Accountant needed? Can't see the value added?
Discussion
After my accountant made a major snafu. ( now resolved ) I'm questioning - do I really need them?
Business is IT Project Management.
The software issued to me by the accountant is Freeagent.
The software is calculating tax liabilities ( business and personal ) - to the penny. All good.
Im only invoicing weekly , on spec or monthly ( depending on the contract ) - a few expenses each month ( which I enter, and upload the receipts )
Apart from a couple of journal entries which they do each year - I don't see them doing much work.
I'm not getting any advice from Accountant.
Every month I pay them £220
( This does also include business insurance and use of Freeagent - but I can get Freeagent for free by having a business account with Nat West or others )
All I receive is periodic emails along the lines of....
Corporation tax is due on dd/mm/yy
VAT will be taken by direct debit on dd/mm/yy
Your personal tax is due on dd/mm/yy
It seems a bit expensive for what I am receiving?
I'm sure the software can do that.
I'm thinking to part ways with the accountant - keep using Freeagent - and just use another accountant to do the year end submissions - and sanity check / submit the self assessment.
Business insurance is looking like £750 per annum.
It looks like I can save £1K+ per annum
Thoughts?
Am I missing some value add that they are providing?
Business is IT Project Management.
The software issued to me by the accountant is Freeagent.
The software is calculating tax liabilities ( business and personal ) - to the penny. All good.
Im only invoicing weekly , on spec or monthly ( depending on the contract ) - a few expenses each month ( which I enter, and upload the receipts )
Apart from a couple of journal entries which they do each year - I don't see them doing much work.
I'm not getting any advice from Accountant.
Every month I pay them £220
( This does also include business insurance and use of Freeagent - but I can get Freeagent for free by having a business account with Nat West or others )
All I receive is periodic emails along the lines of....
Corporation tax is due on dd/mm/yy
VAT will be taken by direct debit on dd/mm/yy
Your personal tax is due on dd/mm/yy
It seems a bit expensive for what I am receiving?
I'm sure the software can do that.
I'm thinking to part ways with the accountant - keep using Freeagent - and just use another accountant to do the year end submissions - and sanity check / submit the self assessment.
Business insurance is looking like £750 per annum.
It looks like I can save £1K+ per annum
Thoughts?
Am I missing some value add that they are providing?
Edited by Jenny Tailor on Thursday 3rd February 13:21
You can manage without an Accountant if you are prepared to do it all yourself and, more importantly, take responsibility with all your liabilities.
You mention Corporation Tax, so you're presumably running a Limited Company. Are you happy to stay up to date with all relevant changes to tax legislation, company legislation, and requirements for companies and the like?
I'm in a similar situation to you but I wouldn't be without the safety net of an accountant.
Also you seem to be playing an awful lot. I pay half that, and for that I get full support for my Limited Company and also all my personal taxation (ie. Self Assessment). It also includes FreeAgent (my last accountants wanted me to pay for that on top), and also includes all submissions and preparation of Year End accounts / summary, etc.
edit: Oh, you get Business Insurance included? Ok. I pay for that separately.
You mention Corporation Tax, so you're presumably running a Limited Company. Are you happy to stay up to date with all relevant changes to tax legislation, company legislation, and requirements for companies and the like?
I'm in a similar situation to you but I wouldn't be without the safety net of an accountant.
Also you seem to be playing an awful lot. I pay half that, and for that I get full support for my Limited Company and also all my personal taxation (ie. Self Assessment). It also includes FreeAgent (my last accountants wanted me to pay for that on top), and also includes all submissions and preparation of Year End accounts / summary, etc.
edit: Oh, you get Business Insurance included? Ok. I pay for that separately.
Edited by Clockwork Cupcake on Thursday 3rd February 13:36
_Mja_ said:
Sounds like you are doing the bookkeeping - all good and efficiently. Are you a limited company? Does the accountant prepare and file accounts for you?
Yes - Limited company.Yes - they do. But - it balances exactly as per the software. ( so I guess it is not a complex process )
Happy for an accountant to prepare and file.
I should add - every 3 months I email copies of bank statements and they check bank balance matches what I am recording.
Clockwork Cupcake said:
You can manage without an Accountant if you are prepared to do it all yourself and, more importantly, take responsibility with all your liabilities.
You mention Corporation Tax, so you're presumably running a Limited Company. Are you happy to stay up to date with all relevant changes to tax legislation, company legislation, and requirements for companies and the like?
I'm in a similar situation to you but I wouldn't be without the safety net of an accountant.
