How much should you be paying your accountant
There are different types of accountants, some are unqualified working from a bedroom while others are based in expensive offices. Consequently prices vary, but so does the value.
Before thinking about the cost of accounting fees, think about the value which broadly comes in three elements.
First there is making sure you are legally compliant so you don’t suffer fines, penalties and hassle from the taxman. This can include extras like what we do at Scakmans of dealing with tax investigations.
Secondly, there are tax savings. Again, at Sackmans unless we are working with a start-up or low profit business, our fees are pretty much always covered by the tax savings we create and maintain from our tax planning advice.
The third element of value accountants bring is sound business advice. This can just be a new perspective or more specific advice which can be based on working with other clients. Once again, at Sackmans we have a free online advice library that all clients can use plus we have the On-Track service for business owners who want to work a bit closer with us.
Sound business advice can include ways to save time on red tape. A recent survey of small businesses by the FSB found that half spend between two and eight hours each month trying to understand and calculate their taxes and complete their returns.
The survey of 2,198 business owners found that a further 11 per cent spend between two and six days per month working on their taxes. I assume their accountant has not told them about systems like Xero which can save anything up to 60% of the time with features like recurring invoices and bank feeds.
The survey also found 77 per cent spend up to £5,000 on professional fees and software to meet their obligations. I would assume this includes bookkeeping service and/or business advice because the annual fee for personal 1-2-1 support from a qualified accountant during the year plus dealing with limited company year-end accounts/tax should really not exceed £2,000.