Setting up an accounting practice in the UK requires professional body membership, anti-money laundering registration, professional indemnity insurance, and a clear business structure. Most new practices are operational within three to six months of planning, depending on how long professional body approvals take.
What you need before you start
Before you take on your first client, there are several legal and regulatory requirements you must have in place. These are not optional. Practising without them exposes you to fines, professional sanctions, and potential criminal liability under the Money Laundering Regulations 2017.
- Professional body membership with a practising certificate (ICAEW, ACCA, AAT or equivalent)
- Anti-money laundering (AML) registration with your professional body or HMRC
- Professional indemnity insurance (PII) at an appropriate level of cover
- A legal business structure (sole trader or limited company)
- Client due diligence procedures for Know Your Customer (KYC) compliance
You must be registered with an anti-money laundering supervisory body before you carry out accountancy services for clients. The consequences of practising without supervision can include unlimited fines and prosecution.
Step-by-step: setting up your practice
Choose your professional body and obtain a practising certificate
If you hold an ACCA, ACA or AAT qualification, contact your body to apply for a practising certificate. Each body has its own requirements around experience and compliance. Expect fees of £300 to £600 per year for most bodies.
Register for AML supervision
Most qualified accountants are supervised by their professional body. If you are not a member of a recognised supervisory body, you must register directly with HMRC for AML supervision. HMRC's annual fee is currently £300 for the first premises and £150 per additional premises.
Decide on your business structure
Sole trader is simpler to administer. A limited company offers liability protection and can be more tax-efficient at higher profit levels. Most new practices start as sole traders and incorporate later.
Take out professional indemnity insurance
PII protects you against claims of professional negligence. Cover of £250,000 to £500,000 is typical for a sole practitioner starting out. Specialist insurers include Howden, PolicyBee, and Hiscox.
Set up your practice systems and software
At minimum you will need accounting software (Xero or QuickBooks are the most widely used), a practice management tool, and secure file storage. Cloud-based systems are strongly recommended.
Create your engagement letter and client procedures
Draft a standard engagement letter, terms of business, and a client onboarding checklist. These protect you legally and set clear expectations from the outset.
Register your business and open a business bank account
Register as self-employed (if a sole trader) or incorporate via Companies House (if a limited company). Open a dedicated business bank account to keep finances separate.
Start building your client base
Your first clients will most likely come from personal network, referrals, or local business networking. Focus on a niche if possible: a specialist practice commands higher fees and attracts clients more easily.
How much does it cost to start?
| Cost item | Typical range | Notes |
|---|---|---|
| Practising certificate (per year) | £300 to £600 | Varies by professional body |
| AML registration (HMRC, per year) | £300 | Only if not supervised by a body |
| Professional indemnity insurance | £200 to £800/yr | Depends on turnover and services |
| Accounting software (Xero/QBO) | £14 to £55/month | Per practice plan |
| Website | £500 to £2,000 | One-off, DIY options available |
| Business bank account | £0 to £10/month | Many free options exist |
| Companies House incorporation | £13 | Only if limited company |
Choosing your niche
A generalist practice will always face more competition than a specialist one. Common niches for new practices include:
- Contractors and freelancers (IR35 advice in demand)
- E-commerce and Amazon sellers
- Hospitality and restaurants
- Property investors and landlords
- Charities and not-for-profit organisations
- Sole traders and micro businesses in a specific geographic area
Niche practices typically charge 20 to 40 per cent more than generalists and generate stronger word-of-mouth referrals.
Most new accountants get their first three to five clients from people they already know. Tell everyone in your network that you are open for business. Do not underestimate the value of former employers, colleagues, and social contacts.
Making Tax Digital: what new practices need to know
Making Tax Digital (MTD) is expanding. From April 2026, self-employed clients and landlords with income over £50,000 will need to use MTD-compatible software and submit quarterly updates to HMRC. From April 2027, the threshold drops to £30,000.
As a new practice, you should ensure that all clients above these thresholds are using MTD-compatible software from day one. This will become a core part of your client onboarding process.