Whether you are a sole trader or limited company owner, your accounting fees are generally based on the time it takes for your accountant to complete all the work involved.
Accounting fees are usually charged at a fixed hourly rate. Your accountants may quote you a fixed price – based on how long they expect the work to take. But they may also add fees to your final bill for extra hours on e.g. meetings, specific queries or consultations. Accountant Online offers a fixed fee quote, which offers great transparency and removes the threat of big unexpected bills.
Here are a few things that will cut down an accountants work, which could save you money on accounting fees:
Keep good records to save on accounting fees
Maintaining good records is the most basic finance function and will definitely help to save on accounting fees. Keeping a book listing sales and expenses or using an online software application is so important. If you were ever facing a Revenue audit, you need to be able to find all the information they seek.
There are a range of vitally important reasons to keep good records:
- Compliance: You have a legal obligation to maintain books or records for tax purposes. Whether you do the books yourself or outsource, a summary of profits/losses and your tax returns must be correct. You could face penalties if you underdeclare Tax or VAT. You also need to keep records going back at least 6 years.
- Managing your business effectively: You need to be on top of your finances. At the very least, you need to know what income your sole trader business or company is generating and what is going out in costs or expenses. Are you spending more than you are bringing in? In terms of cash flow, do you have enough to pay your bills? Are there peaks and troughs over the year that you need to plan for, particularly if you are in a seasonal business?
- Future planning: If you maintain good records and monitor your sales and spending, then you are in a stronger position to look ahead. This can help you to spot winning and losing areas of business, and to plan ahead for growth. For example, if you are a sole trader and your profits are growing rapidly, should you consider forming a company instead to save on tax?
- Business funding opportunities: Banks and other funders may need to see your financial records and accounts before considering applications for loans or grants.
DIY may save money on accounting fees
The more work you do yourself, the less work your accountant has to do. Consider this example that compares two taxi drivers. One puts all their receipts and papers into a shoe box and hands it to their accountant to sort. The other uses an app on their smartphone to record sales and expenses and then exports it to their accountant. Which one will have the bigger bill?
On a practical level, your first task will be to figure out the best way for your company or business to keep records. Check out our bookkeeping tips for more on this. You can also ask your accountant for their help or support, as follows:
- Can they give you bookkeeping spreadsheets?
• Do they recommend any particular software which would suit your business?
• Do they give general bookkeeping advice?
If you don’t have the time, skill or staff to maintain the financial records properly, it may be best to use a bookkeeper or to outsource this function by using packages for small businesses. We offer special packages for startups and small businesses, by acting as a virtual accountant for companies who need an accountant but can’t afford one full-time.
Ask your accountant about the best ways to maintain your company or business records. This will save them time when handling your accounts, and cuts down on fees.
Software savings on accounting fees
There is a lot of really good software on the market at the moment, both web – based (cloud), that can be accessed anywhere at any time and also software that you install on your desktop. In addition to saving time, using software has other advantages:
- It can give you and staff members access to financial records on the go from your laptop of mobile phone
- You don’t have to worry about backing up data
- Financial information may be easier both to access and interpret
One word of warning, though… if not used correctly, it can actually increase the amount of time your accountant spends on your business. Taking the following steps can help:
- Review all the software on offer first to find the best fit for your company or business. For Irish SME’s, good ones include Xero, Kashflow, and AccountsIQ . Check out our blog on online accounting software for SMEs for details:
- Trial a few of them to make sure they suit your business.
- Then take time at your end to make sure you know how to use it correctly.
- Look up online training advice/videos/support for help,
- Use your social networks to find other business people you know that are using it and that can offer help.
Give us a call at Accountant Online and we can advise you on the software best suited to your business
Get Records To Your Accountant Early
Getting your records into your accountant as early as possible in the year means that your accounts can be prepared early in turn. This gives you time to plan ahead for meeting your tax bill, and can save you fees.
For example, if you are a sole trader, your tax will be due at the end of October – or mid-November usually, if filing and paying online. If you are only getting your records to your accountant in September or October, then they don’t have much time to notify you about your tax bill.
If the bill is significantly greater than you anticipated, this could be hard for your business to handle. Getting your books in early gives you much more time to plan for paying the tax due.
And remember, September and October are the busiest time of year for accountants. Handing your books in late could mean overtime for staff and therefore higher fees for you!
If you are a company, getting your books in early offers the same advantages in terms of planning ahead to meet your tax bill.