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Some rough guidance required please;

We complete the bookkeeping for a client with a turnover in the region of £500,000.

  • The client supplies us with envelopes weekly containing all of the invoices he receives that week and his sales, and these are posted into our software, currently quarterly for his VAT return completion.  
  • In the last few weeks he has asked us to complete management accounts on a regular basis, P&L expense analysis, breakdown of income for comparison, %'s etc.   
  • In the previous year, the book keeping software had roughly 3,000 entries for the year. 
  • We produce his payroll for a small number of employees, say 10, SATR and year end adjustments and accounts and obviously deal with the Revenue and all compliance work on his behalf.  

He is in the process of incorporating on our advice so will probably need a CT600 etc. going forward. 

In what region would you expect the fee level for this type of job to be?

The client has told us that he is willing to pay £200 a month for this service.

Would you think you would struggle to complete that amount of work under those budget constraints? 

Any advice would be appreciated. 

  

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13th Feb 2013 10:36

How long does it take you to do it.

Work out many hours it will take you to do it divide that by the £2400 to see how much per hour you are actually going to earn. If its at the sort of level you are happy with go with it. if not dont or try and negoiate.

Have you tried to educate him to do his own bookkeeping to free up your time to do year end stuff and on going advice. Is the paperwork in good order when it comes in or do you have a lot of sorting to do?

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By Jimess
13th Feb 2013 10:41

Have you worked out what it will cost you to do the work?

If £200 per month sufficiently covers your time at your charge out rates then the decision is yours.  Personally I think it is a bit low, particularly if the client is expecting the £200 per month to be a VAT inclusive figure. 

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13th Feb 2013 11:27

This client needs to get real

Based on the information provided:

Bookkeeping prepared monthly (including bank reconciliation) - £250 month (av of 250 transactions)

Vat returns prepared and submitted - £150 a quarter

Quarterly management accounts - £200 a quarter

Monthly payroll for 10 employees - £50 a month

Annual accounts and corporation tax - £800

Total annual fee £5,800

If the business is complex, I would charge more.

 

And, you should be charging a decent fee if converting from sole trader to limited company.

 

 

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By Old Greying Accountant
to Portia Nina Levin
13th Feb 2013 14:04

Agree with most ...

Kent accountant wrote:

Based on the information provided:

Bookkeeping prepared monthly (including bank reconciliation) - £250 month (av of 250 transactions)

Vat returns prepared and submitted - £150 a quarter

Quarterly management accounts - £200 a quarter

Monthly payroll for 10 employees - £50 a month

Annual accounts and corporation tax - £800

Total annual fee £5,800

If the business is complex, I would charge more.

 

And, you should be charging a decent fee if converting from sole trader to limited company.

... except the VAT, if you are doing the book-keeping, from a client perspective £600 for pressing a button 4 times a year a bit steep! I would include that in the book-keeping fee of £300pm, or split the difference £275pm, £75pq - just looks better to me.

Caveat though - where is this, if SE fine, if elsewhere could be less.

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to Moonbeam
13th Feb 2013 14:38

Agreed

Old Greying Accountant wrote:

Kent accountant wrote:

Based on the information provided:

Bookkeeping prepared monthly (including bank reconciliation) - £250 month (av of 250 transactions)

Vat returns prepared and submitted - £150 a quarter

Quarterly management accounts - £200 a quarter

Monthly payroll for 10 employees - £50 a month

Annual accounts and corporation tax - £800

Total annual fee £5,800

If the business is complex, I would charge more.

 

And, you should be charging a decent fee if converting from sole trader to limited company.

... except the VAT, if you are doing the book-keeping, from a client perspective £600 for pressing a button 4 times a year a bit steep! I would include that in the book-keeping fee of £300pm, or split the difference £275pm, £75pq - just looks better to me.

Caveat though - where is this, if SE fine, if elsewhere could be less.

 

I usually quote the fee (total) and then list the services provided. This then gives me more flexibility as, for example, by doing the bookkeeping and quarterly accounts I have reduced the fee for year end accounts production. Also avoids client picking and choosing the services he wants based on - I'd hate them to come back and say they just want stat accounts and corp tax for £800!

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13th Feb 2013 11:50

I echo the previous comments ...

I echo the previous comments, and would also like to add another comment.

I have always worked in industry so management accounts are my bread and butter - if the client is wanting this information then rather than this being the end of the job, this will be when the queries and extra work really starts.

