Many sole practitioners are from the baby boomer generation. On qualifying, they were authorised to undertake most activities requiring on behalf of their clients, whether it be an audit or a tax investigation. Even insolvency was covered by the original qualification.

Over successive years there has been increasing legislation from the government and ever tighter restrictions placed on the profession by the various institutes and more rules introduced. This has narrowed the work that can be undertaken by an accountancy practice ­ let alone a sole practitioner.

The end result is that a multi-partner firm of a reasonable size has been able to cope with the changes, designating partners to undertake various roles. Not so the sole practitioner.

Sole practitioners are the biggest single group in the country and far outnumber the number of multi-partner firms. The vast majority operate from either a home environment or a high street or suburban offices. One of their great joys is the ability to make decisions without referral (whether good or bad) and to run their own business.

The downside to that is that whatever happens in that office is their responsibility. This can be everything from being the money laundering officer to fixing computers.

Traditionally, the sole practitioner has undertaken very similar work to the multi-partner firm and would pride themselves on the ability to undertake audits and to differentiate themselves in this manner from the non qualified firm around the corner. Up to now the vast majority have not appeared that different from partners in a multi-partner firm.

Times are changing, and a trend that started a few years ago is gathering pace. Older accountants want to dispose of their remaining audits, and we received requests to place them with another local multi partner firms. But they want to retain control of the client, and only pass on the audit work.

Some fees are sold outright, some are managed jointly. Also one or two of the older practitioners decided not to renew professional qualifications with their appropriate institute as it was deemed to have little or no advantage. The underlying truth behind this was that they did not want practice assurance visits.

The sole practitioner of the future will be different. The role of the new-age sole practitioner will be to assist a client’s business to grow and manage itself in a profitable and secure manner. The client will feel the comfort of knowing that he has many choices by going to the sole practitioner and that a search has been undertaken to ensure he has been directed to the most appropriate service.

Clearly, this does not suit everyone, but there are enough businesses out there that want the support of a sole practitioner and not the anonymity of a multi-partner or multi-director firm. The opportunity exists for a sole practitioner to create a very substantial personal business, but on a different basis. The demand is there from accountants who wish to be sole practitioners, and from clients.

Another big change is the increasing prevalence of outsourcing. Many practitioners have now taken advantage of cheaper accounts production abroad and this has given some the opportunity to reduce direct employment costs and commitment.

There has always been a demand from clients for a sole practitioner to look after them personally. Going to a multi-partner firm has meant that they may just be one of many, and does not have the same priority that he could potentially receive from the sole practitioner. Whether this is true or imagined is a different matter. Commercial businesses tend to enjoy a very close relationship with a sole practitioner.

Partners in larger practices fail to see the attraction of being a sole practitioner, but it is true the other way around. Sole practitioners do not see the point of having partners who can interfere in the way they run the business.

But the (near) future role of the sole practitioner will be to introduce the client to a multi-partner or multi-director firm who can undertake this work on their behalf on an economic basis and leave the sole practitioner free to give general advice to the client.

The advantage to the client is that the sole practitioner will know who is best at which type of work and can introduce the client to the most appropriate source for the audit. This is a major change for the profession, as sole practitioners have steered clear of multi-partner firms, fearing the competition. We believe this will move to co-operation.

The client hand-holding model will grow and develop between sole practitioners, their clients and multi-partner firms. Bookkeeping work may well still be undertaken by the practitioner but could even be outsourced to a cheaper alternative abroad.

Corporate finance is another area of interest. While the sole practitioner is, in theory, capable of dealing with the issues, there is normally no capacity in terms of staffing to deal with client requirements. Clients requiring specific areas of expertise will refer to the sole practitioner, who will then guide the client appropriately. This started with insolvency and financial services, and we can well see it growing. Most make referrals, and the sole practitioner is therefore ensuring a client is referred to someone that can be trusted.

Currently, the sole practitioner does not look that different from a multi-partner firm in most areas. The average sole practitioner turning over somewhere between £200,000 and £400,000 a year.

The majority of sole practitioners largely do everything for the client, and have a small staff to assist generally with the bookkeeping issues, payroll, tax returns etc. They are however just support services for the main act.

Taking a snap shot of the past shows us an accountant with £300,000 of turnover working from a suburban office. Several members of staff, some part time, and files everywhere. The accountant working up to a 12 hour day, staff considerably less. They are the anti-money laundering officer, the bookkeeper, the client carer, absolutely everything.

Move forward a few years and the accountant will be in front of his laptop. He will be referring clients on to appropriate sources and even attending meetings himself in order to give the client comfort. How this will all be charged for is an issue for another day.

The virtual sole practitioner can now operate from anywhere, with minimal overheads and maximum benefit from being able to spend most of their time looking after client needs ­ not government and institute requirements.

These are exciting and challenging times, and while the traditional model has worked well with the baby boomer accountants, the next generation coming through are not expected to go down that route. They are essentially only interested in looking after quality clients and making sure the service they introduce them to are perfect for their requirements and charging properly for that service.

Again, up until recently there has been little contact between sole practitioners and multi partner firms. We believe that this will change and we are already seeing the seeds of change taking root.

Look to the future

Just to take a step forward in time, the sole practitioner may not even require an office. They may not even require staff.

Given modern technology, the accountant can work from virtually anywhere. The client comes to the accountant for advice on the audit, and the sole practitioner introduces him to the local firm, or outsourcing unit, specifically created to undertake audits.

The accountant will ensure that the bookkeeping work is undertaken properly. This may well be outsourced to India or wherever is appropriate at that time. The client needs some advice on tax or financial services. The accountant will take him along to the appropriate source for that.

This model would mean that the accountant can reduce considerably fixed and variable overheads, and there will be less of a limit on the amount of turnover that can be handled. The sole practitioners will be there to give solid and reliable business advice to the client, while drawing in the expertise from other areas to support that advice.

Multi-partner firms

Changes are afoot for multi partner firms. Over the next few years we will see a fall in the number of firms.

Those that will remain will be much larger and will be all things to all men with regard to the client requirements. The core of the practice will be accounts production and audits and will have their own separate businesses covering financial services, corporate finance, computer requirements etc.

Whatever the client wants, it should be available from that practice

Ron Goldsmith is managing director of the Goldmiths Group