Also you seem to be playing an awful lot. I pay half that, and for that I get full support for my Limited Company and also all my personal taxation (ie. Self Assessment). It also includes FreeAgent (my last accountants wanted me to pay for that on top), and also includes all submissions and preparation of Year End accounts / summary, etc.
I'd feel more comfortable with an accountant - but pay them as required rather than a high fixed monthly fee.You mention Corporation Tax, so you're presumably running a Limited Company. Are you happy to stay up to date with all relevant changes to tax legislation, company legislation, and requirements for companies and the like?
I'm in a similar situation to you but I wouldn't be without the safety net of an accountant.
Also you seem to be playing an awful lot. I pay half that, and for that I get full support for my Limited Company and also all my personal taxation (ie. Self Assessment). It also includes FreeAgent (my last accountants wanted me to pay for that on top), and also includes all submissions and preparation of Year End accounts / summary, etc.
Timely post, E have a very small Ltd company and I’ve used an accountant since they start. This year I think he had a mental health wobble ( or it could be old age) and he didn’t submit the company accounts on time incurring a penalty and other mistakes too.
We decided to part ways with him and have wondered whether we actually need an accountant.
Not VAT registered, wife does all the bookkeeping with high detail and I do my own SA in any case.
What added value would an accountant give in my case?
Edited to add is filing that difficult?
We decided to part ways with him and have wondered whether we actually need an accountant.
Not VAT registered, wife does all the bookkeeping with high detail and I do my own SA in any case.
What added value would an accountant give in my case?
Edited to add is filing that difficult?
You've described an almost similar service to what I get from my account except that I pay her £95 a month for it. And I think there's your issue because £220 is too much for the depth of service you are getting.
I run Quick Books and she has access to that.
I could probably do it myself but quite like the fact that it's one less thing I have to worry (too) much about.
I'd question the fees, not the need for an accountant.
I run Quick Books and she has access to that.
I could probably do it myself but quite like the fact that it's one less thing I have to worry (too) much about.
I'd question the fees, not the need for an accountant.
StevieBee said:
You've described an almost similar service to what I get from my account except that I pay her £95 a month for it. And I think there's your issue because £220 is too much for the depth of service you are getting.
I'd question the fees, not the need for an accountant.
This.I'd question the fees, not the need for an accountant.
A lot of accountants want their yearly fee paid in monthly chunks. It's easier for them and presumably easier for you to pay as you earn.
Limited company accounts, corp tax, SA return, VAT if necessary, for small businesses are usually in the region of £1.5-2.5k annually. Some accountants are more proactive with their support than others. I'm not in practice but had been researching fees recently out of interest.
You're doing the bookkeeping which is fine and keeps the cost lower - I would promote that sort of activity too as if you as the client/owner don't buy in you're never going to keep good records come the year end. They are checking the bookkeeping at periodic intervals - great and also makes their life easier come accounts production as they already know it is right.
I think have a chat with them to understand the value add and talk fees. From what I see they are efficiently managing you as client (recent incident aside), theoritically have more expertise than you will from their position (that is worth something in their fee) and some of your comments are coming across as though accountancy is all about bookkeeping invoices and expenses and that you're doing it all already but there is more to it than that - have a chat with them about the added value and see what they say. If they don't answer and make you feel comfortable then I would start looking around - your accountant should check in with you regularly, supporting you against a wide variety of business issues as well as keep abreast and proactively manage you to latest regulations.
Edit to add - there are a lot of technological changes in how accounts are filed and how we interact with HMRC. It's not simply a case of filing in a form anymore.
Limited company accounts, corp tax, SA return, VAT if necessary, for small businesses are usually in the region of £1.5-2.5k annually. Some accountants are more proactive with their support than others. I'm not in practice but had been researching fees recently out of interest.
You're doing the bookkeeping which is fine and keeps the cost lower - I would promote that sort of activity too as if you as the client/owner don't buy in you're never going to keep good records come the year end. They are checking the bookkeeping at periodic intervals - great and also makes their life easier come accounts production as they already know it is right.
I think have a chat with them to understand the value add and talk fees. From what I see they are efficiently managing you as client (recent incident aside), theoritically have more expertise than you will from their position (that is worth something in their fee) and some of your comments are coming across as though accountancy is all about bookkeeping invoices and expenses and that you're doing it all already but there is more to it than that - have a chat with them about the added value and see what they say. If they don't answer and make you feel comfortable then I would start looking around - your accountant should check in with you regularly, supporting you against a wide variety of business issues as well as keep abreast and proactively manage you to latest regulations.
