Paying your accountant can seem like a big outlay; it’s an overhead that bites into your profits meaning less money for you to take out of the business.
It could be that you are paying your accountant to simply make a list of your transactions, upload files to a Cloud Accountancy system or file returns that you could do yourself.
There are ways of reducing your accountancy fees by working with your accountant. The more you do the lower your fees could be.
With this in mind here’s some tips to help you work better with your accountant and, in doing so, get your accountancy bill down to a figure that you don’t mind paying.
Keeping the Books
The biggest thing that can be done to reduce accountancy fee is to do the bookkeeping yourself – also known as keeping the books.
This means recording all your business transactions into a spreadsheet or a Cloud Accountancy System.
A good Cloud Accountancy system should be easy for you to use. Shop around, ask for recommendations, sign up for a free trial before you commit to buying one so that you can ensure that its suitable for your needs.
If you use one of the new Challenger Bank Accounting Apps (see Coconut, Tide, Counting Up and Starling as good safe examples of new business bank accounting Apps that are easy to open online) then the technology actually does much of the work for you making bookkeeping a doddle.
Your accountant may suggest a system for you to use although do be aware if they are in partnership with a system’s provider as this may mean that they are recommending a system that suits their needs rather than yours.
Be aware of the deadlines that apply to you and let your accountant have your accounting records or paperwork within 2 to 3 months of your year end or even sooner!
Whilst deadlines are never nice the truth is that most are generous enough giving plenty of time to complete everything. Your accountant won’t be impressed if you turn up on Christmas Eve or in January expecting your tax return to be immediately sorted out.
Generally when an accountant receives your accounting records they will schedule in your work along with their other client commitments, usually on a first come first served basis.
Leaving things to the last minute may be natural, but it could mean that you pay more and certainly leaves no room for an unexpected delay or to deal with any issues arising.
It also means that such things as tax planning can’t be done properly. You can’t change the past; so it’s better to know the rules and regulations in advance and before the events happen or the transactions are made.
What information does your accountant need?
Make sure you know what your accountant needs, so that they do not have to keep asking for missing information.
If you’re unsure then ask your accountant to provide a list of what they need from you and when.
As a general guide, in addition to your bookkeeping records, your accountant would need, (where applicable):
- all bank statements for all business bank accounts
- business credit card statements
- interest on savings
- details of new business loans
- HP agreements
- vehicle purchases and part exchange information
- confirmation of pension contributions
- details of any stock at the year end
- a list of creditors and debtors at the year end
Understand the fees
It’s important to understand what is included in the fees that your accountant has quoted, and what isn’t. How much tax planning is done? What about a review of your salary and dividends? Are VAT returns and PAYE RTI filing included? Are there things, such as the Confirmation Statement, that you could do yourself to help reduce your fees?
If you’re keen to keep your fees low then ask your accountant for advice on what you could do to bring them down. The more that you get your accountant to do the higher your fees will be; so it’s worth working with your accountant to help reduce them.
Do bear in mind that your accountant will have Money Laundering obligations.
The definition of Money Laundering is very wide and includes a suspicion of tax evasion. All professional advisers have a legal duty to report suspected money laundering offences. In the context of accounts and tax, this could include:
- Not declaring all takings or sources of income
- Passing off personal expenses as business costs
- Failing to correct known VAT errors
- Having unusual, undocumented, unexplained and significant cash deposits and withdrawals
Your accountant may be obligated to report suspicious activity but they would commit an offence if they told you that a suspicious activity report had been made.
So next time you feel the need to confess to your accountant that the laptop you brought was for your family, that meal out wasn’t business related, you’ve not declared some takings or generally you’re not being above board with your accounting then do bear in mind that this activity could be reported.
Ad Hoc Advice
You may find that your accountancy fees include a small amount of ad hoc advice during the year. Or it may be that your accountant charges for additional advice on an hourly basis. Make sure that you understand if and how you will be charged for ad hoc queries keeping your requests for help to a minimum and only related to areas that will impact you rather than “what ifs” that may never occur. If you need advice on a complex area, make sure your accountant is aware of all the circumstances and consider asking for such advice in writing. It will reduce the risks of misunderstanding.