I have recently been helping a friend my friend with financial matters for his business such as entering expenses and getting him through the process of getting him VAT registered and providing him with general advice.
He would like to recommend me to some of his clients but I wanted to check the legality and what I can and cannot do!
I currently have a degree in accounting and am not affiliated or studying for a qualification (degree came with exemptions from some of the exams for ACCA)
Now what services can and cannot provide?
I was thinking of providing entering of invoices/ creating invoices, setting them up onto a system such as freshbooks, maybe provide management accounts, poss provide them with the info for their vat returns, credit control and other general admin work. Also I might maybe teach myself payroll and do that as well.
I am currently working but only for another 3 months in an assistant management role so have some experience in creating management accounts etc.
I did read somewhere I needed to register with HMRC is there anything else I would need to do? Would I need insurance and if so how much is it?
Finally I was thinking of charging around £15 an hour would you say that is a good rate.
Many thanks for your comments want to see if this is feasable or not before I take on anyone else.
hypathetically there is nothing stopping you from setting up as a bookkeeper, or for that matter an accountant as neither title is currently (emphasis on that word!) protected in law.
On the legal front there are two considerations that you need to take into account :
1) you are legally required to have supervision for Money Laundering regulations. Without it you can face stiff financial penalties and a potential jail term. MLR covert is provided either by your supervisory body or direct from HMRC for £120.
2) Just because you can set up as a bookkeeper / accountant doesn't neccessarily mean that you should. Whilst anyone can call themselves either title the work that you do is still governed by the supply of goods and services act (1982) therefore any errors can put you in a position of having to restore the client to the position that they would have been in had any mistake not been made.
It is strongly advised that you take out PII (Professional Indemnity) insurance in order to manage the risk associated with the second of the above points.
PII may prove ridiculously expensive if available at all unless you can show either (a) you have two+ years experience of bookkeeping or (b) you have a practicing certificate from a recognised supervisory body.
In your case the degree in accountancy should at least mean that insurance companies will consider you for cover.
For self emplyed bookkeepers the choice of body comes down to two main organisations. The ICB and the IAB. (AAT is aimed more towards finding employment).
If you are thinking of setting up offering bookkeeping services then you need to look carfully at any intention to take the ACCA route as once you become a student you will be severly restricted in the services that you are allowed to offer no matter which other organisations you may be affiliated with.
The ACCA rules (regulation 8) state that you will be allowed to offer bookkeeping services to trial balance, VAT and payroll. However, you will not be able to file any returns with HMRC or offer any advice to clients.
I don't think that any insurance at this level would cover you for management accounts but with the exception of that service I think that the rate seems about right for the services you intend to offer.
Good luck with your venture and keep us all informed as to whether you progress your idea further,
kind 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.
The hourly rate you are quoting is a rate for book-keeping. From what you say, you are not intending to do final accounts or tax returns which command higher hourly rates (and any bookkeeper who is doing them at their basic hourly rate are underselling themselves!)
I have come across a lot of bookkeepers join a body, pay for PII and get a practice certificate and a year later (for vairous reasons) still do not have a single client. At that point they normally give up and don't renew.
I don't know what the ICB would do, but I do know about the IAB.
If you decide to go the IAB route, you should initially apply for membership and because of your accounting degree and work experience I think you would be accepted at Fellow level. But you'd have to check with the IAB to make sure. I would get the forms to apply for a practice certificate and PII, fill them in - but not send them in. There is nothing to stop you from finding work before getting your PII and practice certificate, however if you actually start doing the work then thats a different matter. As soon as you get your first client, apply for your PII and your practice certificate. Both of these must be in place before you issue your first invoice, so if there are any delays in processing them it will delay you getting paid! That is also why I suggest applying for membership straight way - this can be delayed due to references taking time to come through, as I do know the IAB do check them.
Also don't forget to register with HMRC as self-employed!
-- Edited by YLB-HO on Thursday 12th of May 2011 07:20:30 PM
Just thought I would add that you cannot actualy advertise for work without Money Laundering Supervision License. Advertising includes having a website or business cards etc.
Advertising causes you to come under the title of Accountancy Service Provider, if you do not have a license for this then you are in trouble (see Shaun's Point 1).
