Accounting fees - as a %

[GetCarter]

I'm self employed and I'm paying 4.2% of my profit in accounting / VAT preparation / book-keeping fees (six figure profit p.a.). Does this seem low, high or normal? I have nothing else to compare it to, and my accountant is shortly to retire...

Thanks for any help.

[dcb]

GetCarter said:

I'm self employed and I'm paying 4.2% of my profit in accounting / VAT preparation / book-keeping fees (six figure profit p.a.). Does this seem low, high or normal? I have nothing else to compare it to, and my accountant is shortly to retire...

Thanks for any help.

4.2% of £100,000 profit is £4,200.

Suggest get some quotes from other accountants.

Most of them should be able to beat that.

My friend's accountant is about 700 quid a year all in.

[fast_al]

Need more information to say for certain but you may be able to do better. Whats your annual turnover?

[GetCarter]

fast_al said:

Need more information to say for certain but you may be able to do better. Whats your annual turnover?

Well I'm kinda' wierd as turnover is only marginally more than profit (I'm a composer and 99% of my earnings are royalties - I have little outgoings apart from fast computers and fast company cars).

[Eric Mc]

The fee is not normally calculated as a % of turnover but rather as a function of the time taken in dealing with your affairs. The more complex someone's affairs are, the higher their fees are likely to be.

Some individuals with relatively low levels of income sometimes have quite complex tax affairs.

[justinp1]

Eric Mc said:

...Some individuals with relatively low levels of income sometimes have quite complex tax affairs...

Such is the joyous nature of our taxation system!

[Eric Mc]

Too true.

Often it's retired individuals who need accounting and taxation advice, but cannot afford it.

Complexity in your tax affairs is caused, not by large amounts of money, but having multiple sources of income.

[BigAlinEmbra]

dcb said:

GetCarter said:

I'm self employed and I'm paying 4.2% of my profit in accounting / VAT preparation / book-keeping fees (six figure profit p.a.). Does this seem low, high or normal? I have nothing else to compare it to, and my accountant is shortly to retire...

Thanks for any help.

4.2% of £100,000 profit is £4,200.

Sounds like a lot to me, the last job I did at a CAs (admittedly 5 years ago now!) had a fee of around £2k for turnover of over £1m.

As Eric says though, it should be based on time and not % of turnover. If you turnover double the amount in the following year, should your fee double?!
Course not!

[srebbe64]

GetCarter said:

I'm self employed and I'm paying 4.2% of my profit in accounting / VAT preparation / book-keeping fees (six figure profit p.a.). Does this seem low, high or normal? I have nothing else to compare it to, and my accountant is shortly to retire...

Thanks for any help.

What's profitability got to do with the amount of work involved in auditing? The two are unrelated I would have thought! Otherwise, by that rationale, if you're making a loss presumably the accountant pays you to do the work? Accountancy has always struck me as a thankless task. Badly run companies are likely to be much harder to audit than well run companies and I bet, in the main, they earn less from the badly run companies.

[Jaglover]

Eric Mc said:

The fee is not normally calculated as a % of turnover but rather as a function of the time taken in dealing with your affairs. The more complex someone's affairs are, the higher their fees are likely to be.

Some individuals with relatively low levels of income sometimes have quite complex tax affairs.

Though sometimes you end up not being able to recover your chargeable time with clients without much money.

That said for a Sole Trader business without much in the way of expenses a fee of at least £4k sounds very high.

Edited by Jaglover on Wednesday 24th January 10:54

[Eric Mc]

Agreed.

[victormeldrew]

I'm sure that fact that the accountant is in the perfect position to "feel your wallet" has absolutely nothing to do with the size of their fees. Oh no.

[Leftie]

As a sole trader with a turnover of about £80000, and profits of about £40,000 I used to pay about £400 ( 1%). I pay a simlar % as a LTD Company with higher turnover.