New startups

A step-by-step guide to starting a new CA firm

starting a new CA firm

Are you thinking of starting a new CA firm? The ability to choose your own clients, providing services in your area of expertise and interest are a few reasons to start your own CPA firm. With so many CAs entering into practice, now is an excellent time for you to fulfill your aspirations of opening your own firm.

In recent years, Indians have become increasingly interested in starting their own practice or consultancy. GST has emerged as a major business and service opportunity for CAs, as this major tax reform requires more enterprises to pay taxes, and ensure compliance with taxation laws, rules, and regulations.

India’s steady globalisation presents continuous opportunities for CAs, in areas such as knowledge process outsourcing, compliance with IFRS, and forensic accounting. Financial reporting, taxation, auditing expertise, and insurance advisory services constitute the traditional areas of practice.

There are as many opportunities for CAs to grow and excel in practice as there are challenges. In the same way as any business, it would take patience, planning, and process. Where would you begin?

This guide will help you in your journey if you are also considering starting a CA firm.

1. Develop a solid business plan

A solid business plan is one of the fundamentals of any successful venture. You need to include the following in your plan:

Defining your values

Defining your values encompasses the mission and vision of your company. You might consider helping your clients to understand international taxation norms in case they want to venture abroad or provide guidance on finer aspects of GST and enterprise risk management. Additionally, knowing your USP will help you form meaningful relationships with clients over time.

Identify your target domain

Business complexity has opened new avenues of service for a CA. CAs with knowledge in business management, enterprise risk management, international taxation, forensic accounting, etc., are in high demand, unlike earlier when the focus was only on audit and taxation. Therefore, you must know what type of service(s) you want to provide.

Create a pricing and client strategy

Once you know what services you’d like to offer, you’ll need to develop a client strategy. In the digital age, it’s essential to have a website and a strong social media presence to gain traction and gain clients. According to research, virtual service providers will generate 40% of professionals’ income.

It’s also important to have the right pricing strategy in place. An upfront fee or a performance-based fee is available. Cost-effective services are preferred by clients, but you need to ensure the price you set can enable you to meet your venture’s working capital needs in the long run.

2. Find out what your financing options are

The cost of setting up a CA firm is significant. It is easy to spend several lakhs of rupees on acquiring an office space, acquiring the necessary infrastructure, buying new machines, and implementing software.

You can liquidate your savings to obtain funds, but it’s more prudent to choose external financing since it provides you with a larger amount of money. The emergence of non-banking finance companies (NBFCs) has made it easier to obtain financing.

3. Make projections of your cash flow based on your costs

When you set up your own CA firm, you must break down your costs. These expenses can include:

  • Renting/buying office space
  • Putting in place the necessary infrastructure
  • The installation of the desired software
  • Implementing cybersecurity solutions
  • Recruiting employees
  • Marketing

In addition, you must also have enough funds to cover unplanned expenses that may arise as you start your own business. Similarly, a forecast of your cash flows 3-4 years into the future would give you a holistic view of your finances and enable you to make better financial plans.

4. Creating a cash flow structure

Plan for the future of a CA firm by preparing a cash flow structure that forecasts its long-term cost-effectiveness and allows it to plan better. The five-year forecast of cash flows helps in the financial sustainability of a firm, helps plan regular expenses better, and thereby, ensures that the actual returns are in line with the estimates.

Final Words

A Chartered Accountant’s ability to work independently, the flexibility to choose clients, and the ability to offer focused services are some of the benefits of setting up their own firm. Since there are a growing number of Chartered Accountants graduating each year, it becomes imperative to provide them with some guidance on how to set up and establish their own firm in order to avoid hiccups in the beginning. A recent trend has been the rise of CA consulting firms in India. 

Prioritize and focus on various tasks to prevent them from becoming real issues. A certain type of practitioner may offer excellent service but does not enjoy chasing unpaid debts. As a result, customers may take remarkably long to pay their dues. It is imperative for the successful working of a Chartered Accounting firm to manage such issues effectively.

Also Read: A guide to Set up a Business Process Outsourcing firm

Hello, I'm Sejal Jain, Editor at Currently, Pursuing B.Tech in Computer Science from Medi-Caps University, Indore. I am a Tech Enthusiast and a Voracious Learner, getting my hands dirty in as many fields I can, including, Content Writing| Designing | Marketing| Develpoment. Connect to me on LinkedIn and let me know your feedback for my work. I would love to hear from you.

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