Therefore you would need your Practice License and Insurance first, then advertise and find clients.
With your experience, if you could provide chartered/certified accountants as references you would possibly looking at Full Member with the ICB (Certified Bookkeeper). £15 for a Certified Bookkeeper is a little low, but it depends on where you are based, checkout other bookkeepers in your area for an idea.
I personally have not come across 'a lot of bookkeepers' who after a year do not have a single client. Yes there are some, but it's rare. Mainly this is due to those individuals thinking clients will come knocking at your door without any advertising or effort.
There are plenty of experienced self employed bookkeepers on this site who can give great advice on advertising and finding clients. I am sure if you put the effort in you will have no trouble in finding clients.
I personally have not come across 'a lot of bookkeepers' who after a year do not have a single client. Yes there are some, but it's rare. Mainly this is due to those individuals thinking clients will come knocking at your door without any advertising or effort.
Oh I don't know, a lot of people chose to set up bookkeeping business in the last 5 years, and I've seen and heard of many that never get anywhere. Partly I think that's down to advertising but also I'm not entirely convinced that there's enough bookkeeping work to go around anymore, especially where people have cut costs etc due to the recession. You have to work very hard to make it work if you are 100% bookkeeping and not offering anything else.
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Jenny
Responses are my opinion based on the information provided. All information should be thoroughly checked before being relied on.
It's good that your members are reporting lots of work, I know I'm personally drowning in it but then the longer you're in business the easier it is to get clients (IMO) because the existing ones refer new ones and your name is more recognised.
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Jenny
Responses are my opinion based on the information provided. All information should be thoroughly checked before being relied on.
The bookkeepers I mention that I'd come across in the past - set up but I don't think actually do anything. They put so many restrictions on the type of work they were prepared to do, and I think were also inflexible about what they wanted, that they don't actually get started.
Yes there is a lot of work out there, but if you tell people that you: - only work from home, only use one particular software, don't do payroll, etc etc...... people wont ask you to do their books
I'ma bit like you, drowning in work! I think its all about networking (as Rob would say) and good Advertising. Also like you say Frauke, offering other services as well and just going that extra mile with the clients. Since January I have picked up quite abit and just when I thought that would be enough I got 3 more in the space of a week, 1 of which is quite large, so you never know whats round the corner. All of my clients seem to be really busy which is really good and no one is complaining about the recession.
-- Edited by Amanda on Friday 13th of May 2011 12:46:05 PM
I just checked the rules about registering for ML:
What are accountancy services?
Accountancy services cover recording, reviewing, analysing, calculating and reporting on financial information for other people. They include:
* professional bookkeeping services * accounts preparation and signing * tax advice
If you are unsure, you will need to consider the following questions:
* Are you undertaking one of the activities ? * Do you advertise or publicise your business activity, or receive referrals from other businesses? * Do you aim to make a profit when you carry out this activity? * Do you carry out the activity with reasonable or recognisable continuity?
If you answer yes to all of these questions, you are carrying out the activity by way of business. So your business activity needs to be supervised under the Money Laundering Regulations.
If you answer 'No' to all of these questions, you aren't carrying out the activity by way of business. So you don't need to register.
So until you start advertising or publicising your business activity or receive referrals from other businesses - you don't need to get a practice certificate. So wait to until you find your first client before doing any of these things.
The odd word is ALL - it does not seem to cover if the answer is No to some of the questions!
-- Edited by YLB-HO on Friday 13th of May 2011 12:48:44 PM
Just wanting to run a few things past people on here for their advice.
I have worked with various chartered accountants over the last 15 years at various levels but at the moment dont have any formal accountancy qualifcation other than my univ degree.
I have decided to take the plunge into the big bad world and work in industry and start new job mid June.
I would however like to keep my hand in from a practice viewpoint and my current employers are going to keep me on in a consultancy basis on one of the jobs i do over the next few months and i am also going 2 contact other accountants in my area to see if they need any part time help.
I would however like to offer accountancy and tax services to the public at large by setting myself up to offer bookkeeping, preparation of sole trader/partnershp/ltd company accounts, personal/corporate tax returns, payroll (will probably sub contract this out), VAT, company secretarial and business plans.
