Challenges of running a practice
Cost breakup of running a CA practice
Customised financing with a CA loan
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 new practice in metros is very steep. Clients do not like an increase in fees, traditional practice is getting redundant and does not have value—in fact it is losing monetary value!
The new economy is throwing more challenges and unless the smaller firms consolidate and innovate they too will become redundant, with the big CA firms in a much better position to corner all the glory work with economies of scale and contacts at high levels.
The initial years of starting your own practise are tough.
1. You realise you are not earning the same amount you would probably earn in a corporate.
2. You get tempted by the various job offers you receive.
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. Rentals of an office space would completely depend on the area and city of practice.
Sustainability of employees is critical to any CA firm. Salary of minimum 2 to 3 employees monthly would be Rs. 25000 to Rs. 35000 depending on the level of experience of the employees.
Subscribing to knowledge-based websites and purchase of books have all kept pace with inflation and sometimes have outrun inflation, thereby disproportionately increasing operating costs.
CA firms need accounting and tax software like Tally, Spectrum, CA Office, and Tax Power which again have an initial capital cost as well as regular yearly maintenance costs. A minimum of 2 desktops and software would approximately cost Rs 100,000 in the start-up. Maintenance cost would range between Rs. 6000 to Rs. 8000 yearly.
The office equipment and supply needs will be partially driven by your office space decisions. 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).
ICAI has notified the revised/ increased rates of Annual Membership Fee/ Certificate of Practice (COP) Fee (2017-18) to Rs 3000 for an associate member and Rs. 4000 for a fellow member.
You spend a lot of money in client pitching to be able to develop a good and a strong client base.
When looking at expanding one’s scale of operation or starting a new chartered accountant firm, along with initial investment one needs to provide for the day to day running costs of the firm as well. For such firms, chartered accountant’s loans are a good choice, as they are packed with features ideal for such modes of business.