Preparation of the company accounts and corporation tax return
Payroll services - Real Time Information
Advice provided throughout the year
Year end accounts meeting (when I request it)
Self-Assessment Tax Return and submission to HM Revenue & Customs
When I first started with them, their prices were quite low. After a couple of years they bumped it up (primarily the first service) and I queried it and they said that they had under priced some of their services. So that was fair enough.
But even after this the increases seem to be continuously above inflation in the UK. I have just received my year end accounts and the accounting costs in there have gone up 25% this year! I don’t think that I have contacted them anymore often that I did the previous year.
Looking at the history logs, he has been in Manager for just over a day.
Can Manager do some of the services that I have asked my accountant to do like the Dividend Calculation? Can you use Manager for payroll real time information. How are people using Manager dealing with RTI in the UK? These two services seem to keep going up every year way above inflation. If they are simple enough to do in Manager, I am happy to do it myself.
However the main expense is the first one - preparation of company accounts and corporation tax return. This goes up every year without fail, usually by more than inflation.
I think that I have two questions.
Can I do more of this within Manager to reduce my accounting bill
Accountants are your costs increasing every year because of regulatory requirements or what would explain a 25% increase in my bill this year and above inflation in previous years - assuming that the same amount of work is being done this year as last year?
The answer on this depends on what you mean. Manager can prepare all the standard financial statements:
Profit and Loss Statement
Cash Flow Statement
Statement of Change in Equity
There is no need for an accountant to be involved in any of those unless you have specific questions on how to handle unusual situations. These statements would be accepted by any banker or government agency. What Manager cannot provide is an audit opinion, if your government requires one for your form of organization.
That’s a management decision, not an accounting determination.
Again, it depends on what services you mean. Manager’s payroll capabilities are rudimentary, but adequate for small organizations. If you are paying your accountant to provide these, you could probably obtain them from a specialist payroll processing company for considerably less.
No, regardless of what you mean by this.
No, except that tax worksheets for VAT are available for a very small number of countries. And a few report transformations support online portal submissions.
I should have clarified that I realised that Manager does not deal with Self Assessment (as that is my personal tax) and obviously it does not deal with Year end meetings and advice provided throughout the year.
The last three I am happy to pay the accountant as it is work he is doing that Manager can’t do obviously.
It’s really the first three services that I am looking to reduce. The UK government require payroll services to be real time information. I believe that I could find a service to provide this as my accountant does seem to charge a lot for doing very little work. Manager can do the payroll, but it cannot update HMRC in real time. I am not sure if there is a service similar to Tax Optimiser that does the VAT returns.
The dividends calculations I am referring to here is calculating how much I can take out of the business and still leave the business in profit. But I think that this won’t be an issue in future because the business is growing so I will just take a set amount each year in the future when I have sufficient funds to not worry about leaving the business short.
Preparation of the company accounts - this is the big bill. I can see that he does stuff in Manager in the reports area, however this is converted onto their system on their portal. Manager can create the B/S, P&L, Statement of equity, but I can see that this does not match what is sent to the government as my corporation tax bill never matches the net profit in Manager. Presumably because of local tax exemptions etc.
Ask them for their time sheets. The amount of time they spent, both on site and in-house, is the main governor.
Then query it. Ask them how you can reduce their bills by providing the information they need instead of letting them create it. Perhaps some specific reports/filters can be provided for their use.
And ask other accountant companies. If it is worth it, then ask for quotes from a couple. Then you either move accountants, or invite your present ones to try some fat from their bills, on the basis that others can work with your information for less cost.
I don’t know if they convert it to their accounting program. He is using some of the reports in Manager already as I can see by the history what he is doing. What I meant was the reports that they sent to me and HMRC are clearly not from Manager. I will speak to him about that. I think what I need to do is identify what they are spending all their time on as my accounts should be quite simple.
@Yorkshireman I think you are right. I need to ask them what they are spending time on and how can I reduce the time required. I don’t think that my accounts are that complicated.
I will consider looking at getting quotes from other companies and see what they say. I am a bit reluctant to move because I don’t believe that my accountants are ripping me off. They are very professional and very thorough and far better than the previous 2 accountants that I used. The price is not really the issue as much as why my costs keep increasing.
The price is not really the issue as much as why my costs keep increasing
This is a bit contradictory.
A lot of accountants use their own accounting & reporting package for preparing reports and uploading data to the Fiscal authorities. The annual data is entered manually using a Trial Balance report (or perhaps the P & L and B/S) from Manager.
I agree with all you said. If it were me, I’d be starting with a friendly discussion - you are obviously on good terms, and their existing knowledge of your business, and the personal relationships, have a value.
Nevertheless, if they increase fees by 25% you are entitled to point out that their wage costs etc haven’t increased that much, and much as I would with any supplier who increased costs so much, I’d see what the competition do. I had a similar conversation with my accountant a couple of years back, when their work was considerably simplified by a change in our business. The result seems to have been that they pay more attention to what they charge, knowing that I will query any large increase. At the same time, I told them that I appreciate their work, and their need to make (some) profit, though not so much that they move to ultra expensive offices and all run expensive cars!
