Day to day costs of CA firms and how to finance them

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. Rentals of an office space would completely depend on the area and city of practice.

2. Cost of Employees

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.

3. Cost of knowledge

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.

4. Cost of technology

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.

5. Cost of communication, power, systems, equipment and office Supplies

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).

6. Certificate of Practice fees

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.

7. Client pitching

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.