Cost of Accountant for company

[dima]

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Hi, Just wondering what the rough ballpark price others would expect to pay for the tax return only (No BAS etc) for a small pty ltd company would be? Assuming all documentation/statements etc are provided and no unforseen issues arise?

If you would like to understand the background to this question, here goes, enjoy…

We visited our first accountant and she seemed like she would be really good. She was honest, positive and gave us a rough estimate of $200-$400 for our first tax return. Our turnover was around $15,000 last year so not much in it, though we did think this was on the cheaper side, and wouldn’t have been upset if it had gone over that number. They do business development too, so we imagined our fees/their services would grow along with our company and into the next year as we register for GST etc.

The problem is she left the local branch of the company (and she was essentially a one person show), so a new guy took over basically as soon as we’d agreed to join and had sent our paperwork back etc. He seemed friendly enough, but I feel like I’ve done more work than him since then…

They assigned us to a month within which they would prepare our tax return, and said they would contact us in the month prior to organise submitting our paperwork. They did not, so I allowed a week leeway and then contacted them (“no biggie”). Then he said he’ll have it done by the end of September (3 weeks) at the latest, I allowed a week leeway and then contacted him by email (“no biggie”). No response. Then a few days later I called (“no biggie”), he said he would call me mid-next week at the latest (and referenced my email, so had received it). mid-week came and went so I contacted him last Friday (“getting bigger, I need this to submit my personal tax return next week, as mentioned earlier several times”), which was 3 weeks after his initial “at the latest”, and so he completed it that day (“nice”).

Now I am going to have to double check his numbers because he has given us almost $1000 more profit (i.e. hundreds extra tax) than we had worked out, but assuming they are correct (I doubt it) at the end of this we were given a bill for $880+GST. We had one 15 minute meeting to meet the new guy and did not have any other interactions apart from politely chasing him up (which is not billable). We also have the knowledge that he first looked at our paperwork and completed our return all on the same day. It seems high considering we were told to expect less than half of that but is this reasonable?

Either way we plan to pay the invoice without querying, it as much as it hurts our micro operation, however we are tossing up whether to find a new accountant (if that price seems unreasonable) or to raise these as issues and try to stay with these guys (if the price is reasonable), then account for the fact that once we start our BAS statements, wrap our personal returns into this, etc, our accounting fees will be higher again… Even though if I ran my business that way, I would never make any money, or have any clients.

[JacquiPryor]

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Hi There,

Moving forwards, check out local Flying Solo members Taxopia -http://http://www.taxopia.com.au/ different options for different budgets and all of which I would suggest reasonable.

I would be querying the invoice myself if I had been quoted up to or around $400 by the previous operator, pointing out that you’ve had to chase them up etc but that’s just me

Previously my structure was straightforward Pty Ltd company, paying standard type wages to employees so a single return for the company was needed… we took care of bookkeeping (or, engaged bookkeepers to do so) during the year. The cost for my accountant with that structure to do the return each year was around $500 – $600.

More recently we’ve restructured so that there’s a trust involved, profit distributions and still the trading company so it will be higher moving forwards.

I imagine if you have the single and straightforward entity to complete the initial $400 is reasonable and perhaps a little on the lower side, however, $800 is probably still reasonable but perhaps the higher side (based purely on my experience of the $500 – $600 mark).

Good luck!

[bb1]

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I would be questioning the bill, if you had an agreement on a lower price a 100 to 200% price hike is just ridiculous.

I pay $500 for my business and personal returns, if they are just crossing the T’s and dotting the I’s, anything more is a rip off. Just MHO

[dima]

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Thanks Jacqui,

That info is very helpful, I had thought along the same prices you mentioned would be the fair/going rates… As a services business too, I hate to query prices because I know how much time/cost can go into something which you are not aware of as the client. On the flip side, that is why we are so upfront about costs, and if there is an issue which could push them higher, proactive in letting the client know.

& Thanks Bert,

We’re starting to think maybe we should query it either way too. We had the original estimate verbally (though I recorded it in my notes) from the previous accountant, so even though it was the same company, we put it down to ourselves not double checking prices with the new guy. However, they are the ones who swapped their accountants not us, so you’re right, they should still be following their existing agreements.

Appreciate all the help, we have learned a lot today.

[Paul – FS Concierge]

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Little did I know it but when I was referred to my first business Accountant by my Bookkeeper, the Accountant turned out to be a partner so I was charged partner rates… $4k later…

[USER=68601]@Taxopia[/USER] has great rates because his firm has streamlined the offering.

