Sole trader tax return completion (no book-keeping, just totals on a sheet for the accountant to do the tax computations from). Fees of £400pa which they had been paying for 4 years increase to £650pa.
Many would say it was high, as did the "client". But this "client" (not mine), decided to do it herself and save the £650. They rang HMRC and talked through the figures with someone, paid the amount of tax they were told was due, but did not actually do the tax return because they could not figure out how to do it. Four years later they still have not subitted the return and the penalties for the original tax return currently stands at £1,600.00. There are 3 more late returns outstanding etc. Perhaps it would have been cheaper to pay the £650!
Unfortunetly this is not unusual anymore.
Are many book-keepers and accountants who "undercharge" doing thier "clients" and themselves a dis-service? If you are able to charge lower fees and make a reasonably good living then you are not undercharging, but I am beginning to think too many are because we think clients "can't afford or should not have to pay more money" they are actually undercharging.
In this instance I'm going to disappoint Frauke as I agree with you.
The real issue that I feel is causing problems is that there are a lot of new bookkeepers with little or no work who are winning work based on price alone which depresses the market by instilling in the minds of clients that the cheapest rate that they are offered should be the going rate for the work.
I will not compete using price as my primary weapon as I feel that it is a route to a fools paradise of lots of work and no profit.
In the example that you gave I am sure thant the client felt that they were doing all of the work for the accountant and did not appreciate that the accountant would have investigated their figures so that in the event of an investigation they were able to represent their client from a position of knowing that the figures used were correct.
I do not know the work involved with this client but am sure that there must have either been justification for the increase or losing the client on the back of the increase was the desired effect as maybe the return from the accountants other clients worked out to a higher hourly return for the work involved.
Not getting bogged down with the details of the case in question though I think that you make a sound point with the post Frauke.
My God, must record this day, I'm being almost reasonable. lol.
Hope that you are well and work is plentiful Frauke,
kindest regards,
Shaun.
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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.
I have employed people just out of uni, part qualified ACCA or whatever who were so busy learning the higher level stuff that their skills with the basics were surprisingly bad.
I think that the issue is with the individual rather than the qualification.
The complaint that I hear the most is from accountants complaining about qualified bookkeepers who don't have a clue about bookkeeping (mainly journals and accruals) but if you come to this site you see the full spectrum of skill levels of those with apparently the same qualification.
The issue is that you cannot tar everyone with a qualification or working towards a qualification with the same brush.
I've actually shown a chartered a couple of Bills replies to get the grumpy response of "but that's just one".
But my arguement is that it only taken one to prove an assumption about a qualification and those who take it wrong.
Is your stance based on your experiences any better than the stance of accountants who reject all ICB candidates out of hand?
Personal view is that you are both wrong and every candidate should be judged on their own merit regardless of whose banner they fly.
I'm sorry that you've had bad experiences with some ACCA students but I know for a fact that they are not all like that.
kind regards,
Shaun.
-- Edited by Shamus on Tuesday 16th of April 2013 12:22:11 AM
__________________
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.
I think we are in the midst of a race to the bottom with the newer bookkeepers cutting each others throats on price. I have a new bookkeeper locally who is offering self assessments for £30! The key is not to join this game. Human nature, especially in these dark times, is to opt for the cheapest. It's not always for the best, but everyone makes their own choices and lives with the consequences.
I'm not going to say too much about your example because I don't know the ins and outs of it, but on the face of it it does seem like a bit of a jump in fees. Maybe a slow increase over the years would have been better and may not have lead to the client walking. I got such a fright the other week when I went to get my hair cut, I've paid £3.50 for years and now it's £4.90. It's not expensive, but like your story just a big jump.
There's also a bit of what Shaun says about people not really understanding the work that goes on behind the scenes to get these things prepared properly. This probably leads them not to see the value.
Very interested in hearing peoples views on this! I am currently trying to work out how much to charge my first proper big clients years books & SA. So far I have only really done tax returns for friends/family, so I can't really charge going rates. Plus it has given me some practice ...
I really don't want to undercharge, but then I don't want to seem greedy & as he has come to me from a previous accountant because he was having the usual problem whereby they just wouldn't speak to him. He was ecstatic when I sat down with him and went through things. I've been looking online for other peoples fees, but they are stupid! £50 tax return, give me a break!
I have estimated about 400 individual sales, turnover around £60,000, and about 500 expense receipts. He is very organised and everything has been sorted and filed nicely, so not much paper shuffling involved. I was thinking around £350-400, but then looking at your figure of £650 just for the tax return made me question my figures. I work from home office so overheads are not really an issue
I know what you mean about the cheaper bookkeepers coming onto the market, they do nobody any favours. I have found though they generally don't have experience, a good bookkeeper is like hens teeth. I have employed people just out of uni, part qualified ACCA or whatever who were so busy learning the higher level stuff that their skills with the basics were surprisingly bad.
