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Accounting fees

Discussion in 'Accounting & Tax' started by Moist, 20th Jan, 2016.

  1. Moist

    Moist Well-Known Member

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    Hi Everyone,

    I just wanted to touch on the topic of accounting fees. I understand they vary largely for different size portfolios and different structuring, but I wondered if some could give an estimate of what they pay their accountant to do their tax and manage their accounts. I'm particularly interested in forum members with significant portfolios....

    Also, how much could you, or do you do yourself to save on accounting fees?

    I feel I'm paying a premium in accounting fees. I've paid almost over $7,000 this financial year, which includes two interim financial statements throughout the year, "advice on business opportunities", and a couple of BAS statements.....

    Thanks.
     
  2. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Can you ask them for a cost sheet (or whatever it's called) to justify their charges?

    Cheers

    Jamie
     
  3. Redwood

    Redwood Well-Known Member

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    Moist - everyone is different and rightly so.

    Financial statements for what sort of structure? I assume the advice component would be minor however the invoices will detail each service performed i.e Individual tax returns (more for properties held), Company Tax Return, BAS.....

    Not necessary a cost sheet in first instance, I assume these invoices were all separate so you should be able to nail it down very easily. The advice was probably based on a hourly rate, so check the hourly rate and then go for each task - i.e "interim financials?" why....

    There are good accountants and bad accountants and generally they can get away with whatever they want, however, shop around, get a fresh perspective - have them review your situation and see what sort of value they can add.


    Good luck.

    Cheers Ivan
     
  4. Moist

    Moist Well-Known Member

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    I think I recall his hourly rate is $330/hr. How much does it mean though? They can put however many hours they want within reason.

    I had to do interims as I started trading in a new entity recently and needed to give this to a lender for financing purposes.

    Are there any business owners out there that do alot of their books themselves? What can you do yourself without your accountant having to fix everything in the end?
     
  5. wogitalia

    wogitalia Well-Known Member

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    That doesn't sound all that excessive if you've got a significant portfolio...

    It all depends on your structure but these are some ball park of what I've seen charged for different things...

    BAS - $250-$1000 per BAS (depends greatly on information provided and the size) and that's per entity.

    FS & ITR - $1,250 would be a very cheap service for a bare bones entity give or take, if you've got a company and a trust, that's probably going to be about $3k alone.

    Individual Returns - These can vary widely but generally you'd expect about $300 for the most basic return, probably about $250 extra per rental property and probably in the $250-500 range for each capital gain event.

    Interim Accounts - These can vary widely but I'd generally expect to pay somewhere in the 1/3 to 1/2 the full FS fee for these, you should only be doing them if they lead to genuine advice or are needed for finance/similar otherwise you're just spending money to keep some accountants busy and not benefiting from it.

    Discussion and advice - Some firms wont charge for this (unless you abuse it) and some bill for every minute. Remember that if you speak to the partner his charge out rate is generally going to be $400+ an hour. Managers are going to be in the $350 an hour range and senior accountants are going to be $300+. If you're getting $330 an hour for the partner that's a very good rate.

    Getting the time sheet from the accountant will show you if your fee is excessive, basically if it has time written up they're billing you more than the work took them to do and if there are write offs they've actually given you a discount on the actual time. It's always good to see if you're concerned.

    As for keeping the fee down, these would be my tips, and if you start doing them and haven't been you should point it out when discussing fees because these all reduce the cost to the accounting firm...

    1. Use genuine bookkeeping software (MYOB, Xero or Quickbooks the most common) and keep the records, use it properly which includes doing the bank reconciliations monthly (at least), entering all invoices and keeping the records. If you give an accountant a pile of bank statements and a shoebox you're paying him to first do your bookkeeping (bookkeepers cost you say $40 an hour and you'll be paying accountant rates instead) before they can even attempt to do the accounting work. The amount of clients I've seen who could save themselves thousands by doing their own bookkeeping or even paying a bookkeeper is absurd. The BAS for example is something that anyone who finished primary school should be able to complete on their own for all but the most complicated entities.

