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Has anyone tried charging setup fees to new clients?

Has anyone tried charging setup fees to new...

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When I take on a new client there is a significant amount of uncharged work required.  Things like preparation of the engagement letter, a meeting to run through the letter and sign it, setting up client details on PM systems, agent authorisations, setting up Sage/Quickbooks etc, chasing money laundering documents, downloading Companies House info, chasing previous accountants for working papers.  The list goes on.

It strikes me that, if all of this is explained to a client, charging a small one off setup fee is perfectly reasonable.  I wouldn't envisage significant sums.  Maybe £25 per sole trader and £50 for a limited company.  Or perhaps 5-10% of the first year fee.

Has anyone actually tried this, and if so was there resistance from clients?  Did it cost you a prospective new client?

To date. being a new practicioner (coming up to one year) I've been so pleased to actually take on a new client that I haven't thought about a setup fee as I don't want to do anything to scare them off.  However the more I think about how much work is involved after agreeing terms I think it's reasonable to charge for this.

I'd be interested to hear anyone' experiences.

Thanks in advance


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21st Sep 2012 11:26

i charge an advance of £100

i charge an advance of £100 for LTD - this is an advance on annual fee not a set up a fee, no complaints

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By Locutus
21st Sep 2012 11:34

Not tried it
The only thing in your list I would charge for separately would be the Sage / Quickbooks set up - but I'd certainly want more than £25 - £50 for that.

The other costs you list are your own administrative costs that you have to absorb in your overall pricing structure. The client is coming to you for a solution - I'm not sure they want to be presented with a bill for all sorts of "set up costs" they didn't ask for and have no real interest in.

Would be interested if others charge a set up fee, although £25 - £50 wouldn't really come anywhere close to the true costs of taking on a new client.

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to runningmate
21st Sep 2012 11:59


I don't charge a set up fee, though I agree that for say a limited company the time can be considerable.

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21st Sep 2012 12:21

We Used to

We used to charge a fee which was deducted from the first invoice, as we thought this would deter time wasters, but it didnt and we dont do it anymore.

What we do now is charge a consultation fee after the first hour, that seems better at deterring time wasters.

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21st Sep 2012 13:22

charge up front - but no fees

we charge up front for all new clients. 


ltd co = 50% of agreed annual fee

private client = 30% of agreed annual fee

overseas client = 100% of agreed annual fee

we don't charge "admin" or "set-up" fees as i agree with the poster above, it's an irritant to a new client, and such overheads should be absorbed into your pricing structure ... although if i thought clients would pay it with a smile, that would be different LOL

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21st Sep 2012 15:20

My thinking on this is that in so many other industries setup fees are charged as standard that why shouldn't accountants, who do genuinely perform a great deal of setup work, do likewise?

I'm not in the business of trying to screw every last penny out of my clients but the more I think about this the more I think it's reasonable.  I guess it's something to thrown out there when agreeing fees bearing in mind it could be 'waived'.

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21st Sep 2012 16:25

Why would you do that?

How many other industries stand a very real chance of keeping a client for 5 - 10 years once the sales job has been done? Surely that is ample time to recover a few hours work of lost time at the beginning? I appreciate that few of us are as rich as our clients sometimes assume but charging an admin fee will sound like penny pinching to the client who will see your bill as pretty generous already.

Of course if you don't fancy the look of the prospect then ask for whatever you want!


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By Old Greying Accountant
21st Sep 2012 16:50

If I am forming ...

... a new limited company, my fee is such it covers all the admin needed for me and to do the CT; VAT; PAYE compliance/registration etc. for them. Makes me laugh, it takes best part of a day to set a new limited up from scratch (including the client meeting) and you end up with a two inch file before you have even looked at a number for them! Then you cry when they tell you three months later it didn't work out and they have got a job instead!

I have considered a non-refundable deposit for sole traders as it irks that you shell out for online AML checks and never see them again?

I had thought may be £25 to be reduced from the first years fees, but decided the admin aggro and possible badwill it could generate was not worth it.

I tend to wait for the books to come in before doing the admin if they are ones I have reservations about, and always get a minimum 50% of quoted fee upfront on all new clients in any case. That way, you see the books before you sign them up, and if it is a PoS you can change your mind about acting.

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21st Sep 2012 18:01

As far back as I can remember

I've charged setup fees and maybe my clients are unusual but - as sombody says - because it's standard practice in other industries, I've never had a problem with it.  There is now more & more to do to get a client on board and I do go overboard to get as much info & background on them asap so that we can hit the ground running.

