Pre-startup External Building Cleaning Business - Accountancy, Bookkeeping?

Discussion in 'Accounts & Finance' started by Tyla Thomas, Sep 8, 2020.

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Is a quote of £105/month for Partnership accountancy (compliance and bookkeeping) fair?

  1. Yes

    0 vote(s)
    0.0%
  2. No

    1 vote(s)
    25.0%
  3. It's in the ball-park

    3 vote(s)
    75.0%
  1. Tyla Thomas

    Tyla Thomas UKBF Newcomer Free Member

    1 0
    Good evening,

    Myself and my partner are looking to set up an external building cleaning business (windows, gutters, conservatories, patios, driveways...) and have spoken to an accountant in regards to this. At first we looked at going LTD, but he suggested a Partnership for ease of start-up. Talking it through, it seemed a fair suggestion.

    My main question is this: Having quoted us for his services, we were quite shocked at the price of an accountant for a small business partnership, and wanted to know whether we're being naive (and this is a fair quote) or whether we should shop around for other quotes. Honestly, we just don't know what the going rates are. This is our first business proposition, and we want to get it right... we just want to ensure we get everything at a realistic cost for a start-up to manage.

    The price for the following services was £105.70/month (incl. VAT). The accountant is chartered:

    Compliance Work - Accountancy and Taxation Services:
    Sole Traders and Partnership Accounts (monthly cost basis)*
    £25.00

    Compliance Work - Personal Tax Return Services:
    Personal tax return (SA100) Monthly Cost basis*
    £29.33

    Bookkeeping Services:
    Entering Supplier Bills and Receipts - Monthly
    £20.00

    Reconciling Bank Transactions & Preparing Non-Bank Journals - Monthly (<20 entries)
    £13.75

    This is for a business with projections of £30,000-45,000 revenue in the first year, two partners, using XERO for much of the bookkeeping. Hoping to, after the first year, have in the region of 330 bank transactions a month for reconciliation.
    A family member who owns an established LTD company pays in the region of £175 a month for accountancy, with the above compliance work included, plus VAT and Corporation Tax.

    Would you say this is a fair quote?
    ----
    Another question, on bookkeeping: if I'm paying for Xero and have the time for bookkeeping (but need to learn the platform and how to do it properly), is there a benefit to having an accountant that offers bookkeeping services, or should I just get a quote for compliance work? That would work out at £65.20/month for the compliance work only (£782.35/annual). As we don't know how the business will do in these uncertain times, thats a much nicer figure!

    On the topic, what on earth are 'non-bank journals'?

    Many thanks for any help you can offer,
    Tyla
     
    Posted: Sep 8, 2020 By: Tyla Thomas Member since: Sep 8, 2020
    #1
  2. Scalloway

    Scalloway UKBF Legend Free Member

    16,390 3,466
    These are entries that do not involve entries on the bank account, or sales or purchase invoices. Generally journals are entries that are done to tidy things up, eg corrections.
     
    Posted: Sep 8, 2020 By: Scalloway Member since: Jun 6, 2010
    #2
  3. Andreas Christodoulou

    Andreas Christodoulou UKBF Newcomer Free Member

    3 0
    Tyla,

    I would strongly recommend a limited company, especially in these trying times. That way, if the business does get into trouble, you won't have the problem of personal liability - assuming of course that you haven't done anything maliciously wrong!

    This would be a touch more expensive, because you'd also have payroll, but in effect, it's a hell of an insurance policy that you get in return.

    Honestly, this is broadly in the ballpark of what I'd expect to charge (based only on this initial post, of course) - in the region of £100/month sounds about right - especially if there are lots of transactions to reconcile. For a limited company it would be a bit more, but then you'd have limited liability - so you're getting more as well. You may also find a limited company - with the ability to withdraw money through dividends - could be more tax efficient too. This would depend on both of your other sources of income, but it's fairly likely.

    Just some other things to think about - it's important to do this early:

    * Have you considered your marketing (website, obviously, but how else you're going to get your customers)? For a company like yours a simple website would sound like the best option, don't pay through the nose for it.
    * Have you considered how you're going to comply with GDPR? I know it doesn't sound like it's going to be a big issue, but you're still obligated to keep your customers' data secure?
    * Are you likely to employ any further staff in the next few years? If you think so, a limited company becomes a better idea compared to a partnership.
    * Are you going to use software to book your appointments/calendar/time?
    * Are you going to chase your customers for payment yourself, or is the accountant going to take over your full sales ledger?

    With regard to your question on bookkeeping - look, I'm an accountant myself so you'd probably never expect me to recommend your own bookkeeping, but in a high-transaction low-value business like it sounds you're in (at an expected 330 transactions a month) - honestly, pay someone else to do it. If you were only issuing a handful of invoices, then it'd be totally worth it to save the money, but at that level, pay someone else - you'll save yourself days a month, seriously.