    2. Get a checklist of the required information off the accountant and respond to any queries immediately. Any time an accountant has pickup/putdown time on a job costs you, if they have all the information before they start the job will take a good 30% less time to complete, think about reading a book, if you read it day to day it's easy, if you read the first 4 chapters and then put it down for 2 months you're probably going to have to start again. Accountants deal with the same when people take 2 months to respond to queries.

    3. Get your accountants advice before making major decisions, this is just common sense but the amount of times you see a client make a major decision and mess up what they think is a minor detail is scary, when it comes to year end accountants can spend hours having to fix that minor mistake or find ways to avoid it being a major mistake.

    4. Streamline your entities, lots of clients will have 6 entities when 1 or 2 will achieve the same thing, I've seen clients who pay the above mentioned $1250 per entity for 4 entities that are basically empty shells. Sometimes you can't avoid this but often you can.

    5. Further to the bookkeeping, get the advice on how to do things you don't know (often you can get it free online), if accountants don't have to fix your bookkeeping it helps. Demand an adjusting journal at year end and get it confirmed the file is correct. Your accountant should be doing this anyway but it never hurts to get proactive.
     
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  6. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    How long is a piece of string ?
    Hourly rates are like buying timber by the kilo. What is more important is how many hours and what can YOU do to reduce their hours. Reduce the hours and the cost has to fall. Some accountants are great at that and others not. But reducing hours to zero or a unrealistic number wont happen either.

    The amount you pay may well be based on how much of your accountants (and staff) time is consumed with tasks. Your mistakes, poor organisation etc could contribute and basic issues that require advice, guidance and changes will all add to cost. If you can reduce this time your fee should reduce. Do you work with the accountant that way ?

    I assume the interim financials etc are finance related. Perhaps better management information could be more reliable and avoid some of this cost ? Cloud based systems can help as the accountant can review remotely and adjust on the fly and retain your staff to prevent repeat. Also BAS's indicates that this is all business related and definitely not passive investment property related.
     
  7. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    If a lawyer's bill is excessive, or appears excessive, their costs can be assessed by a third party and reduced. Does the same thing happen in the accounting world?
     
  8. wogitalia

    wogitalia Well-Known Member

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    I assume it could but it's not anywhere near as common because we don't have the common situation of the other party having to pay the legal fees and thus needing them to be regulated more tightly. I know a lot of the areas of law have industry mandated standard charges that anything above needs to be clarified to be covered by "legal costs" at settlement.

    Normally a client will complain about a fee and if there isn't a sufficient response they will go elsewhere and probably get changed the same if they remain a "bad" client.

    The main thing if you want lower fees is to talk with the accountant and tell him "I am going to do this to make your life easier as my accountant and as such I expect the fee will be reduced proportionately", you don't want to do all the work and not communicate it and end up paying the same so the accountant can have a nice writeup on your work!
     
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  9. Bayview

    Bayview Well-Known Member

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    Mine are between $2k and $3k per year.
     
  10. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    No. However I have also seen the independent review to lead to an increased fee also !! It can be a bit of a joke using a independent lawyer to assess a colleague. But the Keddie example was bought down by such a review by the society. And court awarded costs that aren't actual costs.

    An accountant may be a member of a professional body and may need to demonstrate that the fee was objectively based and there was an agreed engagement. Not quite the same same as legal costs agreements which is far more stringent. Without engagement terms and scope in writing the client could be let off by the professional body if the member was found not to have complied. Otherwise pro bodies say its a civil issue.

    This only applies to PIA, CPA and CAs I believe.
     
  11. RumpledElf

    RumpledElf Well-Known Member

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    Ok, this makes me feel better.

    I pay $2000+GST a year and that includes advice and my company tax return. Additional $300+GST for my personal one, which is so heavily driven by the company tax return there's not a lot to add. I have more property this year so curious to see if my personal return goes up.