I know that i need to get MRL in place and believe i can do this through HMRC for about £110. I also need to get PII in place and have had a few quotes of about £250 including PII and legal expense cover (but still to check if covered given dont have formal qualification). Is there anything else i need to consider before setting up a website and let it be known what i offer?
I dont have any problems doing the work as i know i could handle it no problem and anything couldnt do wouldnt take on.
There is already a couple of clients i have at the moment which will generate about £1k per year.
Just want to see if the above is possible and if anything i have missed out or overlooked.
Yeah good points there, I have come across a few like that in my time too :)
YLB-HO says: "So until you start advertising or publicising your business activity or receive referrals from other businesses - you don't need to get a practice certificate. So wait to until you find your first client before doing any of these things."
Yeah I'm just being on the safe side, but how do you get your first client without advertising?
I have seen cases where someone buys a website puts some info up, but isn't actually looking for work, but gets done under the advertising/offering services part.
Note that you missed the next part off which states answering no to some does not mean you don't have to register, you have to contact the HMRC, they will then tell you that you do need to register before advertising.
James, I notice MarkS has mentioned that he already has a couple of clients which will generate about £1k per year. I presume he does not have a web site or advertised his services!
When I started I did not advertise my services. My first client was someone I knew, and was chatting to when he complained that he could no longer afford to pay his accountant who had been dealing with a tax investigation of the accounts the accountant had done. I asked him if I could help - and he said Yes. Next thing I found myself taking on the HMRC on his behalf.
In fact I have only in the last few years started to advertised my services. I didn't even bother with a business card until recently! All my clients were often friends of friends in trouble (if you know the number of cases I have taken of people being investigated, including one who had lost his case at the High Court.... but that's another story - again a friend of a friend......)
I'm surprised you've seen cases when someone has been done.... I've never heard about anyone who has been done - but I do wish they would do something. We have all these rules and people break them all the time, and not just in a small way and nothing seems to happen to them.
6 months ago I took on a new client and the old accountant refused to hand anything over etc.... I discovered he was not registered with any organisation and contacted the HMRC as he was not registered with them either! Nothing happened, the HMRC weren't interested. He is still trading illegally as an accountant, but I don't think he has many clients left. In the end my client turned up at his doorstep and told him that if he did not hand his records over he would call the police. This is how he got his records.
I know its possible to get clients without advertising, but I wanted to make clear the rules for others reading this post, or for anyone who comes across it in the future.
The ICB has a direct link to the special MLR unit within HMRC for its members, I would assume IAB has the same link? Try going to HMRC via your professional body (IAB or IFA?).
HMRC seem rather keen to catch people, as it means a hefty fine
Off topic I know, but those are pretty impressive stats!
I too could say that I'm drowning in work, but I am not sure if that is due to bad time management rather than having more than enough work! Income-wise, I know I could do with a little more. Maybe it is the type of client that I need to address....more about this below.
So what 'good' networking/advertising specifically led to these extra clients if you don't mind me asking??
It's always interesting to hear of other peoples success stories and also what constitutes a 'large' job??
To get back on topic and reciprocate a little......I am in a similar position to Tony C.
I am not registered with any bookkeeping/acountancy body, I DO pay for MLR through HMRC and DO NOT have PI insurance.
I offer all services up to final accounts (or year end pack for handover to accountants for audit/annual return) including all bookkeeping/management accounts etc. I have mainly obtained new clients through an accountant that I have a relationship with and these have been steady rather that spectacular in terms of number. I only have three clients that I obtained myself....or rather through people I know, hence my interest in advertising etc. At the moment I am toying with a company name/website/flyer campaign. I actually have more larger jobs than small ones at the moment (e.g. perhaps one visit a week for a few hours....and one or two of these are quite hectic and stressful) but see the benefit in more of the smaller ones......e.g, one visit/drop off a month charging (say) £100/mth or rather £300 per quarter....say£20/£25 per hour. This would include minor bookkeeping (or a review of theirs), management accounts, VAT returns etc.