From what you say, when you have produced the figures they will then have questions regarding prior year comparisons, why margins have increased/decreased etc. and you will have almost endless queries.

They then may want budgets / forecasts - and then variance analysis from actual to budget etc.

It sounds as though they want a part time finance manager for their business and based on what you describe this is currently approx one day per week ? Based on this, I would say a minimum of £10k pa. + vat

You will need to be clear with the client exactly what is included in the price and that any extra work will be chargeable. 

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13th Feb 2013 12:20

Fees

I have a client with a turnover in excess of £650,000 (sole Trader)

I provide a monthly visit on site to process all purchase invoices and cheques paid netted off, and sales figures.

I then work an afternoon a month in my office performing the bank rec, and journal entries.

Quarterly I provide management accounts showing percentages etc.

And provide a weekly payroll of some 12 employess, who in the main have static amounts paid to them, including the annual return.

I also process the clients self assessment, handle all HMRC issues, and produce a full set of accounts.

For this purpose I charge £360 per month (£4,320 pa).

 

For the time I spend, I actually sometimes feel that I may be overcharging, as its one of those jobs where once everything is set up, you are just running on cruise control each time you do the job.

If on occasion, the client has asked for a chashflow forecast, I have charged an additional fee for this.

 

He can't become incorporated as yet, but once he is able to do so, his fee will go up accordingly.

 

Hope this is of help.

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By Scotton
to Crestax
18th Feb 2013 09:04

Hi Caroline

Have you worked out your hourly rate? Just your monthly visit and the subsequent afternoon - say 11.5 hours - means your monthly fee equals £31.30/hour. That's without all the other work you do!! If you do a full hourly analysis you'll probably end up closer to £25/hour

Seems pretty low.

Not sure if it would be worth replicating this for all clients and for a year's turnover. You do the math and assume some downtime and holidays.

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13th Feb 2013 12:34

Based on 10 hours per month @ £30 per hour, i would say a minimum of £4500 per annum.

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By Viv100
13th Feb 2013 13:46

Underpriced?

I have a ltd co that I do bookkeeping for, with slightly higher transaction volumes, 2 payrolls and VAT returns and I charge £300+VAT.

That doesn't include regular management accounts (but they have access to the bookkeeping software, too), but it does include adhoc financial reports (probably a request every 6mths) 

(The £300/mth fee doesn't include year-end compliance, either)

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13th Feb 2013 15:32

£200 per month is too low+ queries on top!

I would not get out of bed for £200.

Many years ago, when working as an audit senior, I was at a client and the director in a round about way asked how much salary I would take to come and work for them. The salary he mentioned was about 50% of what I was earning at the time and I remember I said ' I would not get out of bed for that'. Soon put a stop to the conversation. Not that I was looking for a move in the first place.

 

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13th Feb 2013 16:07

it depends on your skill set

..... i wouldnt want to get tied up with too many bookkeeping jobs as theyare time cosuming and most people place little value on what you do. I could fill my weeks doing bookkeeping but people only expect to pay £10 per hour (North East) for the service. If your not actually part of the buisness it creates a lot of queries etc. I would back heal it to the client as they should maintain their own books and records, pay suppliers, chase debts ect, and i wouldnt want to over commit on this type of work over other more lucrative fees. have you thought about sub contracting this to a local bookkeeper or wages girl as i find this works best as they are happy with £10-£12 per hour and tend to do a decent job, leaving you to do the better value compliance and year end work.

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By RedFive
to David Heaton
13th Feb 2013 16:29

 

 

Wages girl!!!!

Oh, it's ok I just looked outside and it's 1965.

;-)

 

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to Wanderer
13th Feb 2013 16:43

Sorry Ken

DefenderKen wrote:

 

Wages girl!!!!

Oh, it's ok I just looked outside and it's 1965.

;-)

 

I didnt intend for that to sound sexist but the 2 girls I use are girls and do wages

hence the phrase "wages girls" 

My wife has told me that "birds" is no longer PC.

LOL

 

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to David Heaton
13th Feb 2013 16:34

I quite like jobs that include bookkeeping.  However my fixed fee is based on estimated hours at £25 - on the basis that when I can afford to employ someone to do it for me I'll pay them around £12 per hour.