Edit to add - there are a lot of technological changes in how accounts are filed and how we interact with HMRC. It's not simply a case of filing in a form anymore.
Edited by _Mja_ on Thursday 3rd February 15:47
Thank you all for the input so far.
I do want an accountant to be in the mix. ( final accounts, corp tax )
I don't expect them to do it for free.
I'm just trying to understand what they are doing for their money.
It does seem steep.
Monthly payroll - Software does this and has RTI directly to HMRC.
Dividend vouchers - Does this.
VAT returns - Software does this and has online submissions to HMRC
Self Assessment - Software does this too - and again online submission to HMRC
Final accounts to companies house, corporation tax - does all that too ( which I do see the value of engaging an accountant to review this before submission ) and online submission.
Dates payments due reminders- software does that.
For the last 5 years - everything has balanced to the penny.
Accountancy firm are not providing any advice.
The software company have actually been far more proactive in advising changes of tax rates etc etc
I do want an accountant to be in the mix. ( final accounts, corp tax )
I don't expect them to do it for free.
I'm just trying to understand what they are doing for their money.
It does seem steep.
Monthly payroll - Software does this and has RTI directly to HMRC.
Dividend vouchers - Does this.
VAT returns - Software does this and has online submissions to HMRC
Self Assessment - Software does this too - and again online submission to HMRC
Final accounts to companies house, corporation tax - does all that too ( which I do see the value of engaging an accountant to review this before submission ) and online submission.
Dates payments due reminders- software does that.
For the last 5 years - everything has balanced to the penny.
Accountancy firm are not providing any advice.
The software company have actually been far more proactive in advising changes of tax rates etc etc
Edited by Jenny Tailor on Thursday 3rd February 16:35
For all those things the software does the accountant should be doing 2 things - 1) he should have been involved in the set up to ensure it's right for your circumstances and 2) he should be reviewing what is coming out of the system to make sure it is correct and you're not liable for anything you shouldn't be or not underclaiming benefits maybe you could be.
What if you treated a transaction incorrectly and put the wrong VAT rate on - the software wouldn't spot that. If you use your home/car/personal internet the software wouldn't advise on what tax you might be able to get back from HMRC to offset what you pay.
In the company I work for one of our trading subsidiaries had been relying on whatever the finance staff input into the system. When I joined I looked it alongside the rules and some of it was wrong and I got £75k back from HMRC.
What if you treated a transaction incorrectly and put the wrong VAT rate on - the software wouldn't spot that. If you use your home/car/personal internet the software wouldn't advise on what tax you might be able to get back from HMRC to offset what you pay.
In the company I work for one of our trading subsidiaries had been relying on whatever the finance staff input into the system. When I joined I looked it alongside the rules and some of it was wrong and I got £75k back from HMRC.
Edited by _Mja_ on Thursday 3rd February 17:37
_Mja_ said:
For all those things the software does the accountant should be doing 2 things - 1) he should have been involved in the set up to ensure it's right for your circumstances and 2) he should be reviewing what is coming out of the system to make sure it is correct and you're not liable for anything you shouldn't be or not underclaiming benefits maybe you could be.
Quite. My new accountant does exactly this and is very proactive and holds my hand a lot and also does stuff for me that my old accountants would expect me to do myself, such as the annual Companies House submission. My old accountants were more like what the OP described and just rubber-stamped stuff. We fell out when they insisted that I took out a subscription to FreeAgent at my own expense and I pushed back saying it would do their job for them (or, at least, drastically reduce their workload) and that they should be including it in their fees. Cut a long story short, the owner / senior partner tersely told me that they "didn't have time for this" and to find a new accountant. And this is after 20+ years with them, ie. since they first set up practise. I kid you not.
So I did find a new accountant and they are so much better.
Edited by Clockwork Cupcake on Monday 7th February 10:34
There does appear to be some rogue accountants out there! Perhaps been in the game a long time and (arrogant is the wrong word but inset correct) not wanting to change with the times; they see the software as a replacement to their bookkeepers and cash in the bank for them.
Interesting thread for me as I would assume good service today is replacing the time saved using software gives practicing accountants the chance to be the mini FDs each small business needs to help them grow or just get by. Yes there is expertise reviewing numbers against rules and regs but also there's the conversations around what you want to achieve with the business, your life, business plans, expansion, support with providing information for mortgages etc etc and being a person the client can bounce ideas off of and such like.
