There are a lot of variables in calculating a fair price. How well do you keep the records, what extra work the accountant needs to do etc.
To verify your accounts, make year end adjustments, prepare final accounts, prepare and submit a partnership return and 2 self assessment tax returns on the face of it I would say you are getting a great deal. I do similar for a number of sole traders and my prices would be greater than this.
Interested to see what others say.
Kris
-- Edited by kjmcculloch83 on Tuesday 15th of May 2012 06:36:00 PM
I'm not a book-keeper however I hope someone will be able to help me. I run a cafe as a partnership with my sister. I do my own book-keeping using a cash book, and at the year end I produce a basic profit and loss account from the numbers in the cash book. I then give this to my accountant, together with business bank statements and invoices.
We're not VAT registered and I ensure the bank balances and all items are put in the correct columns.
My accountant then prepares the partnership accounts, which is basically an exact replica of the profit and loss I give him. He also prepares the partnership tax return and personal tax returns. We have no other income. He currently charges £300+VAT a year for this service.
My reason for posting is that I'm not sure the fee is worth the work he does. The accounts he gives me every year include the same figures as the profit and loss account I give him, the only addition being an accountants report. To be fair he does the tax returns but I believe HMRC would now let me do this myself online.
Does the fee seem fair to other professionals? Or should I look for a cheaper accountant or even do it myself online?
It sounds a very (very, very) reasonable fee to me. Any less than that and it would virtually be costing them to have you as a client as they have overheads such as professional fee's, software licences, premises etc. before you even get to the time taken to service a client!
The problem with doing it yourself is going to be that you should really be concentrating on running your business rather than wasting your time keeping abreast of all of the latest developments in financial reporting standards, etc.
Also of course is it not better to have a financial professional in your corner for when HMRC come knocking?
Its better than an insurance policy because having an accountant tells HMRC that you are serious so they are less likely to investigate you.
There was an advertising campaign run by I think that it was the ICAEW that went along the lines of "it's easy to sleep with an accountant".
Obvious joke aside the reason behind that is that HMRC knows that an accountants clients will have their books and records examined by a highly trained financial professional so you should be able to sleep at night a lot better having an accountant than without one.
hth,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Are the major components on his invoice as follows:-
preparation of the balance sheet, partnership allocation statement, capital and profit computations, notes comments interview correspondence with yourselves.
I know it sticks in the throat that you are doing all the donkey work, and with your being under the VAT threshold, it is not too onerous a task for him to finalise the accounts.
Another way to approach this question is : what would you pay for someone to do the bookkeeping as well as accountants duties? If the answer is £500 or so, then yes, you might consider trying to find another accountant/bookkeeper for that fee.
This might have the benefit of freeing up your time to run your own business and cancel those Sunday afternoons on the dining table.
It's a more than fair price (my fee would probably be the same or more and im not ACCA) but I'd like to think he was doing some basic checks to satisfy himself that your figures are correct and at least talking to you about the business and showing an interest rather than just filling in your tax returns. Tax software licences aren't cheap and something has to pAy for it. You couldnt do it yourself now anyway I don't think unless HMRC have enabled filing partnership returns on line on their website ??
Yep Julie can rest assured she isn't being overcharged but are there any better alternatives?
She could purchase partnership software if she determined to do it herself. She could also just request a 'tax return only service' if she doesn't need to send accounts to the bank manager etc.
Obviously all three alternatives lose the assurance provided by the accountant. A fourth option is to change to one who isn't registered for VAT.
The absolute minimum i would charge (assuming everything is maintained correctly) for set of accounts, 1 partnership tax return and 2 individual tax returns would be £400 so you are getting a good deal.
I would have expected someone ACCA qualfied would be charging upwards of £500.
Another way to approach this question is : what would you pay for someone to do the bookkeeping as well as accountants duties? If the answer is £500 or so, then yes, you might consider trying to find another accountant/bookkeeper for that fee.
Tim, are you saying that for £200 more a year, £500 in total, that I could get an accountant or book-keeper to do the whole lot for me?
I'd gladly pay this, and appreciate we're not a big business, but I can't believe anyone would do the book-keeping for so little. Happy if I'm wrong though!
