Why are your fee’s so high?

Why are your fee’s so high?

This often asked question is enough to make the most mild-mannered accountant throw their calculator to the ground in a hissy-fit.

So let’s see if I can’t explain at least a little about how/why we charge what we do at Grow Accounting and maybe also help you keep your costs down.

Accounting is a competitive business and like many professional services we face very high overheads. There is not a large profit margin in accounting work, most firms set their rates on industry standard calculations that do not vary greatly. When you are quoted for work this is something to consider; a cheaper price generally means less is included in the scope of work and unfortunately a completed set of financials do not look that different to most people regardless of the care & work that has gone into them. So tip one ask your accountant an open ended question like “what do you do with my figures”. If it’s not as exhaustive as the list below then they probably are just regurgitating your bookkeepers’ figures and not working in your best interests.

Grow Accountings main office is located on the Sunshine Coast and we are not operating in a high priced region. We are regularly benchmarking our fees with average fees for other Sunshine Coast practice as well as in other cities and regions. For our clients this can equate up to around half the price of Melbourne, Sydney and Perth Firms. In comparison to Brisbane and the Gold Coast we are around 20% less. “Why”? You ask. Predominantly it’s wages – we don’t set them but every practice are slaves to market price. In our case it actually gives us a pricing advantage and you as a customer shouldn’t believe big city firms do a better job than we do. Stay local is my second money saving tip.

The question of why fees are so high is usually closely followed by the business clients stating “but my bookkeeper did everything, so why do I still get stung”?

Bookkeepers are truth tellers. They record things that have been paid and received by your business. It would make it easy if that’s all the ATO required but there are hundreds of thousands of pages of tax law that then comes into play. Add to that a further 10,000 pages every year the ATO adds by way of rulings and you can see how things start to get complicated.

After we receive the file that has been completed by the bookkeeper our job as Tax Specialists begins. As your advisor on a typical business tax return we conduct the following:
– check all transactions to ensure the GST has been recorded correctly. Common mistakes are things like not claiming GST on merchant fees (GST doesn’t apply to normal bank fees). Claiming GST on full amount of insurance (there is stamp duty that needs to be accounted for)
– checking all transactions to ensure you haven’t claimed anything you aren’t allowed to claim according to ATO. E.g. alcohol of any sort, raffle tickets (they don’t qualify as a donation)
– reviewing all transactions to ensure you haven’t forgotten about anything. For example, those home office expenses
– reviewing all transactions to make sure that they have been claimed in best way i.e. there are different methods to claim car and we look at best method every year. If your business has stock we can also look at different ways to value it to best represent your tax status
– we then check every item on your balance sheet to ensure it is correct. Do the bank accounts balance, has any equipment been sold or scrapped during the year?
– if any equipment has been purchased during the year we need to look at how it was paid for. Cash, bank loans, hire purchase and leases are all treated completely differently for ATO purposes and depending on method will require us to create loan schedules to claim interest etc.
– once that is all done the financials are finished and we can move onto the tax return!
– completion of tax returns includes adjusting the above financials for anything that we have by accounting standards (set by a completely different organisation than the ATO) claimed that can’t be claimed in a tax return. E.g. super that was due in the June Qtr. that isn’t paid till the next year.
– we then complete the individual returns so we can get a picture of what the tax situation is like.
– we then work out the best way to record the business profit depending on your structure and the level of income the individuals have to ensure you pay the minimum level of tax.
– this completed work then goes to a senior accountant to review the job and ensure everything is correct.

This covers off briefly on the accountants side of things but there are also many checks/balances and work also done by the admin staff as well.

So I am going to put it out there and say that often there is a perception of ‘accountants vs bookkeepers’ as my daughter recently discovered. She has just completed a certificate in bookkeeping and called me one night very early on in her course to ask why the bookkeepers hated accountants so much!  I think a lot of it comes down to an understanding of what accountants do (see above) and the experience accountants have had with really bad bookkeepers. The truth is there are great accountants and there are great bookkeepers and both have a job to do.

My third tip is please ensure your bookkeeper is a registered agent with the tax practitioners’ board (as this body only registers bookkeepers that have completed a course & have ongoing training).  Also if you are ever in the market for a bookkeeper I strongly you ask for a recommendation from your accountant as they will know who prepares quality work. A good relationship between bookkeeper and accountant WILL save you money.

I have worked with some absolutely great bookkeepers & they have the advantage of being on the ground and being able to help you in real time and are worth their weight in gold. However come tax time bookkeepers cannot be expected to do the job of accountants but a great bookkeeper will certainly make our job easier. On the flip side a bad bookkeeper will cost you hundreds or thousands of dollars in extra accounting fees when we need to make adjustments to numerous transactions.

I hope this has given you an insight into how Grow Accounting works & what mysterious cogs turn between you dropping off your file & seeing the end result.