how are accountant fees charged?

D

dexter

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are they typically charged at a percentage of gross sales or is there another method?


i am a sole trader with gross sales of 640,000 for the first 6 months of this year and my accountant fees are 5,500 for the first 6 months. Does this sound like the typical price i should be paying?

basically i'm just trying to figure out if i'm getting a good deal from my accountant.
 
Different firms have different pricing policies, although I don't know of any who charge business customers on the basis of turnover. Prices can vary depending on the complexity of the business, quality of records etc. Its impossible to comment on the figure you quote without knowing what services you received for this price.
 
Accountants fee are charged per hour it takes to perform what ever service you require. The charge out rate will vary depending on the level of seniority of the staff invloved. This fee policy should be fully detailed in the engagement letter you should have with your accountant.

The 6 month fee seems a bit a high but of course would depend on what stage the books are at before the accountant commenced work. Also was there any other worked performed such as income tax compliance or advisory services? The best way to see if this is good value is to get another quote from a similiar size firm
 
ubiquitous said:
Not all firms charge on a per-hour basis although that is a very common pricing mechanism.
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True, but, for audit purposes you can only charge per hour. Any other pricing mechanism may undermine the auditors independence and objectivity!
 
Are you sure this is true? Is that part of the new ISA? Its the first I heard of that rule.

Anyway, the OP is a sole trader so should not have to worry about auditing for a while yet.
 
ubiquitous said:
Are you sure this is true? Is that part of the new ISA? Its the first I heard of that rule.

No not part of new ISA'a been around for a while now, its an ACCA rule for its members. Not to sure about ICAI firms, but probably the same.

Anyway, the OP is a sole trader so should not have to worry about auditing for a while yet.
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Anyway the OP is a sole trader so audit does not matter, but I be seriously surprised if they billed another way, I work in tax and we even bill that way for both compliance and advisory work.
 
Can you ask the accountant to provide details on how they calculated the charge?
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You can and he will give you a breakdown of the charges. As the others say, the fee might or might not be high. Do you for example have a bookkeeper? Is your personal income tax included? Presumably VAT returns are also required? At the end of the day a lot of the fee is dependent on what you do yourself in terms of bookwork and the quality of that bookwork.
Bazermac, I don't think it's a requirement to bill audit in terms of hours (it does happen in the bigger audit jobs though), in fact I'd be virtually certain it isn't. Audit firms tend to use the hourly rates solely for time management/management accounting purposes (or more cynically as an instrument for the torture they inflict on staff). I don't think too many firms in the real world would be happy paying those inflated charge out rates for their audits.
 
You should discuss this with you accountant. He should be happy to tell you what your being charged for with a detailed breakdown, You should be able to ask him what you can do to reduce the fees. Tell him you want to try and do some of it yourself. Hire a bookkeeper etc.

If he gives says nothing you can do, I'd say safe bet he's overcharging. I think €5,500 for 6 months seems excessive, even if you personal tax returns are included, though not likely as usually billed p.a. Though as others said, he could be doing payroll for 50 employees, vat returns for 500 invoices per month, You really need to discuss this with the accountant.
 
I'd say safe bet he's overcharging. I think €5,500 for 6 months seems excessive
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Not necessarily, if he has to undertake all the bookkeeping function, that saves a bookkeeper salary (possibly part time) which would probably be circa €18 per hr. That adds up to significant fees in no time at all, and part time employees have all the rights and entitlements of full time employees.
 
Dont forget. If you think your bill is too high trash it out with your accountant. Get him to reduce it. Don't just pay the first bill he hands you. I've been working in practice for the past number of years and you would be amazed at the overcharging that goes on. Clients just accept the charge and thats it.
Anyone who has haggled has always got a reduction.. Its definately worth it.
 
howareya said:
I've been working in practice for the past number of years and you would be amazed at the overcharging that goes on.
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This may be happening in your own workplace (time then to change job, maybe??) but I would not for a moment accept that all firms overcharge (or indeed give discounts when challenged) in the manner you describe.
 
I worked for a firm of accountants in a largish midlands town until last year, and although I could say they certainly didn't overcharge in the first place, it would be safe to say that the tradition there was for most of the clients (mainly farmers and sole traders in that case) to haggle for a discount on their bill - which was always given at approx. 20% I would guess... It may be different for the large Dublin firms, but that's how things are done in the rest of the country from what I could see.

I also think your bill looks very high based on my experience of sole traders in the Midlands. Have a word with your accountant.
 
Rois said:
the tradition there was for most of the clients (mainly farmers and sole traders in that case) to haggle for a discount on their bill - which was always given at approx. 20% I would guess...
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Between needlessly alienating clients who don't want, or don't feel confident enough, to haggle; routinely forcing oneself into negotiation situations in relation to every bill raised; and having to write off up to a fifth of total billed turnover, this doesn't sound to me like good billing practice.
 
ubiquitous said:
Between needlessly alienating clients who don't want, or don't feel confident enough, to haggle; routinely forcing oneself into negotiation situations in relation to every bill raised; and having to write off up to a fifth of total billed turnover, this doesn't sound to me like good billing practice.
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I also found it very strange, having moved from London where I had worked for firms like Ernst & Young, but it would appear to be the norm in rural Ireland - it appears to be a cultural thing here..
 
Based on my own experiences in the sector, stretching back to the 1980s, I would very much doubt if this is the norm anywhere, to be honest. The thing about accountancy is that there are plenty of idiosyncratic individuals running practices out there. What works for me might not work for Joe Bloggs so Joe does his own thing, bizarre and all as it might sound to me.
 
For a builder looking for an accountant what are the fees- I know fees vary what can one expect to pay for one to do set of accounts & tax return. earnings about €150K p.a paperwork not complicated
 
If you gave more information, perhaps you would get replies?

sole trader/company?
how many payment/receipt transactions in year?
c2 holder?
how many employees?
how many subcontractors?
how many lease, hp & loans in place?
any returned cheques/debits on bank statements in year?
quality of records?
 
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