I am thinking about outsourcing some bookkeeping. I'm also thinking of outsourcing accounts for Ltd companies as I don't think I know enough to do those really (I have a few clients where I do the bookkeeping and they would like me to sort out the accounts for them to save them having to deal with two people). The AAT provide a sample agreement to use but I have to fill in the schedule of works at the end describing what they will do. Does anyone have any wording they have used in such an agreement that I could use? Writing stuff isn't my strong point!
Any advice on either situation would also be welcomed. At the moment the plan is to use one person for the bookkeeping. She would be self employed, is already a good bookkeeper from doing her own business and is just starting her AAT exams. She would use her own PC and software and just bill me for the hours done. I would check her work to make sure I'm happy with the quality.
The accounts would be done by another accountant on a similar basis except I wouldn't check the work. Obviously I would be paying him and then billing the client accordingly. My concern with this is that the reason I want to outsource is that I have not done that many Ltd company accounts and want them done by someone with more knowledge than me, but the AAT contract says I have to indemnify their work. I don't think I can do that as I am expecting them to know more than me! I am happy to arrange for the accounts to be done and liaise with the accountant but I don't want to be responsible for the work done. Does anyone have a similar situation and how to you handle it? It may be that this is a non-starter and that the accountant should deal with them direct.
Also, how much do you pay bookkeepers when you subcontract your work. As rates vary a lot over the country a percentage of your hourly rate would probably be most useful.
I think for subcontracting work to subcontractor,fixed monthly per company would be better option than hourly.Regarding sub contracting work from Accountant,you are responsible as company has authorised you to get work done.however,wait for other comments...
1. If you are looking to outsource to an accountant the ltd companies because you dont feel able to do the year end accounts yourself then should you have taken the appointment in the first place?
2. At the end of the day if the client engages you and you outsource the work the buck stops with you and you cant palm it off on the subcontractor if anything goes wrong.
3. If the client is engaging you then who is going to sign the accounts? Expect it will be you so you should be checking everything that goes out and be comfortable that is is reasonable as again the buck stops with you.
At the end of the day the client is paying you in good faith in the belief that you are able and competent to do the work. If you cant do it yourself and looking to outsource it because you dont feel able to do the work then you should let the client know that you cant accept their appointment.
Personally i have people approaching me about insolvency matters, complex tax matters and other other matters that i am not comfortable with. I let them know that I cant help but have contacts that can point them in the direction off. At the end of the day the end user isnt really bothered who does it as long as it done correct. Better to confess up front before making a mess of something, get sued and find out that your PII doesnt cover you as was beyond your capabilities in the first place.
On a separate matter paying a subcontractor 1/3 of the fee is a reasonable basis to charge out at.
Thanks for replying Mark. I really don't like these "if you can't do the work then why are you doing it" comments that are so often posted on here. That is what this forum is for, to get advice and opinions! I did not take on that appointment. I do the bookkeeping for these clients and they have asked if I can arrange for someone to do the accounts so that they don't have to meet someone else and go through the whole engagement letter process etc. They are happy with my bookkeeping/VAT/PAYE work and would trust me to find someone good to do their accounts. However on reflection I don't think it is appropriate for me to outsource that work and I will only be outsourcing the bookkeeping work which I can check and feel comfortable taking responsibility for. I was not comfortable with the accounts which is why I posted on here to see what others think. It can be lonely running a business on your own which is why this forum is so useful.
I really don't like these "if you can't do the work then why are you doing it" comments that are so often posted on here. That is what this forum is for, to get advice and opinions!
Its a good point Princess.
With your initial point about outsourcing accounts I did'nt see a problem with that (ok, there may be moral one's but not professional one's as such). There are many accountancy practices that are little more than sales fronts with the work actually being done off shore (with the client never being aware of the arrangement).
You are not suggesting that you did anything more than your capability, you merely suggested an appropriate facilitation of the clients needs via a suitably skilled, qualified and experienced third party provider.
Thats the part where I'm agreeing with your original post.
Now the disagreement with the above line part.
I think that the underlying issue with the above quote is that there are some (not all) bookkeepers offering accountancy services directly which are beyond their experience and skill level but within their qualification remit and of course, that will create scenarios where people who have spent many years studying and gaining the required experience requirements of their professional bodies in order to be able to offer those services will become quite short with their retorts especially where the question is a basic one such as about fundamental issues in relation to basis periods (that line is nothing to do with you or this thread, it's simply giving reasoning).
I more than most as a career changer myself appreciate how difficult it can be to gain the right experience and the site always tries to give people a helping hand. The issue though is to my mind where the questions are too basic for the level of service being provided.
As extreme examples (not relating to actual questions) if some one were to ask "I'm preparing accounts for a company. How are the figures from the income statement shown of the balance sheet" that one would be a case that the person should not be offering accounting services.
Conversely if for example someone asked "What is a sensible level to capitalise rather than expense assets" that one would be where I think pretty much everyone would be happy to help.
I'm sure that on occassion the wrong people have felt the brunt of responders frustrations but all in all I think that this site works in quite a freindly and helpful way.
Sure that not everyone will agree with that but hey ho, if everyone agreed with me where would the fun be.
Hope that the above reads as intended. Such of course can only be judged by any replies posted in relation to it.
kindest 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.
I agree with you to a certain extent. I do see your point honestly. But I am also a career changer and however many exams you do each client is different and there will always be something you simply haven't come across before. I understand what you are saying about the basic questions but what shouldn't happen is that people start to be scared of asking in case others think it's a stupid question. What might be basic to one person who has done something a thousand times might not be basic to someone that has an established client that suddenly decides to do something new. I love the fact that even if I think I know something I can ask on here and get reassurance. There are many questions I couldn't answer as well so I learn something every time I'm on here.
I am totally in agreement with pointless answers such as "if you can't do the work then why are you doing it", but I don't read Mark's answer in that way... he isn't asking why, he is saying "should you" - I think his answer is leading you to seriously think about whether "ethically" you should take the accounts work on, under your own letter of engagement, and warning you that it could come a cropper... that's good advice, like it or not, and its right that somebody mentions it. Its not quite the same as getting some help with a section of the tax return, for instance, and his point about who signs the accounts is quite relevant to your situation.
Would it be better to work in tandem with an accountant, and let them deal direct with the client? I know the client doesn't want to the hassle, but its not wise to put yourself at risk because of that. Trusting you to put them in contact with someone worthwhile, is enough? Working with an accountant and passing work their way could lead to more bookkeeping being passed your way - you could even build a relationship with them, and eventually ask to do voluntary accounts work for them, so you can learn how to do them yourself, properly - so that in time you can do them yourself with more confidence. I know it will be hard to find the right person to work with, but its a much better approach for a long term solution?
Another situation (that might not be financially do-able for you, but lets say it anyway for anyone else reading and looking to expand) is to look for a semi retired accountant and employ them part time? You could then take necessary insurance steps to ensure their work was covered under your business name.
Having been the asker of silly questions on occasion, I know what its like to have that "don't you know your job, why are you doing it" answer, and I don't want to make you feel bad about what you thinking about doing... but, in fairness, I don't feel Mark's trying to be a git on this one, he's actually said something really useful, albeit in a very straight to the point way!
I think it amazing that you want to expand, and I hope that you come up with a solution that will work for you :)
And of course, we are all going to be here ready to help with your questions!!!
PS.. another thing I should have mentioned.. as of 01.01.16 a new Ltd Co format is being introduced for micro entities, one which, at the moment, (I'm told) wont have any notes, and whose PL and BS is laid out differently to what we know now (not impressed TBH) - it might be that when comes around, you could more easily do a ME Ltd accounts..
