This might seem a bit odd to some given the impact the COVID-19 pandemic has had on the UK economy over the last 15 months.

So what does the data actually tell us about the future of new accounting firms looking for a 2021 grand opening? And what can they do to stand out in this day and age?

Over the past decade, accountancy practices taken as a whole – firms that conduct accountancy, auditing, bookkeeping and tax consultancy activities – have seen steady growth in terms of their numbers.

For instance, in 2010 there were 35,270 accounting firms operating in the UK. This number had grown to 43,235 by March 2020 –an increase of just under 20%.

The only significant irregularity was between 2018 and 2019, when numbers dipped for the first time since 2011 by 4% from 45,570 to 43,720. Other than that: steady growth.

However, there’s more to it than that when we look at the performance of each activity over the past decade.

When we do this, we can see that bookkeeping services increased every single year between 2011 and 2020 from 3,290 to 6,735. The same is true for tax consultancies, which numbered 875 in 2011 and 1,560 in 2020.

Accounting and auditing firms, on the other hand, have been on a downwards trend since 2017 when they numbered 36,005 firms, compared to the 34,950 recorded by the Office for National Statistics (ONS) in March 2020.

Smaller firms, especially those with less than four employees were the main casualties, while firms with 20 to 49 and 50 to 249 employees fared better, even increasing in number over the three-year period.

The question, then, is have accounting and auditing firms reached a peak in terms of new startups? Are entrepreneurs confident about their prospects, despite the economic toll of the pandemic, restrictions and lockdowns?

Unfortunately, there is no data available to assess how many new firms formed in 2020 or the first half of 2021 yet. But we can look to the past to gather an understanding of what might have happened by observing data from when the UK was in a similar tough situation – over the course of the global financial crisis between mid-2007 and early 2009.

Here, we see something very interesting: in 2006, all accountancy firms totalled 24,510 in 2006 and 25,030 in 2007. Then, the sector exploded by 39% to reach 34,815 firms in 2008, which started the upwards trend that we previously touched on.

John Stokdyk, editor-in-chief at AccountingWEB, suggested that immediately after the financial crisis, firm formations during this time were driven by experienced accountants who had left larger organisations, either out of choice or after they were let go.

Furthermore, there is arguably greater demand for accountants during times of economic hardship as businesses look for all the help they can get, especially from financial advisers.

If history repeats itself, then, we might see the next ONS report on accounting enterprises indicating there was a positively large increase in accountancy firms between April 2020 and March 2021 around this time next year.

New firms will be facing their fair amount of challenges, of course, but there are steps they can take to ensure they succeed in the first year of their lives.

One of the best things a startup can do in this day and age is opt for modern branding to stand out from the huge number of competitors who are often still using the same overused language, outdated websites and bland logos.

Getting your digital marketing strategy right will help better communicate who you and your team are, what makes you stand out from the crowd and why you’re the best choice for a prospective client.

Content marketing for accountants is equally as important, which you can always outsource for a great return on investment if your team is too busy to be writing blogs and similar content themselves.

Combine all of that with a strong SEO strategy to ensure your content can be easily found, and you’re on your way to getting a steady wave of traffic, potentially new clients, and profits.

You also need to attract not just new clients, but the right clients. If the economic downturn in 2021 has taught us anything we now know to attract those recession-proof, crisis-proof clients, accountants need not only to assert their modern, tech-savvy credentials but prove them.

Talk the same language as your ideal clients and walk the walk. Don’t make software an add-on – put automation and efficiency at the heart of your proposition.

That’s why we highly recommend that you read through our recession proof clients guide for some tips, while Capium is always open to chat with you.

Talk to us about setting up your own accounting firm here.

The post The changing of the guard: how many new firms will start in 2021? appeared first on capium.

Are you ready for the changes?

Our accountants are already getting ahead of the curve with our real-time compliant software.

Is your software agile enough to roll with the punches?

We’ll help you keep moving with the changes by giving you the tools and software you need to comply now and in the future.

Book a demo with us today to protect and future-proof your practice now.

The new tax year starts today 6 April 2021, with it comes major changes. Here are the key changes you need to know.

VAT rates will not change, exemptions however apply to coronavirus relief measures. The VAT threshold will not change from £85,000 it’s currently set at. This will remain until April 1 2024 government says.

Minimum wage amounts, personal tax, and National Insurance allowances have increased for 2021. A recent addition to the 2021/22 tax year is National Living Wage is now extended to 23 and 24-year-olds for the first time, having previously been limited to those aged and older.

There are process changes in how medium and large businesses are to handle the tax affairs of contractors who work for them. As of April 6, 2021, medium and large businesses must determine if the IR35 applies to contractors they hire. If so they are required to pay a Deemed Employment Payment.

Brexit legislation doesn’t directly impact any other kind of business tax.

The hospitality sector VAT rate which was reduced to 5% in July 2020 has been extended to 30 September 2021. Subsequently, a new 12.5% rate will be applied until 31 March 2022. The 20% rate will resume from 1 April 2022. Flat rate VAT users in the hospitality sector also benefit further from these changes.

Catering services: 4.5% until 30 September 2021, and 8.5% following this until 31 March 2022.

Hotel and accommodation: 0% until 30 September 2021, and 5.5% following this until 31 March 2022.

