Startup - how much to pay an accountant?

rayyan

Hello,

We're new to business so we have no idea how much to pay for accounting services. The services we need are:
- Payroll
- VAT
- Annual return reports

The firm we're with is charging us based on our expected annual revenue figures. We do our own book keeping and they generate our reports. That is, we invoice customers, log those invoices in an accounting system, and they make sure our statements make sense and things are logged correctly at the end of the year.

Based on our revenues so far, they charge us between EUR 400-500 monthly (that's not including VAT services which are charged separately).

Is this more or less reasonable given annual revenues of EUR 400-500K? Should this be even based on revenues and not number of transactions?

We're happy to pay if it's a fair price but based on our assessment it seems like we're paying too much.

Thank you!

vintagecosmos

Hi there,

that does seem on the high side. But it all depends on the number of transactions etc. Ill drop you a PM for more info.

rayyan

vintagecosmos wrote: »

Hi there,

that does seem on the high side. But it all depends on the number of transactions etc. Ill drop you a PM for more info.

Thank you! To clarify, the # of transactions is around 1000 per month.

Jim2007

rayyan wrote: »

The firm we're with is charging us based on our expected annual revenue figures.

It might be a novel idea, but perhaps they could charge based on the work done...

marizpan

So they are charging €4,800 to €6,000 a year for bookkeeping and possibly some mgt reports?

Seems like value to me, especially for 1,000 transactions a month.
Whilst you might be inputting invoices, I assume they are dealing with purchases invoices and bank recs etc.

When did accountancy become a race to the bottom in terms of fees?

Are you happy with your accountant?
Do you trust their knowledge and advice?
Do you feel they are providing value and removing stress?

Jim2007

marizpan wrote: »

When did accountancy become a race to the bottom in terms of fees?

It is only just starting to ramp up. Outsourcing to India is well underway.

"The Indian accounting outsourcing industry is one of the most dynamic, and competitive in the world, and also one of the most regulated. It is estimated that organizations save about 30-50% of their costs when outsourcing, depending on whether the processes are located locally or abroad."
Pankaj Dave, Senior Partner, B.M. Chatrath & Co, India

marizpan

Jim2007 wrote: »

It is only just starting to ramp up. Outsourcing to India is well underway.

Having worked in a MN that did just this, last year they made the decision to reverse this.
The reason being cultural issues, in other words the staff are very passive to westerners.
In practice this results in them not taking initiative or ownership of their roles.
This leads to increased errors and need for review.
There was high turnover of staff as is typical and constant spoon feeding required.
Outsourcing is fine for very low level and simplistic tasks and nothing more.

Depressing reading Jim not the less

Immy

If you do your own bookkeeping, depending on how big the payroll is I think that sounds a bit expensive if they charge extra for VAT.

rayyan

Jim2007 wrote: »

It might be a novel idea, but perhaps they could charge based on the work done...

hehe agreed. The problem is, how do you define "work done"? they don't do anything all year long until it is time for the end of year reports. I do send them an email once a month or every two months. We only have 1-5 employees on payroll, so payroll isn't complex. So "work done" is end of year reporting, which isn't yet done - yet we pay monthly.

rayyan

marizpan wrote: »

So they are charging €4,800 to €6,000 a year for bookkeeping and possibly some mgt reports?

Seems like value to me, especially for 1,000 transactions a month.
Whilst you might be inputting invoices, I assume they are dealing with purchases invoices and bank recs etc.

They don't deal with purchase invoices, no. Nothing related to banks either. Most of this work is semi-automated due to the nature of our business (e-commerce).

marizpan wrote: »

When did accountancy become a race to the bottom in terms of fees?
Are you happy with your accountant?
Do you trust their knowledge and advice?
Do you feel they are providing value and removing stress?

They're nice, but they don't go the extra mile to help us navigate ambiguity. They're knowledgeable, yes. Are they removing stress? only if I pay them extra for certain tasks like audits when required.

rayyan

Immy wrote: »

If you do your own bookkeeping, depending on how big the payroll is I think that sounds a bit expensive if they charge extra for VAT.

Yeah the figure does not include VAT...

vintagecosmos

I'd say go out and get 3 quotes and see what the market is offering.

Immy

rayyan wrote: »

Yeah the figure does not include VAT...

As already suggested, go out and get a few quotes.

v638sg7k1a92bx

Jim2007 wrote: »

It might be a novel idea, but perhaps they could charge based on the work done...

That's exactly what is wrong with the profession. Accountants should be charging based on outputs not inputs.

vintagecosmos

Almost a year on, id say he got sorted

v638sg7k1a92bx

vintagecosmos wrote: »

Almost a year on, id say he got sorted

He could be looking again. Alot of accountants will be upping their fees after this. Fees are so low that it's not sustainable at the current rate.

Stratvs

Parker Tiny Ladyfinger wrote: »

He could be looking again. Alot of accountants will be upping their fees after this. Fees are so low that it's not sustainable at the current rate.

Some might just decide they've had enough and bring forward the retirement to Lanzarote

Stratvs

Stratvs wrote: »

Some might just decide they've had enough and bring forward the retirement to Lanzarote

I think you could be onto something. I spoke to three accountants last week who are seriously considering disengaging from payroll services after the TWSS is over. I think there are a lot of accountants who are jaded with practice, COVID and the pressure to reduce fees might push a lot of accountants into retirement.

duffysfarm

Good observation below - one month in and already on version 9 of the revenue guidelines and do clients give a f**k?

brenbrady wrote: »

I think you could be onto something. I spoke to three accountants last week who are seriously considering disengaging from payroll services after the TWSS is over. I think there are a lot of accountants who are jaded with practice, COVID and the pressure to reduce fees might push a lot of accountants into retirement.

duffysfarm

duffysfarm wrote: »

Good observation below - one month in and already on version 9 of the revenue guidelines and do clients give a f**k?

This crisis could be the catalyst for many accountants to reassess their business models.

I don't think the status quo for the generalist accountant is sustainable.
There has been such an increase in client engagement over the past 10 years in terms of client email, support, instant or daily responses to queries, and with the entry of low cost providers into the market I can't see how accountants can continue being all things, to all people, all the time - for an annual accounts fee of €2k - €3k per year i.e. €50 per week.

I think you will start to see accountants providing more niche services and moving away from compliance, payroll and bookkeeping which are perceived as low value services.

kayleycun

This has been a year old already. I smell something fishy

Stratvs

kayleycun wrote: »

This has been a year old already. I smell something fishy

Pls elaborate ? Cod or mackeral ?