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dima, post: 240432, member: 70936 wrote:
Appreciate the advice and perspective from an accountant, Alex. For the record, I’m definitely not normally one to jump on the attack and have been almost too polite to him this whole time. I know some clients can’t see the bigger picture with fees, but I wouldn’t consider myself one of them. We absolutely agreed that the original price sounded cheap, though we had no real experience.

Regarding the ethical responsibility though… I’m meeting with him tomorrow to discuss, but at the end of all of this he has not included expenses which I’d detailed for him (ASIC fees, we’re very small/new so only a handful of expenses and receipts), and when I politely queried this he could only say ‘I think you’ll find they’re in there’ without checking, he has also ‘assumed’ (without actually asking us, though we did tell him we had fulltime jobs that year) that our personal income is less than the $37k threshold and distributed our remaining profit to us meaning, unless I am missing something, we’ll pay 32.5% personal tax instead of 28.5% company tax. I did not want to increase my personal tax bill, especially to pay even more tax. There is another mistake worth $1500 in our liabilities too, and he has the company owing each director different amounts even though we have split every input 50-50.

…Maybe I am missing something on some of these, but not all of them, so we will be finding a new accountant. Whether we pay this then go to someone else, or whether we get him to submit this one first is still up in the air. We want to work with an accountant, however would have saved time, money and tax by doing it ourselves using taxopia, time being the big one. Thanks to this forum I have an understanding that the fee he charged, though perhaps on the higher end, would not have been unreasonable had we been expecting it which is good to know going forward.

Hi Dima. They sound like perfectly reasonable concerns that you have raised.

Some other comments for you. Yes the accountant should have checked your personal tax position before making and determination about distributing dividends. Its very easy for an accountant to do this – simply checking your personal ATO “prefill” reports on the tax agent portal would show that you had $X salary and other income for the year (ATO prefill reports are about 95% accurate now). So personal tax can almost be determined without even contacting you. Also, if those company dividends were fully franked (which they should have been) then you will only pay the difference between 30% and 32.5% (so 2.5%) rather than 32.5% on the entire amount. The 28.5% franking issue will effectively kick in next year because 2016 is the first year of that rate for SBE’s and the company tax franking credits will not accrue until post 1 July 2016.

Based on your information it does all sound odd. You don’t pay out current year profits as dividends unless you have sufficient franking credits from previous years so I only hope that (a) you haven’t received an unfranked dividend or (b) you haven’t had a deemed dividend under the related party loan Div7A provisions. Those are both taxed harshly.

Leaving things out is obviously not good (and pretty hard to if you are using some form of accounting system). If the directors are spouses we would normally recommend rolling the loan into one account (it makes Div7A related party loan compliance easier). If you are unrelated to each other then yes they should be separate and an accurate reflection of each others loan monies. Again I suspect you are not using an accounting platform because this would have been depicted clearly when you entered the data.

Really at any price point you have the right to assume the job will be done correctly and professionally (and its the obligation of the adviser to make sure they can deliver at their quoted price). Bert is right in that there can also be problems with larger more expensive firms so its not always the case that bigger is better.

But I will leave you with this…If your instinct says “I’m not happy with the service” for genuine reasons (mistakes etc) then look elsewhere. There are quite a few accountants on this forum so perhaps read their material and get a sense of fit for you. Or seek a referral from a friend that has a business accountant and that you know is not dodgy. Every great business needs a great accountant.