Pubs: 1% until 30 September 2021m and 4% following this until 31 March 2022.

There’s no increase in corporation tax for the 2021/2022 tax year, this also applies to the 2022/23 tax year.

There are major changes in April 2023, when corporation tax rises to 25% on profits over what will then be referred to as an Upper Profits Threshold of £250,000.

Personal tax allowance will increase from 2021/22, however it will be frozen the year after.

To find out more how Capium can support your practice in with all the new tax year changes, book a free demo today and speak to our product specialist today.

The post What’s Changing in the New Tax Year 2021? appeared first on capium.

The intense triage mode of the past few months was hard work but absolutely necessary.

SME clients, fearing for the future of their businesses as the UK lockdown bit, were desperate for clear information and proactive guidance from their accountants.

As a result, the industry has been forced to up its game, reacting faster, communicating more frequently and learning about emotional intelligence – fast. The good news is, it seems to have paid dividends.

Research we’ve seen suggests that around two thirds of SME decision-makers feel their accountant has met or exceeded their expectations during the coronavirus crisis. And more than a third say they are now more likely to recommend their accountant as a result.

Unfortunately, that level of intense support isn’t sustainable. Accountants need to look after themselves, too, and risk burnout if they continue working endless days, seven days a week.

One of the buzz phrases of the day is ‘corona-fatigue’ and this is just one more example.

The question is, how do you keep up the momentum you’ve built by making yourself indispensable while stepping back from permanent emergency mode?

Automate everything

During COVID-19, many accountants have been forced to be reactive, answering endlessly ringing phones and racing to contact as many clients as possible every time the Chancellor, Rishi Sunak, announces a new support measure.

Now, as we find a bit of collective breathing space, it’s time to take control and turn that into a process.

First, if you’re not already doing so, set up customer relationship management (CRM) software – something Capium has built in.

There’s usually some investment in time required upfront to get the client database up to date but it’s well worth it.

When a client calls, you’ll have immediate access to the history of the conversation your firm has been having with them. You’ll know which accountancy services they’re already paying for and which they’ve been thinking about.

More importantly, you should be able to get on the front foot, scheduling contact points and reminders so that you can call them before they call you – at a time that suits, when your head is in the right place.

Accelerated digitalisation

On 23 March, everything went digital whether we were ready for it or not, from teambuilding to date night.

Savvy accountancy firms will build on that momentum. Push on with implementation of remote working facilities, cloud accounting systems and enhanced digital communications facilities.

You’ve no doubt been advising your clients to use Government-supported bounce-back loans to cover this kind of future-proofing investment. It goes without saying that you should seriously consider doing the same.

Pivot with your clients

Have you built your accountancy business around sectors such as hospitality or tourism? Both have been hit hard by measures designed to control the spread of COVID-19 and face restricted trading for months to come.

Ecommerce and takeaway food, meanwhile, are booming. The same goes for trades such as industrial deep cleaning. And recurring revenue tech firms such as Zoom are having a good year, too.

As we pass the longest day of the year, and 2021 hoves into view, ask yourself not only how you can help your clients pivot, as a trusted business adviser, but also whether your business is targeting the right sectors.

Cut the right cords

The change caused upheaval, as businesses struggled to adjust all their systems and processes within the space of a few weeks, but it also got people thinking about why they needed to be bound to their offices in the first place.

A YouGov poll conducted in May showed that 59% of people want to work from home more often than they did before the crisis, and 50% felt that remote working had benefited their work-life balance.

Anyone who was already set up for remote working with cloud-based practice management and accountancy software has probably found the transition a lot easier.

Not being tied to the office desktop or relying on paper records takes a huge amount of stress out of switching to working from home – and maybe you’ve even found more time for yourself after cutting out your commute.

If you’re planning to retain some level of remote working after restrictions on businesses loosen, the benefits of a true cloud software can’t be overstated. Online software can help you manage your staff, set up tasks and workflows, communicate and share information much more easily.

Even aside from the immediate advantage of convenience, there’s security to think about. Using the cloud lowers the risk of permanently losing or damaging your files, because they’re stored remotely in multiple locations.

And by swapping multiple pieces of outdated software for one all-encompassing solution, you have the opportunity to significantly lower your practice’s technology costs by removing the need to pay per user licence.

With economic challenges ahead, streamlining your practice and putting more efficient processes in place will put you in the best possible position to face them.

Capium’s full suite of software covers everything from practice management to payroll with no user licence fees!  Book a free demo today to find out how Capium can transform your business today. 

The post Covid-19 is reshaping the accounting industry, don’t get left behind appeared first on capium.

Now, more than ever, businesses are seeking financial support. Here we will keep you updated on the changing UK lending market.

With over 360 lenders in the UK, only 40 can offer the Coronavirus Business Interruption Loan Scheme (CBILS), this update takes a closer look at the non-CBILS lenders.

For information on Coronavirus Business Interruption Loan Scheme, see Capitalise’ recent post What are CBILS loans? Here we explore what the loan is, who is eligible and how you can apply on the Capitalise Platform.

The UK lending market

Acceptance, interest rates and security

No longer business as usual

Additional information needed

Underwriting criteria tightening

Offers are not guaranteed

Security is a must

Revenue Lending

Many sectors are off the table

The post Status of Lending in the UK appeared first on capium.