With CAs flooding the market and not getting a job, the alternative is to start a practice—which is easier said than done as the cost of setting up a practice in metros is very steep.
The new economy is throwing more challenges. Unless the smaller firms consolidate and innovate, they too will become redundant. The big CA firms are better positioned to corner all the glory work with economies of scale and contacts at high levels.
Here’s a look at the daily costs of running a chartered accountant firm:
1. Rentals of the working space
The cost of setting up a new practice in metros is very steep with property prices. Rentals are beyond the reach of most freshly qualified CAs’ budgets, and completely depend on the area and city of practice.
2. Cost of employees
The sustainability of employees is critical to any CA firm. The salary of a minimum of 2 to 3 employees monthly would be Rs. 25,000 to Rs. 35,000 each, depending on the level of experience of the employees.
3. Cost of technology
CA firms need accounting and tax software like Tally, Spectrum, CA Office, and Tax Power, which have initial capital and yearly maintenance costs. A minimum of 2 desktops and software would approximately cost Rs. 1 lakh. Maintenance would range between Rs. 6,000 to Rs. 8,000 yearly.
4. Cost of communication, power, systems, equipment and office supplies
Your office space decisions will be partially driven by the office equipment and supply needs. In many cases, a shared office arrangement will enable you to cut some corners on telephone equipment, office furniture, and office equipment (copiers, fax, and file cabinets).
5. Certificate of practice fees
ICAI has revised the annual membership fee/ Certificate of Practice (COP) fee to Rs. 3,000 for an associate member and Rs. 4,000 for a fellow member.
6. Client pitching
You may spend a lot of money on client pitching to develop a good and solid client base.
When looking at expanding one’s scale of operations or starting a new chartered accountant firm, along with initial investment, one needs to provide for the firm’s day-to-day running costs. For such firms, chartered accountant loans are a good choice, as they are packed with features ideal for such modes of business.
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