Good luck.

[dima]

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Thanks. I guess you probably learned never to assume after that. I lesson I’ve now learned.

[Paul – FS Concierge]

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dima, post: 240345, member: 70936 wrote:

Thanks. I guess you probably learned never to assume after that. I lesson I’ve now learned.
Yes knowing the right questions to ask and where the different service providers fit into the market were my failings.

[Taxopia]

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I will chime in here for our Taxopia perspective on this (and thank you Jacqui and Paul for mentioning us).

1. $200 to $400 for a professionally prepared company tax return is a very reasonable (cheap) price. The problem is that (as Bert will no doubt point out), accountants come in all shapes and sizes and “professionally prepared” can vary considerably from firm to firm. So comparisons can be difficult. At the lower end of the market you will find a lot of one man/women type operators that are “buying” work at a potentially unviable price and then having trouble delivering much of a solution (ie a quality correct tax return in a timely manner). This may be why the previous person moved on.

2. The new firm seems to have bumped the fees without any consultation and not delivered a better experience. That is obviously a tough pill to swallow as a client. Double fees at same slow service = unhappy clients.

3. Accountants have a legal and ethical responsibility to apply a minimum standard of advice. So, when we prepare a company tax return (with or without financial statements) for a micro business there are many issues we need to consider and document – often too technical to get into with the average client. This is to protect the client and to protect the firm. There are often serious consequences for all parties if an accounting or tax document is incorrect – even for small and micro business. So, you can’t afford to compromise the standard just because the business is small.

The mission at Taxopia is to bring professional low cost accounting and tax solutions to small business – that’s it. We manage this via highly efficient operation now possible with the use of various systems and processes that most accountants don’t use. We have a truly excellent team of accountants (I am pleased to say the best I have worked with in 20 years) and they have the technical skills, the soft skills and the personal motivation to deliver superior service 99% of the time. It is proving very popular so by all means consider us for your business requirements and feel free to reach out.

Regards
Alex

[Taxopia]

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I might add that Taxopia also has the only interactive DIY online company tax return preparation solution in the country (and its very affordable at $180 Exc). It even has a PSI tool. So if you think you are capable of just entering numbers and don’t see the value in having an accountant prepare it then perhaps try this out http://www.taxopia.com.au/interactive-online-company-tax-return/

[bb1]

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Taxopia, post: 240398, member: 68601 wrote:

At the lower end of the market you will find a lot of one man/women type operators that are “buying” work at a potentially unviable price and then having trouble delivering much of a solution (ie a quality correct tax return in a timely manner). This may be why the previous person moved on.

That’s a bit of a rough statement to make about one person bands, some do it just because they prefer to work alone, and cant be bothered with office politics. A bit like some of us gardeners, that doesn’t mean we deliver substandard quality work.

In fact I would say my accountant delivers above quality work, better than the previous partnership I used, not just because he seems (IMO) to be a quality worker, but has to actually deliver because he cant hide behind the façade of a big firm. IMHO

[Taxopia]

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bb1, post: 240425, member: 53375 wrote:

That’s a bit of a rough statement to make about one person bands, some do it just because they prefer to work alone, and cant be bothered with office politics. A bit like some of us gardeners, that doesn’t mean we deliver substandard quality work.

In fact I would say my accountant delivers above quality work, better than the previous partnership I used, not just because he seems (IMO) to be a quality worker, but has to actually deliver because he cant hide behind the façade of a big firm. IMHO

Bert its pleasing to hear this works well for you and I have no doubt there are many highly professional principal only firms. Unfortunately there are also many that take on more than they can service by themselves and this leads problems. This is not isolated to accounting by any means.

[bb1]

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Taxopia, post: 240428, member: 68601 wrote:

Bert its pleasing to hear this works well for you and I have no doubt there are many highly professional principal only firms. Unfortunately there are also many that take on more than they can service by themselves and this leads problems. This is not isolated to accounting by any means.

Yep and there are some horror stories that come out of larger firms of clients being shuffled between accountants, forgotten in the system, differing advise being provided.

[dima]

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Taxopia, post: 240398, member: 68601 wrote:

3. Accountants have a legal and ethical responsibility to apply a minimum standard of advice.

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.

[Taxopia]

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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.

[Paul – FS Concierge]

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Taxopia, post: 240458, member: 68601 wrote:

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.
Love the reply Alex. Thanks for contributing!

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