Sole-trader Income Tax

Hippo1234

Hey Guys,

Any help on the below would be great.

My dad is a sole trader - subcontracts about 3-4 people. His accountant is charging him €1k ex vat for for his year end income tax assessment.

Now, I'm an accountant who works in the advisory side of stuff so I am limited in terms of tax ability. Knowing hourly rates though, I find this very expensive - I reckon about 4 hours of work?

I compute and file his VAT and RCT for the year.

If I am right (which I probably am not!!), that leaves the accountant to prepare:
- Case V Income for his investment property : this is a relatively simple rental schedule?
- Case I Income : As I do his VAT for the year, income and expenditure is already calculated. What other procedures are completed - agrees income to bank statements?
- Calculates liability through a spreadsheet and files assessment.

Firstly, am I right to think these rates are very high?
Secondly, would I be able to competently prepare the y/e assessment? Am I missing any further procedures the accountant may perform?
Finally, is there a template or tool that I could get that would plug out PRSI, USC (higher for a ST I believe), Tax after putting in the appropriate input

Any advice from someone with experience would be great!

Cheers all!

Gard1

1k seems a little excessive if the donkey work is completed.

You can download the ROS Offline application and plug the figures into this as it will calculate the tax for you.

Only issue that may arise is if he needs formatted accounts for the banks. They may require an independent accountant to have reviewed same.

Also you cannot discount other advice etc given by the accountant.

Most accountants offices are dragged down with overheads like rent secretaries etc etc so have to charge a higher rate

I keep my practice simple me and my pc and phone so I can afford to charge a lower rate.

CIARAN_BOYLE

Just checking but does he give the accountant your income and expenditure schedules?

The accountant may be doing them from scratch.

Also is a full set of accounts prepared or just an I&E account, if a full set is prepared the accountant may be doing extra work not required.

viztopia

4 hours won't get a lot of work done to be honest. Also as you are an accountant yourself although in consultancy, do you know what your charge out rate is?

2moreMinutes

If you think it's too expensive, why not just do it yourself for him?

dbran

Hi

There is not enough information to decide one way or the other whether it is expensive. But I would think that if you believe a set of accounts and a tax return that includes RCT and VAT can be done in an afternoon then I think you are underestimating the extent of the work involved.

I am always agreeable to keeping costs down as low as possible but I know at the end of the day I wont be thanked for a rush job and inaccurate figures. A person who under quotes on a job lays a trap for both themselves and the client when they find they are unable to prepare the work to the proper standard. They will eventually realise they are just providing a source of employment to their staff or a source of rent to their landlord etc. with little reward for themselves and all the risks that running a business gives them.

Just my 2 cents.

dbran

Hippo1234

Hi All,

Thanks for the reply - greatly appreciated.

Gard1 - Didn't realise that about ROS off-line, cheers!

Ciaran - No accounts are prepared, he just completes the year end self assessment.

Viztopia - Umm, I do know my charge out rate, and it probably runs on par with this accountant, although I would never work with plumbers or other small ST's. Also, more often then not this will be discounted downwards depending on a number of factors. Being honest I am a little more skeptical as I know a little more then my father - same rate applied in celtic tiger years, I know the partner does not do this work through brief discussion with him, my father is a trade person who hardly has massive T/O and lives off a good take-home, not a great one. 1,000e would be a nice lump sum saving (as it would be for most of us!!!)

2more - Yeah, I probably will do it myself after thinking through it - just looking for a few opinions first. Also, I would just be conscious of missing a particular compliance feature or applying the wrong relief e.g. 100% interest relief instead of 75% and generally don't like doing too much work for my family ( I get enough grief from relatives about how high there VAT is and whether they can leave paying until a few bob comes in)However, I would be confident, that in general, it would be accurate and complete.

Dbran - Thanks for the advice, I may well be naive about the workload. Would I be right in saying that if no accounts are required the procedures are as follows:

- Prepare SchV rentals, also register him for the PTSB, fairly sure this was overlooked in the past
- Agree income to bank statements to ensure some level of completeness
- Scd D Case I

Thank you all for replies!!

dbran

Hi

Well if there are no accounts prepared then it is probably a bit expensive to be honest. With proper software it does not take that much extra time to prepare a simple sole trader accounts and at least then you wont have the possibility of a clanger of a mistake being made with accruals, creditors prepayments etc., as well as being able to show the client where the business is going. Unless it is a very simple income and expenditure account, I would always do a set of accounts. But that is just me.

If you have 3-4 subcontractors working for you plus materials and your profit that would make your turnover between €50-€100k, small but not trivial.

I would think the best course of action is to approach the accountant and tell him you arent happy with the fee and see if it can be reduced by you doing an extra bit of the work. You should also shop around and see if you can get other quotes.

If the existing accountant is doing a good job, delivering the service and knows your father's business there is a lot to be said for that also.

Good luck with it.

Best regards

dbran

CIARAN_BOYLE

When you do vat returns do you do any analysis of expenses. Account details have to be fed into the form 11. If you don't do any analysis and provide expenditure list in pdf or paper there is probably some junior retyping your vat schedules and analysing them.

1,000 sounds a lot if accounts arent prepared.