- Most CAs need a Certificate of Public Practice before starting a public practice
- Guidance and resources are available to support you through the process of setting up your business
- If you comply with specific criteria, you may be able to use the CA logo and collateral
If you’re ready to venture out and start your own Chartered Accounting practice, the first thing you’ll need to do is apply for a Certificate of Public Practice.
To be eligible for the certificate, you will need to complete the Public Practice Program. This is an educational course which includes eLearning to cover your ethical and regulatory obligations followed by a two-day workshop covering business management essentials.
Once you have obtained a CPP, your ongoing obligations require you to obtain and keep current professional indemnity insurance, and to complete continuing professional development.
Solo versus partnership
In deciding whether to open your own practice or to go into partnership with another, consider it from all angles. Think about the positives and negatives of each.
Partnership: the balance sheet
|Collaboration - Using your collective knowledge and judgement can make yours a stronger practice||Compromise will be required from time to time – you are not simply your own boss|
|Support – You can cover holidays, sickness, etc. between you||Differing levels of competence and motivation could lead to frustration|
|Companionship – It’s natural for humans to want to share experiences with others||Conflict – some partnerships don’t last, and the end may not be amicable.|
|Costs – Economies of scale from shared resources||Different time frames and objectives - Compromise will help but sometimes these need careful negotiation to resolve|
|Image – The public may view a partnership better than a solo practice||Risk – Your partner’s actions expose you to risk.|
|Different strengths – Beyond the technical, think about business development and client and staff management.|
Buying a practice
An alternative to growing your own business is to buy into an existing business. You may buy the business outright, enter into a partnership or merge your existing business into another existing business.
Agreeing a price is only part of the equation. For example, your due diligence should include consideration of:
- The firm structure including the dominance of individuals and management responsibilities of various partners
- What will be your status within the business - equity or non-equity partner or contractor
- Succession plans and what happens when a partner leaves
- Coverage for periods of extended leave or a reduction in hours, such as parenting leave or winding down
- Other business agreements in place (such as financing, leases). The age of existing equipment and is it likely to need upgrading soon and is regular maintenance completed
- The age and upkeep of the premises and the running costs including utilities and maintenance
- How partners’ performance is assessed and rewarded
- The financials – including cash-flow/funding, work in progress, debtors (and disputes) and goodwill
- Any existing or likely legal and insurance claims
Where you are entering partnership, ensure that there is a current partnership agreement which takes your entry into the partnership into account.
And think long term. It is never too early to think about issues such as succession and business continuity.
Do your research
Before starting the journey, get familiar with our guidance resources and due diligence resources.
Risk and quality
Not all partnerships last and conflicts can arise unexpectedly.
You or your partner may wish to exit the partnership at different points. If you are heading into partnership, ensure that you obtain legal advice and ensure there is a partnership agreement from the beginning of the new business.
This is essential for you each to understand the rules around the partnership and protect you and your investment through the life cycle of the partnership.
You need to establish a quality control system to ensure that the services you provide are of the standard expected by your clients.
You need to make sure you have a strong risk management system in place in your practice. While managing risks pertaining to the quality of your work is essential, you should look broader to business risks that may arise. These include business continuity plans for managing interruptions to services and building damage in severe weather events or natural disasters. Your local Chamber of Commerce or small business advisory service offered by government agencies is a useful resource.
Even in the best managed practices, problems can still arise despite sound risk management systems.
Professional Indemnity insuranceYou need to protect yourself and your business by arranging adequate Professional Indemnity insurance.
Your obligations as a business owner and employer
There are a number of other factors you need to consider when starting or joining an existing business.Other insurance cover you need to consider includes public liability and business continuity cover. If you are buying into a practice, make sure insurances are one of the things you check in your due diligence.
You also need to consider the other regulatory and legal obligations you are likely to have as an employer. These include workplace safety, people and resource management, personal safety and emergency management. Your local government agencies are the best point of contact for assistance with these factors.
Using the Chartered Accountants logo
Whether you can use the Chartered Accountants description and the CA logo will depend upon your practice being compliant with Chartered Accountants Australia and New Zealand’s rules and regulations.
Read about Practice Structures to find out whether your practice complies.