So hopefully apart from asking to pick Amanda's brains, I have stayed on topic and replied to Toncy C!? I look forward to reading your replies.
I avdertise locally in a magazine which is for businesses small or large and I have had a good response of late from it. Took a while in getting going but now its good.
Get in with as many Accountants as possible don't just stick to one only, you never know when they need to off load the bookkeeping. Now Accountants are getting busier they really don't want the bookkeeping part. I picked up a really good one through this. I already had 2 clients with this particular practice and made myself known to them and kept intouch with them.
One last wk that I got through my advert is only going to be once a year as shes small but thats fine it fills in the gaps.
I don't do any networking groups as they are normally early morning breakfast groups which I can't do, but some people on here have had alot of success with them. I don't have a website yet although may do later. Post cards (from vista) in local shop windows they are very good normally, pick a good area. I don't find the marketing side of things too easy so I'm sure someone will be on here later with some moe ideas.
HTH
-- Edited by Amanda on Tuesday 17th of May 2011 11:08:03 AM
I just checked the rules about registering for ML:
What are accountancy services?
Accountancy services cover recording, reviewing, analysing, calculating and reporting on financial information for other people. They include:
* professional bookkeeping services * accounts preparation and signing * tax advice
If you are unsure, you will need to consider the following questions:
* Are you undertaking one of the activities ? * Do you advertise or publicise your business activity, or receive referrals from other businesses? * Do you aim to make a profit when you carry out this activity? * Do you carry out the activity with reasonable or recognisable continuity?
If you answer yes to all of these questions, you are carrying out the activity by way of business. So your business activity needs to be supervised under the Money Laundering Regulations.
If you answer 'No' to all of these questions, you aren't carrying out the activity by way of business. So you don't need to register.
So until you start advertising or publicising your business activity or receive referrals from other businesses - you don't need to get a practice certificate. So wait to until you find your first client before doing any of these things.
The odd word is ALL - it does not seem to cover if the answer is No to some of the questions!
-- Edited by YLB-HO on Friday 13th of May 2011 12:48:44 PM
Hi
Just to clarify, if a book keeper doesnt advertise, they dont have to regiser for MLR?
sorry to shout but that's a very dangerous statement.
As a bookkeeper you must register for MLR or face severe financial consequences and/or possible imprisonment.
Frauke's post could be misread. What she actually meant (sure that she'll correct me if I'm wrong) but if you are a bookkeeper but have not yet started your business then you do not need to be register. As soon as you start to be a business (taking on clients or even advertising to take on clients) then you must be registered for MLR or part of an organisation that covers you for MLR.
I can see what Frauke was saying but can also see how it could be misread.
kind regards,
Shaun.
__________________
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.
To be honest, I am still confused on it. I have read through HMRC's site, and it does seem to imply that if an ASP doesnt advertise, they dont need to register as an ASP, and therefore MLR? Im note sure what the above post was saying if it doesnt mean that.
The way that you are arguing the scenario is from the perspective that if you don't advertise but clients come to you, say through word of mouth from family and family then you don't need to be registered for MLR!
Think about the second part of the statement. "If you answer No to all of the above!"... You don't answer no to all of the above therefore whilst the first statement was correct in that you didn't answer yes to all of them one cannot simply take the parts of the HMRC statement that they want to and disregard the remainder.
If at all in doubt as emphasised on the HMRC page that this comes from then give HMRC a call.
For reference, refer to this page to read the full article rather than selected information from it :
If you decide not to register for MLR don't forget to send us your forwarding address so that we can send along a cake with a file in it (lol).
kind regards,
Shaun.
__________________
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.
I still think its left open though, as I honestly cant say yes or no to all of them. I work full time, and dont want to advertise for new clients, I only have time for the one I have!
As Shaun says, and I think what I was getting at... If you are going to receive income which is not as an employee from as little as one "client" then you MUST be registered under the ML regulations.
ML is to do with "knowing your client" and therefore if you have even one client you have to be registered. Saying you don't advertise may not be strictly true. Having and keeping even one client, means indirectly you are advertising your services to your existing client so they continue to use you. Advertising can just be telling someone you will continue to keep them as a client!
So in reality you could say YES to ALL of them without you realising it.