Perhaps if you're not getting that sort of service it's time to move on (once you've had a chat with the accountant on value ad). Maybe think about what it is you want as a client from your accountant - if it really is tick and bash, company secreterial (submit accounts, manage companies house) - then a suitable fee of £100 or so a month is probably fair. If you're after the full mini FD partnership approach then a higher fee is fair but you've got to get the service. Not all practices are the same, some will specialise in the "business consultancy" angle.
Interesting thread for me as I would assume good service today is replacing the time saved using software gives practicing accountants the chance to be the mini FDs each small business needs to help them grow or just get by. Yes there is expertise reviewing numbers against rules and regs but also there's the conversations around what you want to achieve with the business, your life, business plans, expansion, support with providing information for mortgages etc etc and being a person the client can bounce ideas off of and such like.
Perhaps if you're not getting that sort of service it's time to move on (once you've had a chat with the accountant on value ad). Maybe think about what it is you want as a client from your accountant - if it really is tick and bash, company secreterial (submit accounts, manage companies house) - then a suitable fee of £100 or so a month is probably fair. If you're after the full mini FD partnership approach then a higher fee is fair but you've got to get the service. Not all practices are the same, some will specialise in the "business consultancy" angle.
_Mja_ said:
There does appear to be some rogue accountants out there! Perhaps been in the game a long time and (arrogant is the wrong word but inset correct) not wanting to change with the times; they see the software as a replacement to their bookkeepers and cash in the bank for them.
Interesting thread for me as I would assume good service today is replacing the time saved using software gives practicing accountants the chance to be the mini FDs each small business needs to help them grow or just get by. Yes there is expertise reviewing numbers against rules and regs but also there's the conversations around what you want to achieve with the business, your life, business plans, expansion, support with providing information for mortgages etc etc and being a person the client can bounce ideas off of and such like.
Perhaps if you're not getting that sort of service it's time to move on (once you've had a chat with the accountant on value ad). Maybe think about what it is you want as a client from your accountant - if it really is tick and bash, company secreterial (submit accounts, manage companies house) - then a suitable fee of £100 or so a month is probably fair. If you're after the full mini FD partnership approach then a higher fee is fair but you've got to get the service. Not all practices are the same, some will specialise in the "business consultancy" angle.
Yes, interesting thread and you have made some good points. Interesting thread for me as I would assume good service today is replacing the time saved using software gives practicing accountants the chance to be the mini FDs each small business needs to help them grow or just get by. Yes there is expertise reviewing numbers against rules and regs but also there's the conversations around what you want to achieve with the business, your life, business plans, expansion, support with providing information for mortgages etc etc and being a person the client can bounce ideas off of and such like.
Perhaps if you're not getting that sort of service it's time to move on (once you've had a chat with the accountant on value ad). Maybe think about what it is you want as a client from your accountant - if it really is tick and bash, company secreterial (submit accounts, manage companies house) - then a suitable fee of £100 or so a month is probably fair. If you're after the full mini FD partnership approach then a higher fee is fair but you've got to get the service. Not all practices are the same, some will specialise in the "business consultancy" angle.
Being forced to change accountants was the best thing that happened to me. There is comfort in the familiar, of course, but also a tendency to put up with bad service.
@Jenny - maybe time to find a new accountant? Although as _Mja_ says, maybe give your current ones a chance to justify themselves. Sounds like you want to move on anyway though.
It sounds like you are not getting value at the moment.
The business insurance seems to be clouding the issue a little (at least for some other posters!). If you reckon it should be about £750, this equates to £62.50 per month, meaning you are paying the thick end of £160 for your accountancy fees.
As others have said, you can probably get what you need for around £100 per month - maybe even less if you are confident.
It could be that you are on the accountants "gold standard" package which might be giving you lots of options that you aren't using and don't need.
I would suggest it's worth checking out the detail of what you are actually paying for and comparing that against what the rest of the market offers. If you stick with a FreeAgent accountant, your FA account is just switched to the new accountant.
There is lots of advice about accountants on the contractoruk forum and there is also a list of partner accountants on the FreeAgent site.
As it happens, I have an accountant that appears to be similar to yours and doesn't seem to do much for the money but, if you can believe it, is a significant improvement over the one I had before!
My next assignment will be inside IR35 (starting in a couple of weeks) and I am rather looking forward to not having to deal with an accountant, for a while at least!
The business insurance seems to be clouding the issue a little (at least for some other posters!). If you reckon it should be about £750, this equates to £62.50 per month, meaning you are paying the thick end of £160 for your accountancy fees.
