Accountant cost

[rich998]

My Limited Company is just about to have its completed second year of trading. Turnover has gone from 55k in the first year to 130/135k this financial year. We are an independent Land Rover specialist dealing with mostly repairs and servicing of Land Rover and Range Rover vehicles. I have 2 technicians employed, and I don't yet pay myself - the capital is going back into the business to build it up.

Obviously you tend to look for new customers during the first year and by the end of the second year you tend to find you are more concerned about trimming costs back. One of the things bugging me is the cost of accounting. I obviously realise that it is an important process, but what is the average cost of having an accountant because I am paying around £300 a month to have the accounting, book-keeping and wages processed.

I feel I may be better finding a SAGE book-keeper and then use my accountant for all the other areas that the book-keeper can't do. Would this be reasonable?

 

[DesignerNick]

Speak to Nicola at My Accountant Online.

She does our accountancy and payroll and is a great help,especially when it comes to saving on tax

You could probably employ a part time book keeper and get them to liase with an accountant directly.

 

[serasan]

It makes sense. You could easily do the books yourself or use a bookkeeper.

I use http://www.clearbooks.co.uk/ I am a small one man band and it is easy for me to keep my books.

I pay £500 per year for end of year accounts.

 

[rich998]

Thanks for the replies.

I actually did a Sage self learning course leading up to the opening of the business, and did the books on Sage for the first 6 months of trading, but I simply don't have the time to do it now. Time is spent doing everyday tasks to support the workshop and keeping customers happy.

 

[MyAccountantOnline]

Speak to Nicola at My Accountant Online.

She does our accountancy and payroll and is a great help,especially when it comes to saving on tax

You could probably employ a part time book keeper and get them to liase with an accountant directly.

Thank you VERY much - much appreciated.

Always very happy to discuss how we can help

 

[Abacus Accountants]

For comparison purposes we do an all-in service such as this for similar types of businesses for £200 per month. On the face of it £300 per month seems on the expensive side without being a rip-off but if your accountant is saving you money with proactive advice then it could well be money well spent.

We find that doing the bookkeeping as well as year end works well and helps us advise appropriately during the year. Separating the bookkeeping and year end is often just as expensive, is poorer quality and you also lose the advisory aspect.

Regards

Andrew

 

[Lancelot]

I am paying around £300 a month to have the accounting, book-keeping and wages processed.

I feel I may be better finding a SAGE book-keeper and then use my accountant for all the other areas that the book-keeper can't do. Would this be reasonable?

Even if you decide to use an accountant for statutory accounts only, looking at your turnover, I would expect to be quoted around £1,000. Do you think you can find a bookkeeper to do the work for £2,500? How many transactions do you have?

 

[gouldie0]

Hi,

I understand why you're looking into this area as it always comes across as the first easy area to review but have you looked at other areas of your business for improving your profit margins?

It may be worth speaking with your accountant to have a business review or a financial health check?

Whilst I agree £300 is a little high, your accountant may be saving you quite a bit in tax. Have you spoken with your accountant to discuss the monthly charge?

Kind Regards

Neil

 

[DFL]

Do you get advice, support, meetings etc thrown in with your monthly charge?

Also is the fee £300 or is it £250 plus VAT?

Agree with poster above that seperation doesn't usually work so well.

 

[andygambles]

Also remember to factor in your own time if you decide to start doing this yourself. You may not realise it but you may end up spending 2 hours a day bookkeeping when you could be earning.

 

[Strontium Dog]

This is probably quite a tricky one.

Your accountant might be thinking "£1200 for year end accounts/CT600 £100 tax return and £300 payroll - only leaves £2K for bookeeping!"

On the basis that most staff working in accountants office are going to be charged out at £20 - £40 per hour thats not a lot of hours per month.

He might actually be RELIEVED that you want someone to take over the bookeeping. Why not ask your accountant to recomend someone? You should get a decent self employed bookeeper to do a day a month for £100.

 

[Poldenacc]

Rich,
As others have mentioned, there are a lot of options available to you, whether that be combining the bookkeeping and accounting or separating out to different people.

I am happy to have a chat through your options with you. I am also based in Somerset, so could come to you for a face to face meeting if it would help. Just give me a call and we can arrange a time to suit.

 

[globes]

There are many software available in the market for maintaining records or day to day transactions.Bookkeeping is easy to maintain for an company which you are holding it that is for Limited company.

