With CAs flooding the market and not getting a job, the alternative is to start a practice. Making this move will be 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 large CA firms are in a favourable position to corner all the glory work with economies of scale and contacts at high levels.
Here is a look at the daily costs of running a chartered accountancy 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. The salaries depend on the experience level of the employees.
3. Cost of technology
CA firms need accounting and tax software like Tally, Spectrum, CA Office, and Tax Power. There is an initial capital investment and yearly maintenance costs for the software. A minimum of two 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 depend partly on the office equipment and supply needs. In many cases, a shared office arrangement will help you. It 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. It is Rs. 5,310 for an associate member and Rs. 8,260 for a fellow member.
6. Client pitching
You may set aside a good amount 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, there is an initial investment. In addition, you need to account for the firm’s day-to-day running costs and other miscellaneous expenses. To manage such costs, chartered accountant loans are a good choice, as they come with features to meet your financial needs.
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