CAN YOU FIGURE IT OUT YOURSELF?
Your marketplace is getting so competitive you are having to examine your overhead costs and seek alternative quotes, or even consider whether to dispense with certain service providers such as window cleaners, maintenance agreements -- and possibly your accountant.
Would it be possible to do without your accountant? The answer is a qualified yes -- if you are prepared to:
* Purchase a basic computer for around 500 [pounds sterling] and learn to navigate your way around the Windows 95/98 operating system.
* Sort out a suitable accounting package, then fork out between 300 [pounds sterling] and 1,500 [pounds sterling] -- or you could write up your records using a couple of Simplex or similar books.
* Decide on a suitable self assessment tax package costing from 80 [pounds sterling] to 1,000 [pounds sterling] -- or you could fill in the Inland Revenue self assessment form manually to save cash.
* Spend some time acquainting yourself with all the tax and VAT allowances you may claim -- you won't want to save your accountant's fee and then lose even more by overpaying your tax or VAT.
* Give some thought to how you will handle a VAT inspector's visit.
You could have an inspector's visit in your first 18 months of trading and at varying times thereafter, depending on how the first VAT inspector rated your records.
We are now into the third year of self assessment and statistics show that you have a one in 10 chance of being chosen for an inspection.
It may, therefore, be useful to obtain a copy of the Taxman Charter and a set of his briefing notes if you do not want to be out of your depth when the taxman calls.
If all that sounds like hell on earth, you may be better off paying for an accountant.
However, you would still like to save money -- and that could be possible.
Let's look at your options other than doing it yourself. Your three broad choices are to appoint an unqualified accountant or bookkeeper; go for a qualified accountant with one of the smaller accounting bodies; or appoint a chartered/certified accountant.
Before making your choice, ask your prospective accountant the following questions:
* Does your fee include advice on demand, or do I have to pay for this separately?
* Do you have a 24 hour helpline and, if so, is it free?
* Will you brief me on a tax inspection and are you there to hold my hand?
* Will you provide me with all the necessary information prior to a VAT inspection?
* Will you return my completed financial accounts within an agreed timescale?
* Will you agree on an alt inclusive fee -- no extras for VAT or tax visit attendance or additional fees for extra work?
Are you on to a winner?
If the answer to the first five questions is yes, you may be on to a winner and need to settle a fee.
It is impossible to tell you what you should pay for your accountant's fees.
Local conditions and courier costs may vary, but I will attempt to give you a ball park figure for each of the three types of accountant previously mentioned.
However, first let me set out one or two ground rules. If you give your accountant a carrier bag full of paperwork and say "sort that out", you are likely to be charged a high fee. Alternatively, if you have a fully balanced cashbook and all your invoices and receipts are cross referenced to the cashbook, you will make the accountant's life very much easier.
If the bank statements have been reconciled each month, the fee should be less.
On a weekly turnover up to 10,000 [pounds sterling] the charges in the table below are likely to apply.
On a weekly turnover ranging from 10,001 [pounds sterling] to 20,000 [pounds sterling] your fees are likely to be 200% of the figures in the table but remember, there will be regional variations on these fees.
Whatever you are paying now you should ask for a reduction. If lower fees are not forthcoming you could threaten to take your business elsewhere.
What have you got to lose?
The Labour government has promised to cut back on red tape, thereby reducing costs faced by SMEs (small medium enterprises).
As a part of this drive it is proposed that limited companies the turnover of which is less than 4m [pounds sterling] will not need to have a costly full audit.
The threshold figure is currently 350,000 [pounds sterling], but sole traders and partnerships do not need to complete full audits.
What that means is that the use of a chartered/certified accountant will not be a legal requirement for such companies, giving the prospect of an immediate saving.
Jim Chesters operates a national courier accountancy service and is a qualified associate of the Institute of Company Accountants.
He can be contacted on 01782 799500 or, out of normal working hours, on 01782 625115.
Type of accountant Quarterly VAT returns Unqualified accountant 60 [pounds sterling] Qualified accountant 115 [pounds sterling] Chartered/certified 150 [pounds sterling] Type of accountant Annual accounts and self assessment Unqualified accountant 350 [pounds sterling] Qualified accountant 650 [pounds sterling] Chartered/certified 1,000 [pounds sterling]