Accountants

[vp1980]

Hi, I am a partner in 2 businesses. A website business with my girlfriend and an ebay shop with two of my friends. Now the website hasnt been doing so well but as its baby products we understand its going to take time to take off. The ebay shop has done well from day one as a new business. The ebay shop has been runing since May the 1st and has been selling about 5-10 items per day. We decided to go see a few accountants and ended up talking to one just 50 yards up the road. He quoted us £1200 for our ebay shop £1500 as soon as we hit the VAT threshold. This was all ok until I told him about my 2nd business with my girlfriend. I told him that I was losing money with that business and could I put it against the tax I would have to pay with the Ebay shop. He said yes but he would charge me £500 for that business, do you guys think that's ok? Now as the website is losing money at this time with paying designers and coders etc I basically can't afford an extra £500. I said that I could do my tax return myself for my 2nd business and the accountant said that as he was doing the tax return for the Ebay shop he would have to do the website at the same time. I am not sure about this one as I really need an accountant for my ebay shop but don't feel like I need one yet for my website. I feel like because I need an accountant for the ebay shop it's forcing me to pay more for the website.

Please let me know what you think as I have got to try and sort all of this out tomorrow.

Thanks in advance.

 

[accountancyextra]

What has he quoted you for exactly? End of year, bookkeeping, VAT returns etc?

How do you have the businesses structured? Sole Traders/ Limited Companies/ partnerships?

If you could give us some more clarity over the businesses and the services you would be getting, I'm sure you'll get plenty of helpful reponses

 

[Williams lester]

That sounds a fairly hefty price anyway for a set of accounts and tax return. Did you get a few quotes before deciding on an accountant.

 

[vp1980]

The 2 businesses are partnerships, we have been to a few around our local area. The other accountants have said that they would have to work with us for some time before they could give us a proper quote. The quote in my first post is for tax returns for each of the 3 partners plus 1 for the business and basically looking after our books meaning that we are just handing all our information over for them to sort out, with an extra £300 for when we hit the VAT threshold.

 

[DFL]

I said that I could do my tax return myself for my 2nd business and the accountant said that as he was doing the tax return for the Ebay shop he would have to do the website at the same time.

Not true, he could do the tax return for the first partnership, you do the website one, and you could provide him with the figures for the second partnership loss for your personal tax and that of your Partners.

So either you have got the wrong end of the stick or he is being a bit misleading.

Decide which it is, and also how pro active he is with his advice for the (seemingly) high price you are paying him.

You need to work with and trust your accountant as well as being comfortable asking probing questions. The sole fact that you are asking on here and not to him / her direct is not a good sign.

 

[QuickHomeBuyers]

Not sure if it would make a difference in costs between a partnership as in two sole traders or an LLP.

LLP is registered so it may be a case he thought you were an LLP?

 

[Alison Jones]

That sounds like you are being overcharged. If you are only an ebay shop with 5 - 10 sales a day cannot understand why you are being charged that much for your accounts. Can understand having an increase if you become VAT registered because there is 4 VAT returns to be done each month. If your accountant charging you that much because they doing the bookkeeping as well as the accounts either go on a bookkeeping course and do the bookkeeping yourself or hire a bookkeeper. Bookkeepers hourly rate can vary from £8 - £25 an hour (normally bookkeeping hourly rate is cheaper then an accountants) depending on location but having a bookkeeper they can do VAT returns as well and if a good bookkeeper it should keep the time down that the accountant has to spend doing end of year accounts so technically your accountancy bill should decrease.

Alison

 

[QuickHomeBuyers]

4 VAT returns each month? or annually?

 

[Alison Jones]

Meant annually.

Alison

 

[Philip Hoyle]

My thoughts on this....

Re the reluctance to do half a tax return, I'd be the same I'm afraid - I have a rule of doing all the tax return, or nothing on it at all. I know where the buck will stop if it all goes wrong and I know (by experience) that when a client says they want to do some of the tax return themselves, they mean they'll pester you to tell them what boxes to put what figures in, meaning you spend more time telling them how to do than if you were doing it yourself but just not getting any money for it. I'd turn it around, I'd offer to do the partnership tax return and the partnership accounts, and simply give them a sheet telling them what entries they need to put on their personal tax returns. You also have to appreciate that the accountant will almost certainly be submitting the tax return electronically, so that you'll have to tell him the figures to enter for your other business that you want to do yourself, so in effect, he's doing it anyway!