So I judge it per client but a new small self employed client might be around £80 - £120 and Ltd Company's £150 - £450.  New businesses tend to be easy to set up but then, if the client knows very little about how things work, there's a lot of knowledge to tranfer.

I also charge a setup for annual accounting systems, especially with a Ltd Company with history where we need to setup data screens & post last year's TB and so the first year's accounts will tend to be say 20% higher than year 2's charge.  Again this is judged per client, no shopping list.




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26th Sep 2012 11:41

We charge set-up fees

Just done an LLP  time to fill HMRC forms 401 and 402 including letter out and then forms plus 64-8 to CATT also letters of engagement . 2 Hours.

Trying to collect by charging higher fees during life of client does not work because it makes you look expensive. 

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26th Sep 2012 11:41

I am only a small , part time practice but charge £50 set fees for limited companies........

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26th Sep 2012 12:27

......claw back?

I just charge the time & claw back over the first couple of years, build it into the fee. But agree with some of above if they are a bit wobbly I don't spend time issuing stuff untill work comes in, apart from on line 64-8, but you can usually get a feel for a client at first meeting etc.

At the end of the day it's only time they have used, and I haven't actually spent any money. I do find sometimes thou' even if they don't stay in business they will recommed you to others who will.


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26th Sep 2012 12:48

Set up Charge fee


For over 12 years we have built in our set up fees to our monthly charges this avoids an early confrontation with a client who could be with you for many years and does not charge his clients for opening an account

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By Jimess
26th Sep 2012 12:49

Set up fees

I don't charge set up fees as such, but if I am asked to set up a company I charge £200 to include company set up, CT reg, VAT reg, writing up stat books, initial bookkeeping training etc.

However, I do explain to all clients at the initial meeting that I will charge an admin fee for the work done if we carry out all the AML checks, prep engagement letters, 64-8 etc and then the client decides not to join us - usually £25- £50 depending on how much work we have done. It does not happen very often and when they do you tend to have a spate of them and it gets you wondering what is happening.  I think it is just the way people shop around nowadays.  Like an earlier post, unless it is a new business reg that needs to be at HMRC within a very short period of time I tend to hold back with the paperwork until I know the client is definitely coming on board.  Unless the prospective client says a definite "yes I want to be your client" at the meeting,  I generally ring them a week after the initial meeting to firm up on the situation.

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26th Sep 2012 12:49

Mortgage lenders seem to get away with it...

Mortgage lenders and other financial services seem to get away with charging admin or set-up fees, probably with less justification. And don't let's think about Ryanair.

So, if there is work involved and the client is committed to coming to you, why not try it, so long as it's a reasonable amount for both sides.

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26th Sep 2012 13:31

set up fees

we dont charge set up fees.

our charging rates include an element for overheads and that is how we recover the overheads with initial processing, 64-8, clearance etc.

However we detail our fees quote on a spreadsheet, task, hours, charge rates and clients like that. included in that is up front fees for up front services. Those services are setting up company, payroll, vat reg, accounting software or our accounting spreadsheets.

Where we have continuing services such as payroll or vat returns we have a standing order.

If i think a client may not pay we charge ask for an advance, but that is true  for a small number of cases.

So there are many ways to skin a cat. We prefer not to charge for the initial admin and i feel that is correct as we are part of the icaew bas scheme


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26th Sep 2012 13:36

On the other hand

I don't see a setup fee as something to get away with or to try and see if the client complains.

The way I see it is that if I didn't do all the AML, Eng letters, fact-finding, database/stat books/agent setup and, most importantly, "getting to know" the client in the first month or two of the relationship I'd have to do it over the first year. 

So it could well be the case that my £200 setup fee + £1,000 for the year ahead may well have been a first year's fee of £1,200 (or more) had I not bothered with a setup fee and just sauntered into the relationship.

Getting as much of the upfront stuff out the way asap makes sense for me & the client, especially where this is the client's first attempt at business and an upfront fee tends to encourage this on both sides.

Ultimately, as has been so often said on this site, if all the client is concerned about is getting the cheapest deal then I'm happy for them to go elsewhere.

In maybe 10 years of charging setup fees I honestly have never had even a raised eyebrow, yes they may take a deep breath when I say that the tax return and other general work in the year will be £400 but they have no prob with £100 setup.

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26th Sep 2012 15:41

Paul thats interesting

I have not market tested it, but intuitively I would have thought a set-up fee of any size would be offputting to most people.

Supposing there are annual recurring fees of , say, £5K - would you still propose a setup fee?

I have tended to go down the route of SO instead, then if the client folds after three months at least you have had some money (raise an invoice for work done to date at that point).