As others have said, you can probably get what you need for around £100 per month - maybe even less if you are confident.
It could be that you are on the accountants "gold standard" package which might be giving you lots of options that you aren't using and don't need.
I would suggest it's worth checking out the detail of what you are actually paying for and comparing that against what the rest of the market offers. If you stick with a FreeAgent accountant, your FA account is just switched to the new accountant.
There is lots of advice about accountants on the contractoruk forum and there is also a list of partner accountants on the FreeAgent site.
As it happens, I have an accountant that appears to be similar to yours and doesn't seem to do much for the money but, if you can believe it, is a significant improvement over the one I had before!
My next assignment will be inside IR35 (starting in a couple of weeks) and I am rather looking forward to not having to deal with an accountant, for a while at least!
Those who complain about lack of advice from an accountant should ask themselves, do they ever think to actually ask the accountant for specific advice in the first place?
If they do and they get a poor or no response, then they are perfectly justified in feeling aggrieved.
If they don't actually ask for specific advice then that may be the reason why they aren't getting any. Accountants do have to walk a bit of a tightrope between being very generous with global advice to clients and not over burdening them with data that may not be relevant to them or they may or may not properly understand.
I remember one firm I worked for where we sent out a load of useful tax planning information to a range of clients to whom it might have been useful. The response we got was mainly negative. Clients more or less told us that if they wanted advice they would ask for it and they also complained that they might be paying for advice they hadn't requested.
At the end of the day, the best approach is to get to know the clients as people and gauge what the best approach is for each one. Some want a bit of cossetting - and some actually resent it.
If they do and they get a poor or no response, then they are perfectly justified in feeling aggrieved.
If they don't actually ask for specific advice then that may be the reason why they aren't getting any. Accountants do have to walk a bit of a tightrope between being very generous with global advice to clients and not over burdening them with data that may not be relevant to them or they may or may not properly understand.
I remember one firm I worked for where we sent out a load of useful tax planning information to a range of clients to whom it might have been useful. The response we got was mainly negative. Clients more or less told us that if they wanted advice they would ask for it and they also complained that they might be paying for advice they hadn't requested.
At the end of the day, the best approach is to get to know the clients as people and gauge what the best approach is for each one. Some want a bit of cossetting - and some actually resent it.
I generally spend all of February and towards end of March arranging meetings and doing planning for my clients.
I use Xero (freeagent is okay - I have one client on that and wouldn't trust it in a million years for getting corp tax to the penny) but gives them a guide and like Xero, with up to date records, we can plan, make dividend payments or pension contributions before year end, ensure structures are correct, tell them what salaries we're paying, making use of spare cash or get borrowing in for capital investment etc....just simple stuff that means a lot.
Like Eric says, some just aren't interested.
For a small company with few transactions, for us to run their Xero, submit CS01, quarterly VAT, monthly RTi for say 2 directors, all statotory records (minutes, J60s etc) ...basically everything and on tap calls, it's about £1200+vat
Quite a few contractors don't bother with software as a decent quarerly spreadsheet is more than sufficient, so you're saving a coulpe of hundred there.
That 45 mins to 2 hours I put aside for a great deal of clients this time of year is where just being a tiny bit proactive makes a huge difference.
I love a chat with clients, sometimes the best advice isn't always centred around tax either, obviously that helps, the more you understand what they're trying to do, the more they tell you (so relationship essential) the more you can help and do that planning.
I use Xero (freeagent is okay - I have one client on that and wouldn't trust it in a million years for getting corp tax to the penny) but gives them a guide and like Xero, with up to date records, we can plan, make dividend payments or pension contributions before year end, ensure structures are correct, tell them what salaries we're paying, making use of spare cash or get borrowing in for capital investment etc....just simple stuff that means a lot.
Like Eric says, some just aren't interested.
For a small company with few transactions, for us to run their Xero, submit CS01, quarterly VAT, monthly RTi for say 2 directors, all statotory records (minutes, J60s etc) ...basically everything and on tap calls, it's about £1200+vat
Quite a few contractors don't bother with software as a decent quarerly spreadsheet is more than sufficient, so you're saving a coulpe of hundred there.
That 45 mins to 2 hours I put aside for a great deal of clients this time of year is where just being a tiny bit proactive makes a huge difference.
I love a chat with clients, sometimes the best advice isn't always centred around tax either, obviously that helps, the more you understand what they're trying to do, the more they tell you (so relationship essential) the more you can help and do that planning.
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