 

[Abacus Accountants]

There are many software available in the market for maintaining records or day to day transactions.Bookkeeping is easy to maintain for an company which you are holding it that is for Limited company.

No offence globes but the view that bookkeeping is easy and anyone can do it with little/no training is frustrating for those that have to sort out the inevitable mess. Poorly maintained records can cost businesses through increased accountant's fees, paying too much tax due to incorrect treatment and run the risk of HMRC enquiry and assessments as a result of incorrect VAT accounting.

Anyone considering doing their own bookkeeping should first read about the impending HMRC assault on small businesses in a bid to raise extra tax revenue. See this link to a useful article: http://www.accountingweb.co.uk/topic/tax/how-big-problem-record-keeping/484174.

 

[rich998]

Thanks for all the replies and comments.

The £300 also includes advice and the payroll, but whenever I call about a query I get charged for the time involved in researching an answer. I genuinely realise (from my own position) that you have to charge for services in order to pay your own monthly costs, but I'd just like to reduce it a little.

As I said, I did try it myself when I had the time to do it, but these days I'm busy with other parts of the business. I did manage to mess it up slightly in the second VAT period and HMRC jumped on me, although the second call I got was from a chap encouraging me to carry on with the book-keeping. The first wasn't so friendly.

I have been advised to use a motor trade specialist accountant based in Yorkshire, as I would get advice back relating to motor trade sector, which I do not have at the moment.

Another thought is that I need management information back from the accountant, and to be honest I'm afraid to ask as I'd expect costs to increase again for this service, however, this is vital in controlling the business. :| See where I'm at?

I do have a lot of invoices as we have lots of parts purchased through the year. Nature of the sector I suppose.

 

[MyAccountantOnline]

I have been advised to use a motor trade specialist accountant based in Yorkshire, as I would get advice back relating to motor trade sector, which I do not have at the moment.

I wouldnt say the motor trade particularly needs a specialist unlike say the medical profession or farmers.

...I need management information back from the accountant, and to be honest I'm afraid to ask as I'd expect costs to increase again for this service, however, this is vital in controlling the business. :| See where I'm at?

If an accountant or bookkeeper is preparing your books and VAT returns this really shouldnt cost anymore as the accounts are produced automatically as part of the work they are doing.

 

[Abacus Accountants]

Rich998

Your accountant is there to help you to apply the rules correctly and run your business efficiently. I wouldn't expect extra charges for advice if you are paying a monthly fee unless it is a particularly complex and time consuming task.

Management information would cost more but you would hope that £300 per month would go a long way towards this. The exact cost would depend on the information you want.

Motor trade experience is useful but I would expect a good accountant to cope with the specific requirements of the sector. I say this as someone who has run the finance operation of a £100m car supermarket.

Regards

Andrew

 

[accountancyextra]

Another thought is that I need management information back from the accountant, and to be honest I'm afraid to ask as I'd expect costs to increase again for this service, however, this is vital in controlling the business. :| See where I'm at?

Whilst I'm sure that there will be an additional charge from the Accountant for management information, it shouldn't really be a cost...

The right regular financial information will help you manage the business and drive it forward. It will provide you with the key numbers that you should be measuring on a daily, weekly or monthly basis. It will include leading indicators as well as lagging ones (such as turnover & profit). What it isn't (generally) is just another set of historical management accounts showing past performance.

By doing and measuring the right things, you'll be able to see an improvement in the bottom line over and above where you are now. That improvement should more than offset the charges for creating the information (hence the no cost bit).

Hope that makes some sort of sense.

 

[Wild Goose]

Rich,

I think you yourself have stated the root of your discomfiture:

1. You've said you're uncomfortable asking your accountants for advice because that costs you arbitrary amounts;

2. You also said that you'd like management accounts (and probably have other things on your wish list as well) but think that'll cost you an arm and a leg.

Stand-alone, £3k pa isn't overpriced if in return you're getting statutory accounts, tax return, bookkeeping done properly, payroll, VAT returns, and (importantly) basic tax planning / profit extraction advice (eg salary/divs mix to build up a tax-free pot in your director's loan account; having deemed NI contributions credited without it costing you anything).

The real reason you need to shop around is because of points 1 and 2 above.