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26th Sep 2012 16:05


Hi zarathustra - I can remember the first few times I did it being a bit nervous as it was a change but what pushed it was just how much we now have to do these days just to get a client onboard.

Also, I can remember a client saying to me that he'd paid a lot of fees in year one to his first accountant but had not been charged when he left so, as it was his choice to move, it was just a cost of that decision.

Thinking about it though nearly all of my new clients over the past 10 years have been via recommendation and so I can imagine if you attract the "colder" prospects (via say adverts, website, social media etc) who have shopped around, what might be seen as an extra charge may put some people off?  I don't know, at my stage in life I'd rather have no client than a cold one!

The principal applies no matter how large the annual fee and, logically, the larger client, with more complex affairs may well attract a much larger setup fee, I've hit £750 on a couple of occasions over the years (and, had I kept timesheets, would probably have lost money on both!).

My setup fee is payable in 30 days and, at the same time, I render a bill for the rest of the anticipated work from then to following 31 March and, like you, clients have the option to pay this by monthly standing order up to 31 January.   No catch up bills ever.

By the way, on that subject, you can now take online direct debits via "GoCardless", they link with online accounting like Kashflow & FreeAgent but you can also organise manual DDRs on their website.  I'll be offering this to all clients with my annual bills in April, so much easier than monitoring and waiting for clients to organise things their end.



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27th Sep 2012 09:08

I used to

In the early years of my business I used to charge a first year setup fee of around £50.


Whilst it seems reasonable to do this, I found that it wasn't that popular so stopped charging this - I just absorb the additional cost in the first year.


As an average client stays with an accountant for 10+ years, the lifetime value of the new client is much more important than an additional charge in the first year.

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27th Sep 2012 09:34

I charge a set-up fee

I am a sole practitioner working from home on my own.  I charge clients the cost of the admin in setting them up (around £150) but I explain when I take them on that there will be a one-off cost of around that amount.  When I bill for the first tax return I set out what is the set-up cost and what is the ongoing cost.  I have never had a client complain about the charge.

Maybe it is easier for me as clients can see that I run a small practice and cannot afford to absorb such costs.  They benefit from lower ongoing costs and normally their first fee, even with the extra charge, is around half what they had been paying before.

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By rota2
27th Sep 2012 10:36

I charge set up fees

Getting to know the client and how we are going to proceed can be time consuming, but very worthwhile in the long run, so I usually charge something. It can be as much as 50% of the first year fee. I explain to clients and no problems so far.

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27th Sep 2012 11:52

Another reason

I read a good book years ago on setting up a practice and it was recommended that you took the opportunity to bill the client a modest sum as early as possible in the relationship. That way, you knew for certain you had a client and the client knew for certain they had an accountant.

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to lionofludesch
30th Sep 2012 16:35

Early commitment

andy.partridge wrote:

I read a good book years ago on setting up a practice and it was recommended that you took the opportunity to bill the client a modest sum as early as possible in the relationship. That way, you knew for certain you had a client and the client knew for certain they had an accountant.


Sounds extremely sensible....what was the book?

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to lionofludesch
30th Sep 2012 20:41

Jay Foonberg??

andy.partridge wrote:

I read a good book years ago on setting up a practice and it was recommended that you took the opportunity to bill the client a modest sum as early as possible in the relationship. That way, you knew for certain you had a client and the client knew for certain they had an accountant.


Jay Foonberg?


It;s for lawyers, my solcitor recommended it to me & there are loads of tips that apply equally to accountants, and equally to UK (vs US).  Well worth 25 quid of anyone's money.  


On the subject itself, I couldn't agree more ... we bill most clients 50% of the agreed fee upfront, and it reassures me that there is no misunderstanding on the clients side that s/he knows that they now have a new accountant ...

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to Portia Nina Levin
01st Oct 2012 10:13

@ Lancsboy

That's the one

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30th Sep 2012 19:43


If you are undifferentiated compliance/commodity provided then probably not. But, if you are a specialist with lots of value (and preferably in high demand) then you'll want to filter with an initial fee.

I attended an online seminar where a law firm share their experience. They used to have free meetings with clients for matrimonial disputes. Some became clients and some didn't but lots of value was given in the first meeting.

The firm designed what I call a "starter product/service" and priced this at £750 and gave a 100% guarantee. The service includes a meeting (unlimited time) with answers to all questions. A full initial assessment and a DVD of three leading phycologists about how to keep kids out of the dispute. 

Clients love it.

Bob Harper

The Crunchers Network

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