Re the book-keeping, it's pointless paying an accountant to do basic book-keeping - it's like paying a private doctor to put a sticking plaster on a cut knee. Either get a book-keeper or do it yourself - it's not rocket science, just needs organisational skills and some ring-fenced time every week to keep it up to date. An internet shop is actually quite difficult for an outsider to do the book-keeping based on papers/printouts you send them due to the deductions made by ebay and paypal before you see your net proceeds - that means someone wading through your reports, no doubt finding some are missing, prints for wrong periods, etc - all takes time to sort. I do a couple where despite advising the client to the contrary, they just email me a massive pdf every three months with screen shots from their shopping cart reports, ebay, paypal, clickbank, etc and it takes hours and hours to sift through it all to do the "books" - I charge them £150 per month to do it and even at that level, I'm not charging my time at proper rates - I tell them each year that there are better ways, but they really aren't interested and are happy to pay so they don't have the hassle. Saying that, I have others who I recommended to use Kashflow and do the books themselves with importing data automatically from their banks/paypal, etc. - they "bought" a few hours of my time initially to get themselves set up and now pay only a few hundred pounds a year for the year end accounts and tax, doing the "books" themselves and their own VAT returns.

All I would say is that you have to be happy and respect your accountant. If you're coming onto internet fora to query them before you even appoint them, then you clearly have reservations and you should be looking elsewhere.

 

[David Griffiths]

Re the book-keeping, it's pointless paying an accountant to do basic book-keeping

There are plenty of accountants who are geared up to offer bookkeeping services. We can do it, and there are obvious examples from other people who post on here - Nicola and David & Jenni to name but two (or three!)

For some clients it's a valid choice to enable them to spend their time on something more productive for the business, or even not to spend their time on something they don't like/aren't good at/can't be bothered with.

 

[Strontium Dog]

My thoughts on this....

Re the reluctance to do half a tax return, I'd be the same I'm afraid - I have a rule of doing all the tax return, or nothing on it at all. I know where the buck will stop if it all goes wrong and I know (by experience) that when a client says they want to do some of the tax return themselves, they mean they'll pester you to tell them what boxes to put what figures in, meaning you spend more time telling them how to do than if you were doing it yourself but just not getting any money for it.

Made me smile, but true!

 

[accountancyextra]

Another thought on the "doing part of the tax return" bit....If you've only got half a picture, how can you provide proper and full tax planning advice?

 

[vp1980]

Thanks for all the replies.

I have took your advice and I have been back to see the accountant and told him that I would rather do my own books and he said that he would give me 30% off the price for that. Now, I forgot to ask him what he will be doing for his fee apart from doing the tax returns. He did tell me that he would give me software for my books which is just a speedsheet to calculate my figures with. He said that I could use Microsoft Excel for this.

Do any of you know what the accountant will be doing for his fee apart from 2 partnership returns and 4 partner tax returns?

Thanks again for the advice.

 

[accountancyextra]

Thanks for all the replies.

I have took your advice and I have been back to see the accountant and told him that I would rather do my own books and he said that he would give me 30% off the price for that. Now, I forgot to ask him what he will be doing for his fee apart from doing the tax returns. He did tell me that he would give me software for my books which is just a speedsheet to calculate my figures with. He said that I could use Microsoft Excel for this.

Do any of you know what the accountant will be doing for his fee apart from 2 partnership returns and 4 partner tax returns?

Thanks again for the advice.

Finlay,

The best thing you can do is to pick up the phone and ask him. Get him to go through exactly what he's doing and what he's charging for what element. If he's a reasonable chap, he'll take the time to explain. If he's not, regardless of fee, he's not the guy for you.

One of the biggest areas of dispute between accountants and clients in my opinion is not the actual size of the fees charged, but a lack of understanding as to what the fee is being charged for.

 

[elaine@cheapaccounting]

surely all of this is set out in the engagement letter?

 

[MyAccountantOnline]

Thanks for all the replies.

I have took your advice and I have been back to see the accountant and told him that I would rather do my own books and he said that he would give me 30% off the price for that. Now, I forgot to ask him what he will be doing for his fee apart from doing the tax returns. He did tell me that he would give me software for my books which is just a speedsheet to calculate my figures with. He said that I could use Microsoft Excel for this.

Do any of you know what the accountant will be doing for his fee apart from 2 partnership returns and 4 partner tax returns?

Thanks again for the advice.

I agree with Stuart and Elaine - if you have any concerns you really should speak with your accountant and get him to explain what work they are doing for the agreed fee, and if you are using a qualified accountant they should have confirmed this in a written letter of engagement too.

Do bear in mind that if you are going to be keeping your Excel sheets what you are doing is bookkeeping - thats the bit that enables the accounts to be prepared. The accountant will still need to prepare your accounts from your records. When you use an accountant who operates in this way what you are doing is the intial work for him/her which is traditionally undertaken by a junior or trainee in a larger firm.