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February 7, 2021

How to Start your CA Practice after clearing CA Final

by facelesscompliance in Special Invitation Author

How to Start your CA Practice after clearing CA Final

CA Final passed? Practice or Industry What Choice to Make?

Once you join the CA course as student, it is your dream to become CA soon without any attempts. Few do manage to pass all exams within one attempt, few may have to give multiple attempt. Irrespective of number of attempt you give to clear CA, once you are qualified and completed articleship you are eligible to practice as a Chartered Accountant.

The question which most students asked after clearing CA final exams is should they join industry or go for practice. Both options have its own Pros and Cons. Let us understand in below 10 points

1) Decide Before Joining CA – Best Way

Even before you start your articleship one has to decide the career in terms of joining job or starting your own practice.  The early you decide it is better. If one is keen to join practice then joining big four firms will not provide exposure in areas of small and medium practicing firm. Ideally a person should join small and medium size firm where he learns everything from audit to taxation from executing to handling client.

In case your family members are already in professional practice it becomes easier to carry on legacy, as you get years of experience and ready clients to serve. Starting your own practice without any family background is challenging and that too if your area of expertise in articleship is different from area you chose in practice.

2) Subjective Choice

Making a Choice is very subjective depends upon each individual liking, ambition, vision, entrepreneur mind set, Job Satisfaction, Location, family background and expectations.

For CAs who have done their intership in mid sized or small firm had already seen working style in practice and knows what is scope of work demanded by clients and how to handle multiple compliance within one firm. For them it is easy to decide if they want to start their own practice. Further they can even join as a partner in same firm if there are options available.

For CAs who are mostly in Big4 or Industry Training, they are likely to join industry as they have experience of working in corporate style.

The challange is when you have done articleship in corporate and want to join practice or when you have done articleship in small firm and want to join industry. If you chose different path. then you will surely able to learn if you provide 6 months of time.

3) Earnings and Cash flow

In Industry you may get good package at begining, and a steady increase if you perform well. In practice the most challenging part is survival for 3 years, if you are able to survive with low cashflow, then form 4th years you can expect to earn decent. Unless you are ready to sacrifice for full 3 years, don’t jump in to practice. You cannot try for one year, as it takes atleast 3 year to create your brand, so if you are thinking to go for practice at any time in your career then have a horizon of minimum 3 years before jumping into it and make decision only after 3 years if you want to continue or switch to job

The expected cash outflow and inflow from practice can be broadly summarized in the below table. As you see in initially years the cash flow are low, however in later years there is significant improvement as growth kicks in.

Year Cash Outflow ExpensesCash Inflow RevenueNet For year Nature of Exp / income
First YearFurniture      ₹ 1.5 Lakhs Rent Cost     ₹ 1.5 Lakhs Staff              ₹ 50K Misc Cost     ₹ 30K₹ 2 Lakhs  Negative ₹ 1.8 LakhsCapital Investment and income filing and accounting
Second YearRent Cost     ₹ 1.5 Lakhs Staff              ₹ 50K Misc Cost     ₹ 50K₹ 6 LakhsPositive ₹ 3.5 Lakhsincome filing and accounting and consultation
Third YearRent Cost     ₹ 2.5 Lakhs Staff              ₹ 70K Misc Cost     ₹ 50K₹ 9 LakhsPositive  ₹ 5.3 LakhsAuditing and additional Income
Fourth YearRent Cost     ₹ 2.5 Lakhs Staff              ₹ 2 Lakhs Misc Cost     ₹ 1 Lakhs₹ 16 LakhsPositive ₹ 10.5 LakhsIncome from Special Skills Learned
Fifth YearRent Cost     ₹ 3 Lakhs Staff Cost     ₹ 3 Lakhs Misc Cost     ₹ 1 Lakhs₹ 22 LakhsPositive ₹ 15 LakhsIncome from Special Skills Learned

4) What is Right time to Start CA Practice ?

There are 2 kind of people in practice

A) After becoming CA and completing article who have started

B) Working in Industry for a while and then started

Mostly people who falls in A category are one who has Assets and Cash to support in initial years of struggling period or have parents in practice

People fall in B catagory are ones who first save few millions while in industry, then they get bored of working in industry and want to be their own boss and start new practice.

Ideally there is no concept of right time. Any time is Right time provided you plan first and then jump to practice. I have seen people in Industry for more than 10 years switching to practice

5) General Practice or Specialization

Once you have decided to start a practice you need to chose between General Practice in which you have to do all ITR, GST, Business Set up and Consulting or Specialization in one particular area like litigations, Trust and NGO, etc

90% of people start with general practice and eventually go for specialization in 5 to 10 years

However it comes with its own risk. Imagine government abolish GST Audits in Budget 2021, many professionals who just practiced in GST field will find it difficult to start something new and has cash flow impact because of loss of work

6) Switching from Job to Practice

This is mostly a dream task however many are not able to decide! The reason is risk of cash flow and lack of confidence. CA’s who are in corporate job for 3 years or more, are willing to join practice, however they fail to take this step as they have financial commitments and low risk taking capacity for starting practice. I personally have come across many Chartered Accountant who are in corporate job and want to start their own practice, however they fail because they have financial commitment like home loan and are not able to take financial hit during the initially years. My professional journey too has challenges. During my training period I had experience in Internal Audit, later joined Big 4 firm and my last job was with MNC bank. I had corporate experience of more than 5 years in fields other than tax. However I started with tax practice and consultation.

If you are starting practice keep a minimum horizon of 3 years. You should give your commitment for 3 years atleast and should have funds back up for 3 years. As it is always difficult in first 2 years to sustain with low cash flow. So before jumping you should be able to sustain in initially years and make decision to quit or switch only after putting efforts for 3 years.

7) Creating Online Presence and Growth

One of the biggest challenge is to connect with prospective clients. In past old days the only way to get new clients was through friends and relatives and that too via word of mouth publicity. E commerce revolution was last decade story. Coming is E service revolution. Gone are the days, in which word of mouth reference was the only way for Professional Development. At present prospective clients search experts online based on skill sets and location. How many of your skills which you possesses are searchable online?

Research says that in coming years the concept of Virtual Service Provider will generate 40% of overall Income for professionals and those who fail to change will miss the growth. The entire end to end services will be delivered online virtually without any face to face interaction. Services like new business setup (Company Formation, LLP, Partnership), Compliance (Statutory Audit, Company Audit, MCA Compliance, Income Tax, GST, etc), Internal Audit, Legal Consultation and Financial Consultation will be done virtually.

Most of the CA’s do have their online presence via website. However, there is hardly any traffic on their website. CA needs to create their online presence in a place where there is information market. How people prefer Flipkart or Snap Deal for online goods purchase or even Zomato to check good restaurant, or Practo to search right doctor and book appointment. similarly for professionals like CA / CS / Lawyers can create online presence

Many times prospective client searches online his requirement as per location or skillset, presence in such platform can help professional to connect to those clients.

8) Pursuing your dreams

Do not forget in practice you are your own boss. You can always have a work life balance. You can always fulfill your dreams. Yes in beginning you have cash flow issues and may have to take monetary hit, however the self-satisfaction you get is immeasurable. I personally had that opportunities to explore many new desires which would have been difficult if I would have been employed, as you have to give at least 10 to 12 hours to job. In summary there are challenges to start your own practice but the real fruits you get only with patience, dedication and determination

The Author is CA

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