    Whatever your choices, all the best with your new business. I do general business advice so I can help if you want some more information on any of the above things I mentioned as well.

    Good luck!
     
    Posted: Sep 8, 2020 By: Andreas Christodoulou Member since: Sep 2, 2020
    #3
  4. Mr D

    Mr D UKBF Legend Free Member

    24,306 2,949
    Hopefully the OP'd have payroll anyway. Though does not need to be expensive - some do it themselves.
     
    Posted: Sep 8, 2020 By: Mr D Member since: Feb 12, 2017
    #4
  5. Mr D

    Mr D UKBF Legend Free Member

    24,306 2,949
    The personal tax return figure sounds high unless its complicated. I got offered £40 to do it once, laughed at the guy. For a simple tax return its a matter of minutes to enter.- plenty of people do their own tax return either on forms or online.

    Bookkeeping sounds cheap. Is it too cheap?
     
    Posted: Sep 8, 2020 By: Mr D Member since: Feb 12, 2017
    #5
  6. MBE2017

    MBE2017 UKBF Ace Free Member

    1,937 699
    I would never recommend a partnership personally, look at the forum posts on breaking partners to see why. For a small company with your expected turnover I would have been upset at any quote over £250/350pa.

    Have you looked at specialist software, like the squeegee app, it will allow you to take orders, book in the work, allocate it, invoice it, take payments etc, all through a phone or computer. Most window cleaners are going cashless on their rounds now to save the time, preferring to email invoices, and take card payments instead.

    Through an app as mentioned, your books will be a doddle. Get a bookkeeper or semi retired accountant to do any tax return, hardly any work involved IMO.
     
    Posted: Sep 9, 2020 By: MBE2017 Member since: Feb 16, 2017
    #6
  7. MyAccountantOnline

    MyAccountantOnline UKBF Legend Full Member

    13,216 2,476
    I don't think its unreasonable and the bookkeeping at just £20 a month is a bargain!

    Could you get it cheaper - yes

    If you are happy to undertake your own bookkeeping you will find good qualified accountants who will charge less than you've been quoted.

    It concerns me a little that you've been advised to form a partnership ''for ease of start-up'' - was that the only reason the accountant gave you?
     
    Posted: Sep 9, 2020 By: MyAccountantOnline Member since: Sep 24, 2008
    #7
  8. UK Contractor Accountant

    UK Contractor Accountant UKBF Legend Full Member - Verified Business

    5,070 895
  9. Spur Support Services

    Spur Support Services UKBF Contributor Free Member

    31 8
    It's difficult to judge whether it is a good deal from the limited information, but it certainly looks very reasonable.
    It may also be something that you can delay for a few months, until work starts flowing in, but care should be taken with timing as it is easy to find yourself on the back foot with financial records, if they aren't your cup of tea.

    It may be that as part of their services, they provide software such as Xero, that you can use both on the desktop and on smart phones to create quotes and invoices, including tailoring the documentation to suit, your tastes and needs.
    This could save you lots of time and allow you to control your income flows more effectively.

    As to whether you set up a limited company or a partnership.
    Ask the accountants to explain their reasoning.
    I am not in the least saying that you should launch into a limited company, but it would help if they explained why the partnership route is better in a clearer manner based on your particular circumstances and plans.

    At the very beginning, perhaps look at some of the internet business banking solutions, such as Tide, which have some limited accounting functionality, allowing you to:
    - classify your bank transactions
    - create sales invoicing
    - attach receipts to the transactions
    all within the online banking app (mobile and desktop), to allow you to keep records as you go along.
    The analysed transaction data can then be extracted from the banking app to a "csv" file for your accountants, when you get going and really need and can afford to enlist their help.

    But if you like these accountants and expect income to start flowing as soon as you launch, then really from a distance it seems like quite a good deal, if helpful Accounting Software is included.
     
    Posted: Sep 9, 2020 By: Spur Support Services Member since: Aug 21, 2020
    #9
  10. UK Contractor Accountant

    UK Contractor Accountant UKBF Legend Full Member - Verified Business

    5,070 895
    and get them wrong.

    HMRC target those unrepresnted taxpayers in their various campaigns. High Income Child Benefit Charge often a classic missed of Tax Returns.
     
    Posted: Sep 9, 2020 By: UK Contractor Accountant Member since: Sep 18, 2013
    #10
  11. Mr D

    Mr D UKBF Legend Free Member

    24,306 2,949
    Cannot offhand recall a time the tax return has been incorrect since HMRC stopped changing the bank details.
    2003 or 2004 maybe.
     
    Posted: Sep 9, 2020 By: Mr D Member since: Feb 12, 2017
    #11