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Professional services accountants

You’ve worked hard to launch and build your professional services practice. Whether you’re a solicitor, financial adviser, estate agent, architect or surveyor, the demands don’t stop. Neither do the financial and regulatory pressures. Your time is better spent with clients, so it’s vital to choose an accountancy partner that’s right for you.

As the largest accountancy firm in Cambridge, we work with professional services clients, from successful solo consultants and partnerships to some of the largest practices in our region. Across our multi-disciplinary team, we’ll take care of your audit, accounting, taxation and compliance needs, so you can focus on what you do best.

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Accountants for consultants

From choosing the right trading structure at the start to planning succession and a clean exit, great accounting advice makes a big difference. Whatever stage your practice is at, you’ll get support across:

Strategic and tax planning
Business valuations and M&A
Retirement and succession planning
Financial and managerial controls
Cash flow and working capital management
Professional negligence protection
Outsourced payroll and finance functions.

Running a professional services firm, from legal to financial, brings a distinct set of challenges. We take time to understand how your practice works. At every stage of your journey, you’ll get specialist, partner-led advice. Let’s start with a conversation.

Talk to an expert

James Burrett, Partner in PEM's Professional Services team

Advice that grows with you

Corporate Finance.

Tax.

Hear from our clients

“PEM provides invaluable advice and input with future planning for the firm, including succession planning. Their Solicitors Account Rule annual audit is extremely thorough and comprehensive and they always take the time to talk through their findings. I know that if ever I have a finance query as Managing Partner and COFA that PEM will be on hand to assist promptly with advice and support.”

Jenny Carpenter

Adams Harrison Solicitors

“PEM has demonstrated a great understanding of our business and consequently the team are always very clear in their advice which enables us to execute what are often complex decisions.”

Mark Edmondson

Edmondson Hall Solicitors

“We have used PEM as our accountants and financial advisers for many years. The relationship works really well. Kelly and the rest of the PEM Team know us so well but never take us for granted. As a firm, PEM remains independent but has invested for the future and show themselves to be forward thinking and alive to the challenges that professional firms of our kind face.”

Colin Jones

HCR Law

“We approached PEM earlier this year to carry out an initial risk assessment and were impressed with the depth of detail they were prepared to go to in order to identify any potential exposure within our business. Once the risk assessment was concluded, PEM prepared a series of appropriate controls, identified training and advised on a future monitoring programme. Having had such a positive experience, we are now engaging PEM for further work on business assurance.”

Frances McDermott

Bidwells

FAQs

Does my legal firm need an accountant’s report under the SRA Accounts Rules?

Law firms are required to obtain an accountant’s report for that accounting period if the firm has held or received client money or operated a joint account or a client’s own account as a signatory.

The accountant’s report must be completed within six months of the end of the accounting period, and if it’s qualified to show a failure to comply with the accounting rules, it must be submitted to the SRA.

We can advise on the exemptions from obtaining an accountant’s report. For example, if the client’s money held or received was Legal Aid or if the total of all client accounts held or operated by the firm did not exceed an average of £10,000 or a maximum of £250,000 during the accounting period. We’re always happy to discuss your questions.

What tax will I pay on my share of the partnership profits?

If you are an employee/director in a company or a salaried partner in a partnership (or LLP), you will be taxed, broadly, on the salary and any benefits paid to you during the tax year.

Up to 6 April 2023, partners in a partnership and members in an LLP were taxed based on their tax adjusted profit shares for the account year which ended in a particular tax year. For example, the profit from the accounts ending 30 April 2022 would be taxable in 2022/23. There were special rules if someone joined or left a partnership in a tax year.

However, partners and members could see a major change to their tax from 6 April 2023.

For businesses with accounting years ending between 31 March and 5 April there will be no change to the way partners and members are taxed.

But if your business uses another year end date for its accounts the “Basis Period Reform” rules could have a significant impact on you; both in the technical complexity of calculating your taxable profit shares allocated to a tax year, and also in accelerating when the tax on your profit share is due to HM Revenue & Customs.

From 6 April 2024 onwards you will be taxed based on profits arising solely in the tax year, regardless of when your accounting year end falls. Where the accounting year isn’t in line with the tax year (i.e. accounts year end isn’t between 31 March and 5 April), you will need to apportion the tax adjusted profits from two accounting years to arrive at your taxable profits for 2024/25.

In 2023/24 there is a “transitional year” to prepare for this change. You will be taxed on your profit share from the accounting year that ends in the year to 5 April 2024. You will also be taxed on your “transitional profits”.

Transitional profits cover the period from your year end to 5 April 2024 less any overlap profits available for relief. Transitional profits can be spread over up to five years and careful planning will be needed to make the most of this aspect to mitigate the impact of accelerated tax payments on your cashflow.

Please speak to us if you need assistance understanding your tax position and we will be pleased to help.

How is my professional services firm performing compared to others?

It’s natural to want to know how you’re performing compared to your competitors. But hybrid structures or operating vehicles that don’t publish results can make it difficult to get an accurate picture.

As part of the Kreston Global accounting network, we participate in an annual benchmarking exercise, giving you the ability to assess your firm’s performance against your competitors. The survey provides comparisons for criteria including fees, salary costs, admin costs and profit per equity partner.

What operating structure should my consultancy firm adopt?

There are several options, including a partnership, an LLP, a limited company or a hybrid mixture.

New structures with employee ownership and external investors are becoming popular. The right structure will depend on the type of business, restrictions placed by your professional body, attitude to risk, business life cycle, and the number, age and income requirements of the owners.

While tax shouldn’t be the main driver in any business decision, the tax implications are extensive and a crucial part of any decision-making process. If you want to avoid inflexible structures and succession challenges while maximising tax-saving opportunities, we can help you with a bespoke solution.

Can I still benefit from Goodwill on incorporation?

Historically, when considering the incorporation of an existing sole trading activity or partnership into a limited company, a big benefit to doing this was the ability to ‘realise’ the goodwill built up in the existing business, and access this value at a low tax rate (if Entrepreneurs’ Relief applied).

Since 3 December 2014 the rules on incorporation and goodwill have gone through significant changes, impacting on both the tax reliefs available on incorporation, and the tax deductibility of the amortisation of any goodwill acquired by the new business.

It is therefore important that when looking at incorporation, the tax position is considered so that there are no unexpected surprises.