorgo7 Registered Posts: 18
in General accounting discussion
I am wondering about starting a very small practice with two friends.

One friend has a degree in accountancy and is currently doing CIMA

The other is in the latter stages of L4 AAT.

I am MAAT with some experience in bookkeeping and self assessment.

Could I start a business as three equal partners, get the business registered for MLRO with AAT by myself and let the other two do their own clients accounts under supervisor from me?

I would review any submissions to HMRC and would submit returns through my own HMRC agent account (which I already have).

I obviously need to apply for MIP and the only services I would register for are bookkeeping and self assessment which are the only services we would offer.

Each partner would get their own professional indemnity insurance.

There is a local firm who are AAT qualified that I could ask to act as a continuity agreement.

Does anyone see any flaws in this in regards to AAT's code of practice?

Thanks!

Comments

  • Buhir_the_Bookkeeper
    Buhir_the_Bookkeeper Registered Posts: 36 Regular contributor ⭐
    I would recommend contacting the MIP practice team directly as they will be able to guide you to starting with the correct compliance.

    I would recommend you all to agree upon and complete partnership agreements from the onset to confirm profit share, capital share, loss share, expected time each member is expected to work, eventualities of splitting capital in case one partner wishes to sell his share in the future... and any other matters that may be important to you guys. This always helps in case of problems in the future.

    Also speak to the MIP practice team about what needs to be carried out to increase your practicing license in different areas and how to fulfil the CPD for this with an aim to increasing your areas of practice each year. So adding accounts preparation, management accounts preparation, corporation tax and vat returns and payroll in the future.

    Good luck sounds like you have a good team.


    Buhir@Total Books_The_Friendly_Accountants
  • burg
    burg Registered, Moderator Posts: 1,441 mod
    Firstly good luck with everything and congratulations for getting this far.

    My advice would be that maybe now is just too early depending on what you want longer term. We do very little bookkeeping but this is obviously time limited and the rates and quite someway lower than those for accounts and tax work. Maybe you should work on being able to offer services for limited companies?

    A good example would be that many businesses start of as sole traders but as they grow many become limited companies. These would have to leave the practice. Many people are now contracting via limited companies and you would be missing a whole potential market.

    As for the three of you working together, work out now how things will be split in terms of income and workloads and what happens if and when one of you wants out. the chances are somewhere along the line one of you will want something different and this needs to be agreed now. I've seen it many times and if it is not agreed now it only ends up in arguments and with one or all of you unhappy.

    Good luck
    Regards,

    Burg
  • jmorgo7
    jmorgo7 Registered Posts: 18
    Thank you both for the advice.

    I will look into CPD to see if I can increase the services I can apply for. I don't want to restrict where the practice could go by not being licensed for the necessary services.

    A partnership agreement is essential as you both have mentioned so I will definitely look at getting one drawn up and agreed among all!

    Thanks again,
  • stevo5678
    stevo5678 Registered Posts: 325
    I personally would be weary of having a three way business. It's hard enough to feed one belly! You need to assess whether you need the expertise / support of the other two as it may be costly in the long term sharing equity...

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