Another way to approach this question is : what would you pay for someone to do the bookkeeping as well as accountants duties? If the answer is £500 or so, then yes, you might consider trying to find another accountant/bookkeeper for that fee.
Tim, are you saying that for £200 more a year, £500 in total, that I could get an accountant or book-keeper to do the whole lot for me?
I'd gladly pay this, and appreciate we're not a big business, but I can't believe anyone would do the book-keeping for so little. Happy if I'm wrong though!
Hi Julie,
You'd almost certainly have to do without the assurance that Shamus talked about; that of a highly trained professional in your corner should anything go wrong, particularly with HMRC. Secondly a bank manager was happy to accept them signed off by a bookkeeper registered with say IAB, AAT or ICB for example.
As you have said that the accounts are signed-off virtually 'word for word' from your bookkeeping every year, then the extra £200 would allow for a less qualified, cheaper bookkeeper to spend say 10 hours posting your books through his/her system or more hours depending on their rate and if they were VAT registered etc.
There would be some re-assurance in that your accounts had undergone an independent examination, and at this rate, the bookkeeper would make the same profit as your present accountant, so £500 must therefore be feasible. There may also be actual insurance policy available to you for the event of an HMRC investigation.
I don't think it would be impossible to find such a bookkeeper except perhaps in London, but if there were major problems with the books then this would add to the fee. For example, an overdrawn Cash balance can indicate undeclared takings or over-claimed expenses.
Would you mind sharing two things on here; your turnover and estimate the number of weekly transactions? This might allow other forum members to give you a ball-park quote. You don't need to mention the profits.
@Julie - maybe you need a more expensive accountant?
You say you are a partnership, that could mean you and your Sister are paying more tax/National Insurance than you need to. However, you say you are not VAT registered and with your type of business there are going to be cost of sales and premises costs, so perhaps the profits are not high enough for tax planning.
Your business is high on the list for the tax investigations because there is cash involved. A more expensive accountant would probably give you advice on how to protect yourself. We recommend insurance and assurance. Professional fee insurance so when you are selected for an enquiry you have professional support. And, the assurance of proper bookkeeping. You say you are doing a Cashbook. Is this manual or electronic, are you doing any control accounts?
A more expensive accountant would be looking/searching for ways to add value. This could be providing ideas on how to grow the business/become more profitable, tax credits and personal financial planning.
If all of the about are of no interest then I suggest you do everything yourself or pay £100 for them to review your work.
Pretty unanimous then. About 200 years experience says you're being charged a very reasonable rate and I agree with Bob, there's maybe a possibility that further fees could pay for themselves by NI, Tax Credits or other planning.
I'd put an advert in the 'For Sale Wanted' section asking for a bookkeeper and giving the items I've listed. There are some who work remotely by post but any travelling would add to the cost. You could then take this to the accountant with or without the prime records, but I would firstly inform your present bod that this is what you intend to do.
Hi Tim, our turnover is just below £60,000. The weekly number of transaction are around 20 to 30 as an estimate.
Hi Bob. Our accountant has discussed going limited but our profits are not yet high enough. I use an Excel cash book, very basic with columns for bank, and cash, and columns for expenses, purchases, rent etc.
I do a bank balance report at the end of every week and month, from the cash book. I also balance the petty cash float every week. It always balances to the penny as I'm very strict with this.
@Julie - it's good your accountant has mentioned Going Limited. It sounds to be you can't get value you want from an accountant to justify their fees because you don't make enough profit.
Have you worked out how much you make per hour?
If there are two of you working full time and profits are not high enough to benefit from Going limited then you could be below National minimum Wage. Are you happy with profits?
If not then perhaps you could benefit from an accountant who will do the accounts/tax for free in return for you working with them developing your business?
You could have all the bookkeeping done including at least one bank reconciliation if you supply, off the top of my head:-
Till rolls noted with errors and adjustments
Dedicated bank account statements with cheque and pay in stubs
All purchase and overheads invoices/receipts
A note say on a Petty Cash Voucher for any cash withdrawals without proof of purchase.
All the above sorted into date order and marked B or C whether paid by bank or cash.
Many bookkeepers would want the whole tax job as well for £500 but I, for one, would not wish to pitch for this until I was able to offer some added value which you're not currently receiving.