You'll probably find any number of people willing to undercut what you currently pay - not least on this site, where a feeding frenzy seems to develop every time a prospect for accountancy services pops their head above the parapet. The trouble with that sort of e-bay style bidding is that the cheapest deal isn't necessarily the best deal for you - the only way you'll know whether you're getting value for money is if you yourself make the effort to clarify and negotiate just what exactly you'll receive in return for your money. Which, come to that, is not unlike shopping on e-Bay.

I suppose negotiating an accountancy deal that you're happy with is in many ways a similar negotiation to my bringing my LR to you for a service: the only way I'll know whether I'm getting a good value for money deal is if we agree beforehand what exactly you'll be doing for the £100 you've quoted, and for that matter what rates you'll charge for any unanticipated work. Are you going to give my LR a thorough service for £100, or just change the oil and kick the tyres? Is oil included in the price, or does that cost extra?

Start by making a list of all the essential accounting and tax services you need, and a separate list of all the services you'd like, and go from there.

Finally, a word about free unlimited meetings and phone calls which, in their efforts to attract new clients, some small pratitioners promise: imagine how you'd feel if you spent your day answering people's questions about their LRs, and fixing their vehicles for free. I daresay your business would fall apart! At best, you'd have to skimp on the free work rather than do a good job. Before long you'd be cussing every time your phone rang. Now ask yourself how much use you think a free unlimited meetings and phone service from your accountant might be?

IMHO any accountant who doesn't know enough to charge something for their services doesn't know enough to be a help to your business.

btw for what it's worth I agree with Stuart in thinking you need a set of management accounts pronto.

 

[makeusvisible]

Another vote for Nicola at MyAccountantOnline. Superb level of service, always quick to send a reply and give advice when needed.

 

[MyAccountantOnline]

Another vote for Nicola at MyAccountantOnline. Superb level of service, always quick to send a reply and give advice when needed.

Thank you very much - that's very much appreciated

 

[Poldenacc]

Rich,

I would suggest you speak to a few different accounting firms to compare prices as the price you pay will differ significantly. Make sure you are upfront about what you require from the accountant, including monthly and annual services. Also ask what is included and what will be charged for separately.

There are many accountants, myself included, who agree a fixed fee. This would include everything you specified upfront, including monthly management accounts. TBH it doesn't take much to produce monthly reports if you give them the information monthly, so you shouldn't need to pay extra for this.

 

[Wild Goose]

Rich...
...TBH it doesn't take much to produce monthly reports if you give them the information monthly, so you shouldn't need to pay extra for this.

I'm not a big fan of "have the [Sage] printouts for nothing" approach to management accounts.

The accounts I'm topping and tailing today have a profit of £115k; corporation tax thereupon circa £24k. Bookkeeper's managent accounts from December (ie "free" Sage Reports) showed a cumulative £55k profit for the year; so client has put aside only £12k for corporation tax.

I imagine the directors will prefer to pay for management accounts with some extra time spent on controls, accrued income, prepayments etc in future.

 

[Poldenacc]

Wild Goose,

I was trying to suggest that Rich outlines his requirements to his accountants and that he negotiates an all inclusive fee, to include Management Accounts. If he is providing the information to an accountant each month, there isn't much more that needs to be done on top to generate the management accounts. I completely agree that you shouldn't just rely on the sage print outs each month, the adjustments do need to be processed, but this isn't a huge job.

That's the difference between getting the work done by a bookkeeper vs an accountant.

I provide monthly management accounts (I am a Chartered Management Accountant) to my customers included in the agreed fees. No surprises for the customer at the end of the year that way!

 

[Wild Goose]

Hi Karen,

If he is providing the information to an accountant each month, there isn't much more that needs to be done on top to generate the management accounts.

Ok, so if it's not much work then don't charge him much...

TBH it doesn't take much to produce monthly reports if you give them the information monthly, so you shouldn't need to pay extra for this.

...but don't make the mistake of charging Rich nothing at all. IMHO working for free is unsustainable.

It's a pet hate of mine, that we accountants are such poor negotiators. How much use are we to a client's business if we don't know enough to charge for our own services?

 

[Poldenacc]

Wild Goose,

I agree with your comment about being poor negotiators, if we don't value what we are doing how can we advise businesses to charge for what they do? I don't charge extra for producing management accounts, providing I know it is required up front it is built into the overall fee.

