7 steps to start an accounting practice in Australia
If you're an accountant — or thinking of training as one - and considering starting an accounting practice, we have you covered. Here are eight steps you can take to start your own business.
Why start an accounting practice?
Starting an accounting practice is a great way to progress your career. Business owners will tell you they love the autonomy that comes from setting their own hours and choosing clients. In many cases, it also makes it possible to build more wealth than you can from earning a salary.
Steps to start an accounting practice
The steps to start an accounting practice are similar to starting any business in Australia, but you'll also need to be qualified, register with a professional body, and hold a practice certificate. Here's what to do:
1. Ensure you have the necessary qualifications and certifications
Ensuring you have the necessary qualifications and certifications to offer accounting services is essential in Australia — without them, you could face legal and professional consequences. You'll need at least a Bachelor of Commerce or Business with a major in accounting from a recognised tertiary institution. You'll then need to register with one of three professional bodies and follow the guidelines set out by the Accounting Professional and Ethical Standards Board.
Become a registered member of a recognised professional accounting body
You can become a registered member of one or more of three professional accounting bodies in Australia: CPA Australia, Chartered Accountants Australia and the Institute of Public Accountants (IPA). Each has its own membership requirements, such as minimum experience levels, additional qualifications and ongoing professional development.
Accounting Professional and Ethical Standards Board (APESB) guidelines
The Accounting Professional and Ethical Standards Board (APESB) issues ethical and professional standards for accountants. Understanding these guidelines is essential when embarking on an accounting career or setting up a practice.
2. Apply for a Professional Practice Certificate (PPC)
To apply for a PPC, you'll need to show you have practical experience, undergo more ethics and governance training, comply with the certifying body's professional standards, and undertake professional development. Holding a PPC will assure your clients of your experience, conduct and professionalism while opening doors to the wider accounting community.
3. Create a business plan
Creating a business plan will help get your new accounting practice off on the right foot. It will help you consider your risks, opportunities and strategies, explore your market, conduct competitor analysis and identify a niche. It can also help you secure a business loan, investment or other business financing.
4. Decide on a business structure
Deciding on a business structure is another critical step. In Australia, you can register your accounting firm as a company or partnership or choose to operate as a sole trader. Which business structure will suit you best will depend on your goals for the business:
Sole trader
A sole trader is someone who owns and operates a business alone. If you want to keep things simple and fairly small scale, registering as a sole trader might be a good choice. It's straightforward to set up and manage, but you'll be personally liable for any debts the business incurs. You’ll also pay tax on your business income at the individual income rate.
Company
A company structure means your business is a separate legal entity that can own assets and is liable for its actions and debts. You'll need to comply with complex regulatory requirements, but that might be worth it if you're planning to grow your business. The full company tax rate is 30%, However, unlike sole traders, there's no tax-free threshold for companies. You’ll pay tax on every dollar you earn.
Partnership
Partnerships let you and another person join forces to run the business together. The different kinds of partnerships – general, limited and incorporated — have specific legal and financial responsibilities.
5. Register with the ASIC, and apply for a TFN and an ABN
Registering with the ASIC, and applying for a TFN and an ABN are the next steps — they'll help manage your taxes and legal obligations and keep you compliant with Australian law.
Register with the Australian Securities and Investments Commission
Registering with the Australian Securities and Investments Commission (ASIC) is necessary to form a company. It means your business is legally recognised and complies with regulations.
Apply for a Tax File Number
Applying for a Tax File Number is another important step. TFNs are issued by the Australian Taxation Office (ATO) to identify an individual for tax purposes.
Apply for an Australian Business Number
An Australian business number (ABN) is an 11-digit number that identifies your business to the government and community. Even if you're a sole trader, you'll need an ABN to invoice, claim GST credits, and more.
6. Set up business bank accounts
Setting up business bank accounts makes it easier to, manage your accounting practice's financial performance, and keep tax processes in order. If you've set up a company or a partnership, it's a legal necessity, but getting a bank account as a sole trader is a good idea, too. It makes it easier to track your finances and shows business stakeholders that you're a legitimate operation.
7. Invest in quality software
Investing in quality software is vital for operating efficiently and securely. Accounting practice software will ensure you're billing what you're owed, making the most of your time, automating repetitive tasks, and delivering the best service to clients. When your clients are using the same accounting software as you, you’ll enjoy significant efficiency benefits.
8. Market your business
Marketing your business is the final step. You may already have ready-made clients in your network of friends, family and contacts, but a marketing plan will help you expand your reach. A professional website is a must. From there you can add activities like networking, social or content marketing, and search engine optimisation.
Starting an accounting practice FAQs
How much does it cost to start an accounting practice in Australia?
The cost of starting an accounting practice in Australia will vary significantly depending on your goals and business structure. At a minimum, you'll need to buy a website domain, computer equipment, accounting software, and the right licensing and certifications. You could spend $1500–3000, but this doesn't include other essentials like marketing, other equipment, office space, fit-out or furniture.
How much does an accountancy practice sell for?
How much an accountancy practice will sell for can range from $1 into the billions, depending on your firm's location, size, clients, revenue, profitability and reputation. Generally, you can value smaller accountancy practices based on their maintainable revenue — commonly $.80-$1 for every dollar of revenue. Where in that range you fall will depend on factors like strong client relationships, high profitability and profile, and a good mix of services.
Can you start an accounting practice from home?
Yes, you can start an accounting practice from home as long as you have the necessary qualifications, certifications, memberships and software.
Ready, steady, practice
When setting up your accounting practice, investing a bit of time and energy upfront makes sense — it means you're set up for growth. Some steps are legal requirements, but others make good practical sense — like having a business plan and finding great practice software.
Set yourself up for success with a platform that can scale with you. Find out more about MYOB Practice solutions.
Disclaimer: Information provided in this article is of a general nature and does not consider your personal situation. It does not constitute legal, financial, or other professional advice and should not be relied upon as a statement of law, policy or advice. You should consider whether this information is appropriate to your needs and, if necessary, seek independent advice. This information is only accurate at the time of publication. Although every effort has been made to verify the accuracy of the information contained on this webpage, MYOB disclaims, to the extent permitted by law, all liability for the information contained on this webpage or any loss or damage suffered by any person directly or indirectly through relying on this information.