How to become a self-employed accountant

Customisable business insurance
05 May 2021
7 minute read

Whether you have accountancy experience already or you’re looking to take your career in a new direction, deciding to take the leap into freelancing can be both exciting and daunting.

While working for yourself is lauded for giving greater flexibility, variety and independence, it can be difficult to know how to get started, especially if you’re beginning from scratch.

This guide is designed to answer all of your burning questions, including the differences between working for a firm and being self-employed, a typical freelance accountant salary and tips on how to become a freelance accountant.

What is freelance accounting?

Freelance accounting is different to working full-time in an accountancy firm or in-house department for a number of reasons.

Firstly, you’ll need to source your clients yourself. And unless you already have contacts that could take you on as a freelancer, this task could be quite time consuming, so it’s worth factoring this in.

Secondly, the clients you’ll be working with will most likely be small businesses. This is because a lot of startups and SMEs want to save on costs, so will avoid bringing in a full-time accountant as it’s more cost-effective to hire a freelancer. You may even work for individuals who don’t want to manage their finances or have particularly complicated incomes and need help filing their tax returns.

Thirdly, you’ll have a lot more flexibility in your work, which means things like picking and choosing the clients you’d like to work with and setting your own hours. Many people choose freelance accounting because of this benefit, as it allows you to work around your other commitments, while still earning an income.

Some of the tasks and responsibilities you’ll take on for your clients could include:

  • Analysing spending and budgets
  • Managing payroll
  • Preparing and filing accounts and tax returns
  • Dealing with HMRC on behalf of your clients
  • Submitting VAT returns
  • Auditing financial information

How much do self-employed accountants make?

Your freelance accountant salary will depend on your level of experience and the industry you choose.

Non-freelance accountants who have recently qualified can expect to earn £30,000 per year on average. The average salary for chartered accountants who are employed full-time is roughly £85k per year with a bonus of over £17,000.

As a freelance accountant, you can set your own rates, and you can get a pretty good idea of the benchmark that matches your experience by looking at freelance platforms, such as Upwork or PeoplePerHour.

The typical hourly freelance accountant salary is between £11-£50, however, a lot of clients may prefer a monthly fee. This could be anything from £50-£500 a month depending on the accounting services that will be included and the complexity of the accounts. For instance, you may charge more if the client wants to include payroll for a number of employees.

It’s also typical to find one-off freelance accounting jobs with clients that just need help with the odd accounting tasks or with submitting their year-end accounts at the end of the tax year.

How to be a self-employed accountant

There’s a lot to think about and prepare for when you decide to become a freelance accountant. The best way to approach it is one step at a time, so here’s our 12-step guide to becoming a self-employed accountant.

1. Get qualified

If you’re new to accounting, you’ll need to gain some qualifications from recognised professional bodies. But if you’re already qualified, you can skip this step!

The minimum recognised qualification in the UK is the Association of Accounting Technicians (AAT). This is suitable for anyone as you don’t need any previous qualifications to complete it.

There are different levels of the diploma, and once you’ve achieved Level 4 you’ll be able to offer services as an accountant. The higher up you go and the more experience you gain, the more services you’ll be able to offer.

Another professional body qualification is the Association of Chartered Certified Accountants (ACCA). If you’ve completed AAT, you’ll be able to fast-track through the first three papers of ACCA.

Once you complete this, you’ll be able to sign off accounts for global organisations and call yourself a qualified accountant. ACCA allows you to offer a full range of accounting services, including tax, audits and financial advice to clients.

2. Register as self-employed or set up a limited company

As a freelancer, you may want to start out as a sole trader and then set up a limited company as your business grows. As you’ll know, these setups have different responsibilities in terms of submitting your tax returns.

Either way, you’ll need to register as self-employed with HMRC. Once registered, they’ll send you a unique tax reference, which you should keep hold of to submit your tax returns.

3. Notify the Information Commissioner’s Office (ICO)

As you’ll be holding personal financial information about your clients’ finances, you need to register with the ICO, which is an independent regulatory body that enforces information rights.

4. Register with an approved Supervisory Body

It’s a legal requirement in the UK for anyone who provides accounting services to be registered and monitored by a recognised supervisory authority.

For accountants and bookkeepers, the main approved supervisory bodies are:

  • Association of Accounting Technicians (AAT)
  • Association of Chartered Certified Accountants (ACCA)
  • Association of International Accountants (AIA)
  • Association of Taxation Technicians (ATT)
  • Chartered Institute of Management Accountants (CIMA)
  • Chartered Institute of Taxation
  • Financial Conduct Authority
  • Institute of Certified Bookkeepers
  • Institute of Chartered Accountants in Ireland
  • Institute of Chartered Accountants in Scotland
  • Institute of Chartered Accountants of England and Wales
  • Institute of Financial Accountants
  • International Association of Bookkeepers
  • Law Society

5. Gain experience

You’re more likely to get hired by clients if you have a good amount of experience under your belt. But this means you may have to work on a lower rate for a while.

There are several ways you can gain experience without having had any previously:

  • Volunteer or shadow at an accounting firm or under an accountant
  • Join freelancer platforms such as Upwork and PeoplePerHour
  • Apply for an accountancy apprenticeship

6. Pick a niche

While you can be a generalist accountant who works across all industries, we’d recommend picking a few industries to specialise in. This will not only make you an expert in those specific areas, but industry-specific clients will be more likely to choose your services based on your expertise in those fields. This will also make it much easier to market yourself because you can target specific terms and businesses.

7. Choose the right software

Now you’re all set up, you’ll need the right accounting software. There are loads of accounting platforms on the market, and many offer a 30-day free trial, so you can have a play around and see which one suits you.

We’d recommend QuickBooks or Xero as these are the most well-recognised and therefore may already be in use by your clients. However, if you’ll be using the software yourself for a number of clients, we’d recommend choosing one that you’re most comfortable with.

As a freelance accountant, you’ll also want to pick a cloud-based accounting platform as these allow you to create multiple profiles under one account. This is not only great if you have multiple clients, but also allows them to log in over a secure internet connection and see their account in context.

8. Open a business bank account

While this isn’t a legal requirement, having a business bank account makes keeping track of your business incomings and outgoings much easier. Depending on which one you pick, you can also link your personal accounting software to your business bank account, which allows you to see instant insights regarding your freelance services, such as your cash flow.

9. Become a self-marketing whizz

There are thousands of freelance accountants out there. To get ahead of the game, you’ll need to build a personal brand which demonstrates to potential clients that you're a trustworthy and reliable choice for their business.

Some ways you can do this are:

  • Build a website that’s SEO optimised for key terms such as ‘freelance accountant for hire’
  • Sharpen up your LinkedIn profile, making it clear that you’re freelance and qualified
  • Create social media profiles that are focused on your freelance accounting
  • Reach out to potential clients through these platforms to see if they need any help in the future
  • Ask for testimonials regarding your services from all of your clients and place these on your social media and website

10. Sell service bundles

Service bundles are a way to upsell your services by bundling them together in different packages with attractive prices. Most people offer three packages that include essential services, additional services and a full suite of services.

11. Take care of your tax

As an accountant, you should know the ins and outs of what you can and can’t claim on your tax. If you’re unsure, we’ve written a handy guide all about taxes for self-employed professionals.

12. Get business insurance

Becoming self-employed also now means that you could be liable for any mistakes you make in relation to your accounting services. Insurance for accountants is designed to protect you from risks that could occur as a result of your profession. This could include professional indemnity insurance, cyber insurance and contents and equipment insurance.

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