My pet hate is when accountants see an opportunity to charge way over the odds just because the customer will pay it. I know of someone who paid nearly £1,000 for a company set up - wasn't a complicated one either, but didn't agree the fees up front.. Needless to say they are now a customer of mine

I beleive in charging a fair fee for my work.

 

[Wild Goose]

Wild Goose,

I agree with your comment about being poor negotiators, if we don't value what we are doing how can we advise businesses to charge for what they do? I don't charge extra for producing management accounts, providing I know it is required up front it is built into the overall fee.

Hmm.. you're backtracking, Karen: earlier you said you wouldn't charge extra [for management accounts] because they're not much extra work. You've changed tack: it's now because they're included in the package.

My pet hate is when accountants see an opportunity to charge way over the odds just because the customer will pay it. I know of someone who paid nearly £1,000 for a company set up - wasn't a complicated one either, but didn't agree the fees up front.. Needless to say they are now a customer of mine

Ok, you've just described value pricing. That's where an accountant encourages his (or her) clients to ring to discuss their business without charge and then, having discovered just how important a piece of work is to that client, inflates the price accordingly. The idea is to take advantage of a client who is happy to occupy your time and is comfortable with not paying for it. I suppose it's not all that different to loss-leader pricing in supermarkets.

Not my ideas btw: all laid out in "The Professional's Guide to Value Pricing" by Ronald J Baker (aka The Accountants' Bible).

 

[Poldenacc]

I'm not going to get into a discussion about it. I don't charge extra for mgt accounts and always agree my fees up front. I don't see what the problem is, may be I've missed something.

 

[elaine@cheapaccounting]

I beleive in charging a fair fee for my work.

I think that is a great approach Karen

 

[Alpha]

I think that is a great approach Karen

It may be a great approach but an extremely subjective one

 

[elaine@cheapaccounting]

It may be a great approach but an extremely subjective one

In your opinion

 

[Wild Goose]

I think that is a great approach Karen

Me too. Value Pricing exponents will have to look to look to their laurels.

 

[Alpha]

In your opinion

Not just my opinion but logically it has to be....what is a 'fair price' ?

A fair price as defined by PWC certainly wouldn't be a comparable to a 'fair price' by cheapaccounting (even for exactly the same service to the same business).

Now if you wish to state that you will apply a consistent price strategy then that is more in keeping with the spirit of what was being said.

 

[Wild Goose]

It may be a great approach but an extremely subjective one

In your opinion

That's cute. Your Scouse wit wasn't wasted, Elaine - I got it.

Alan, stop worrying... Duane won't move his account to Karen. She doesn't use Kashflow.

 

[elaine@cheapaccounting]

Why should a client pay more for the same service?

If they know that they are getting the same:

• Service
• Quality
• Standards
• Knowledge
• Experience
• Professionalism
• Care

Who decides the fair price - surely the client!

In my opinion I have a fair price strategy. I don’t see the need to call it anything else!

What others want to call the pricing strategy is up to them – I’ve spent years hearing all the latest management BS to describe business strategies! Bored of it really!

 

[elaine@cheapaccounting]

That's cute. Your Scouse wit wasn't wasted, Elaine - I got it.

Alan, stop worrying... Duane won't move his account to Karen. She doesn't use Kashflow.

I use Kash Flow though tee hee

BTW - that would be Essex wit (I'm not a scouser )

 

[Wild Goose]

I use Kash Flow though tee hee

Take note, Duane.

BTW - that would be Essex wit (I'm not a scouser )

Opps, of course!:redface: I guess that's why you're blonde, not ginger.

 

[elaine@cheapaccounting]

Take note, Duane.

Duane knows

 

[CSBob]

Who decides the fair price - surely the client!

All jokes about "Essex girls are cheap" aside (sorry, couldn't resist!) I couldn't agree more with the above sentiment. Times are changing and traditional high street accountants can no longer charge outrageously with impunity (not that any ever would, of course... ).

At the end of the day, clients will vote with their feet - or online, as the case may be.

 

[Alpha]

Who decides the fair price - surely the client!

In my opinion I have a fair price strategy. I don’t see the need to call it anything else!

Yes the client decides what is a fair price and some clients believe that £1000 is a fair price whilst others will say that £300 is a fair price for the same set of services. So does that mean that a 'menu of prices' should be totally flexible depending upon what the client decides is fair? .......Oh look we have already come full circle in the discussion

I say again a 'fair price' IS subjective and isn't really worth arguing about.