Another approach is to get a quote up front - at least an estimate - in that conversation about 'how can I help you reduce the time you use comes the detail of what they are needing to look at etc.
If they want the data in their own system, I understand that, but then, if they explain how they re-combine your chart of accounts into theirs you could produce a report which follows their sequence, or even a download of data which will transfer directly, or maybe via some CSV/spreadsheet conversion.
The point about another quote is to give you a basis for negotiating. It will sharpen their pencils if you mention that
“Your costs made me look round the market, and another well qualified accountant has quoted a figure well below your costs. Now, I don’t want to have to move, because we have a good relationship, but the difference is so great that I owe it to myself to move unless you can find a way to bring down your bills. Lets look into how we can work together to do that”
I’m sure you’ll succeed if you have a clear idea of what they do, and what they need.
It’s a pain doing these things, but it’s your money they’re spending, maybe inefficiently.
They do, but even so, there are ways of setting up reports, and maybe even downloads, which make the translation easier, and, in a best case, almost instant. Export, convert, upload. 10 minutes? not a day of re-keying and checking…
@Joe91 what I am saying here is that I don’t want the cheapest accountant. I want the work done properly and these people know what they are doing. I have had two accountants before them. The first one was adequate. No issues other than the fact that I got a different person dealing with my query each time. They just got too big. The second accountant was a bookkeeper not an accountant in my opinion.
I had the same problem with cabling companies. Finding a good one took a couple of years.
The key problem that I have is that I don’t know why the price keeps going up, but it may be due to circumstances outside their control such as regulatory changes etc.
I agree with what you say in this post and your longer post. I think the key problem is that I need to find ask what is increasing the costs and look to see if I can reduce this. It is possible that my business has just grown more complicated and they need to spend more hours on it. I don’t know.
I will wait until I get their bill and then query that for the next year.
You actually are right that some acountants and also auditors get too comfortable with the compan, hence the advice with for example auditors to limit contracts to 3 years after which a competitive bid is required. Somehow Accountants are kept on and on and I think this partially stems from 1) familiarity (the "Devil you know) and 2) succesful submissins, etc. However, this is a “reliability trap” and I honestly would advise anyone to change accountants and auditors at least every three years and use competitive bidding for such. When a very small firm just chnage them ever so aften.
@dalacor, this is somewhat interesting topic as I have previously worked in accounting firm and I am using Manager today
What would help, if you want to go all the way which is maybe the only way, is if you can post the year end general ledger entries made by your accountant and your BS and P&L. If you do, please skip the amounts and also skip names or private information from description if applies etc. Just seeing what those journal entries are and how many they are, how complex/fancy the financial statements are, would give much clearer picture of what they are doing and if you can and are willing to take Manager further to as you say reduce the accounting bill. If you think you can do the year end general ledger entries yourself, all documented for the auditor, and wield Excel to do the financial accounts and make them look good or the same as your auditors, you could propably save alot. But there are lots of ifs.
So no doubt there is a learning curve, but in the beginning this doesn’t have to be perfect and you could just tell your accountant you want to do the financial statements inhouse and have them guide you and do some additional review/audit while you are getting the hang of it. Also note if accountants use less expensive assistants why don’t you also to do the heavy lifting in setting up everything in Excel. Someone said Excel is the most ubiquitous program in the world so should not be hard to hire someone for this, as your accountant or accountants assistant is probably spending more than expected billable hours only fiddling in Excel to make all look good, fitting everything on pages correctly, editing basic texts and correcting some glitches etc
If your company is growing as you say, you can also do 1 month or 3,6,9 month interim financial statements as a byproduct. Note that all general ledger records made for financial account purposes are kept in Excel and only thrown into Manager in year end after approval of the accountant. That makes this much easier, not bothering Manager with all theses records, as they are usually calculated in Excel and are just kept there and linked into the financial statements for automation. Going forward you could fully automate and use API (once API is final/documented) to refresh trial balances data in Excel
Also one thing comes to mind which can help reducing the accounting bill, if Manager can right of the bat provide correct statement of cashflows (have not tested) as a base to do the final statement of cashflow where journal entries are included.
I will speak to my accountant first. I know them well enough to know that there will be a valid reason for the cost. I think the simplest way to resolve the problem is simply to ask them what is taking up their time and what I can do to reduce their bill. I suspect that because I am more familiar with Manager, I could do some of the work a lot quicker - they may not be using batch export for example.
I don’t want to have to try do my accounts myself. I hire them, because they are the experts in dealing with HMRC requirements.
I suggest you officially object the bill to trigger renegotiation. Mere enquiry may not yield much results as you may not deal with the right person. With your satisfaction of their work, you might end up helping them to defend their bill if not handled properly.
I think that is a bit extreme. It’s not really about beating down the price. My objection comes in more with regard to knowing why the price has jumped again as there is probably a legitimate reason. I will query it, but as I am very happy with their work, I intend to just query what is taking up the time thus raising the bill.
Just received the bill today and was pleasantly surprised to see that the invoice was the same as last year less services that I did not use in the last 12 months. So I am actually spending less this year.
No idea why my end of year accounts statements was showing the amount as higher? Unless they put the wrong figure in?
Anyway, the bill has stayed the same as last year, so I won’t be raising the issue!