Some of my clients have bad experiences with people like this so don't bat an eyelid when I hand them a bill, they would rather pay extra for my services and have the confidence things are taken care of. I just recently had one crawling back to me after dropping me like a hot stone after meeting a woman who was willing to work for £6 an hour. Turned out she was a roaring alcoholic who went on benders and didn't turn up for work for weeks at a time. Some others ended up with bookkeepers who although charged a lower hourly rate than me, took twice as long to prepare an SA return and ultimately handed them a larger bill. One just paid a newly qualified bookkeeper over £1000 for a small set of sole trader accounts that I could have done for £400. She disregarded all the bookkeeping work he had prepared for his VAT, started from scratch and spent an age in unnecessary preparation.
It has hurt my business a bit, I can tell when I give a price and a prospective new client looks at me as if I am insane that they have had a stupidly low price in their head from elsewhere, but the end of the day you will always have the people who whinge about money, I have found they are the clients not worth having.
£1600 in fines instead of paying £650? Sound like wasters to be honest.
I got such a fright the other week when I went to get my hair cut, I've paid £3.50 for years and now it's £4.90. It's not expensive, but like your story just a big jump.
WOW £4.90 for a hair cut!!! I would be amazed if I can get mine cut for under £30!
I doubt if the £650 was only for the tax return and was more likely to be in confirming the figures that the client had presented.
When you set your fee's you also need to factor in risk as well as looking at transaction volumes. If transactions were all that we based our figures on we would be little more than data entry clerks.
You are not the clients first financial bod. How much did the previous accountant charge? I'm not suggesting that you charge the same but that figure will give you some idea of the clients expectations.
Just looking at the figures given without any additional knowledge of the client the first figure that comes to mind is £650 which I would adjust up or down for the actual workload involved, availability of information, etc.
kind regards,
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.
Wow Kris cheap hair cut, do you do it yourself now, since the increase?
My hubby pays about £10, I pay just under £40 for wash cut and blow dry, his is just a straight cut. I have to say my hair cut and colours (I won't say how much I pay for a colour), is my only vice in life, my hubby and kids go to football so I go to the hairdressers. It was a big jump in price from where I use to live, but hey ho when you move areas you have to put up with the price. I tried a cheap hairdresser coming to the house a few years ago and she was so bad, I then found my new hairdresser who had to actually cut all my hair really short as her haircut and colour was the worst he'd ever seen in all his hairdressing years! So now I just pay the higher price as he's brilliant. It has taken 4 years to grow my hair back to the length that it was before she cut it with the garden shears! So just goes to show cheap isn't always best.
I am starting to put my prices up and so far no problems, I like to think if you do your job well and give a good service and smile, you should keep the majority of your clients, and the ones that don't like your price can just buggar off! I lost one the beginning of 2012, but to be honest he was such a pain and then never paid on time, when he said that his wife was doing it (thats a laugh in itself on sage as well), I was glad to see the back of him. He was also talking about his friend was finding him a cheaper accountant, well we all know where that ones going, my mate down the pub, bla bla bla!
They should have just paid the £650 it would have been cheaper than all the fines, and the fines will just simply grow, then the baliffs will appear and so on.................
I wouldn't be bothered with anyone just qualified Shaun, either bookkeeper or accountant. I was not implying in my comment that all graduates were the same, however, I only work with people now with experience because of the amount of money and time wasted on bad employees in the past that did hurt Projects that I have managed. I have seen some awful standards of work, there's no point in giving a long list of examples here, but believe me when I say some have nearly ruined small businesses. Some younger employees have overstepped their boundaries in areas of employment outside of their day to day duties, things like basic telephone manners etc which I have put down to age and immaturity. Of course this is not just something that just happens in the finance sector, but issues I don't have time to deal with all the same.
I had to start out myself once so I know what it is like but I now run a small practice and haven't the time to hold anyone's hand, all graduates with little or no experience will need more supervision. As a small business owner I just don't have the time to spend on them, it's nothing personal, I just think trainees are better suited to bigger practices with more resources to time to weed out the ones not suited to the profession and further train the ones that are.
last permie job I had (working for a large management consultancy business) we took an annual quota of (supposedly) the best and the brightest from the milk round and whilst some were self motivated and went on to shine it was quite worrying the number of graduates that I would not trust not to hurt themselves using anything sharper than a crayon.
The difference of course is that bsinesses like that can hire 60 people with the intention of keeping 10 but businesses such as ours really need to retain everyone that we hire (says someone with no current employee's of their own but I do occassionally hire for others, and I have been in the position many times of employing people to work for me on a project basis).
My response last night was purely down to the wide brush that your initial answer seemed to paint with but I totally understand that when it comes to hiring experience is king.
kind regards,
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.
No you have not disappointed me Shaun. I was pleased with your answer.
I have seen fixed fees of £250 for a CIS & tax return in a window of a firm of accountants in Southampton. To earn £20k, they need 100 clients. Thats a lot of clients to look after and provide a good service. So I suspect they are not providing much of a service or they are not earning much money to cover overheads.