One of the things I've found is that by doing the bookkeeping I a) have a lot of contact with the client and b) know everything that is going on in the business as it is happening (rather than potentially months after the event).  This means that it is easier, and more welcome, when I offer regular MI packs, busgets, forecasts, 'board' meetings to discuss the business performance, etc.  It also means the year end is a doddle as I know the TB I have is correct and reconciled and I know all of the fiddly disclosure points already.

On a more pragmatic point, as a relatively new practice (15 months old) and one that had zero clients and zero leads on day 1, I need the money!! 

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to D V Fields
13th Feb 2013 16:47

@chris do you do all that for £200 per month

ChrisScullard wrote:

I quite like jobs that include bookkeeping.  However my fixed fee is based on estimated hours at £25 - on the basis that when I can afford to employ someone to do it for me I'll pay them around £12 per hour.

One of the things I've found is that by doing the bookkeeping I a) have a lot of contact with the client and b) know everything that is going on in the business as it is happening (rather than potentially months after the event).  This means that it is easier, and more welcome, when I offer regular MI packs, busgets, forecasts, 'board' meetings to discuss the business performance, etc.  It also means the year end is a doddle as I know the TB I have is correct and reconciled and I know all of the fiddly disclosure points already.

On a more pragmatic point, as a relatively new practice (15 months old) and one that had zero clients and zero leads on day 1, I need the money!! 

Chris if you do regular MI packs, busgets, forecasts, 'board' meetings to discuss the business performance, etc along with all bookeeping and year end accounts for £200 per month will you do some sub contracting for me so I can retire to Tenerife. 

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to D V Fields
13th Feb 2013 16:51

In the same boat

I'm in exactly the same position.  I have taken bookkeeping jobs (providing they include the final accounts and tax), to get me in the door.  I work off a 25ph fee and then quote accounts and tax separately.  I have no intention of becoming a full time bookkeeper, and plan to take on someone else at a lower rate for the donkey work.  I am however a bit worried that I could get swamped with the stuff before I manage to offload anything.  Recently I signed up a 250k t/o client for 25p/h on the bookkeeping with a 1400 fee on top for tax and accounts.  I reckon it takes me a day and a half a month for the full package of management accounts, VAT, Payroll, and everything else.  The thing I have learned very quickly is not to underprice yourself, it just comes back to bite you...

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13th Feb 2013 16:55

I never said I did all that for £200 a month!!  Bookkeeping, basic accounts and a year end is often £200 a month where the bookkeeping is literally an hour or two a month.

Budgets, forecasts, etc are nice little earners - let's leave it at that.......

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13th Feb 2013 17:00

I provide my clients with a free......

Unicorn with their accounts bill as long as they pay for it.

LOL

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13th Feb 2013 21:35

How much do you value the client/work

As others have said, there have been many times in the past where I would have not even bothered to quote, if that's what he thought it was worth, however, if you really need the work then better to have something to occupy your time and get paid for it.

Similarly, there may a lot of potential with the client in the future and so any discount now would be an investment, but the client has to know that's the situation.  So you could say you'll do it for £250 pm just for a year then review the situation.  If you are any good and he gets the management info he needs then he's unlikely to want to try someone else.

My experience however is that these days there really is no need for you to do everything.  Just off the top of my head, you could use Xero or FreeAgent online accounting allowing the client or his staff to prepare and send their own invoices and also, if applicable enter their own expense claims.  You'd also have bank feeds to fill the online cashbook and, if there are a lot of paper bills to enter then you could look at ReceiptBank, where you dump all the paperwork with them and they enter it for a few pounds a month.

This better use of technology and apportionment of roles is how "all inclusive" accounting services are able to do the basics for what looks like silly money.  If they can do it, why can't we?

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13th Feb 2013 21:39

@Chris
Joking aside I also do more high stuff like management accounting, forecasts etc but IMO a business turning 500k needs to have some sort of in house system through xero or some such where you can log in check client data entry etc and shouldn't be carting the invoices down to you each month to process, I don't get how they know how much to pay suppliers etc if they don't have decent purchases ledger etc in house. Don't get it.

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15th Feb 2013 11:28

The Client's Not Interested In Your Costs

So stop thinking about charging for your time plus disbursements!

What's it worth to the client to have the work done? Ask him!

I don't mean how little could he pay some other sucker to do it for him.  I mean what difference will it make if someone does it for him?

If that's hard to fathom - but it should be fathomed, and you need to develop the skill to help him fathom it - then ask how much would it harm him if the work simply wasn't done?  Fines?  Loss of earnings while in jail?  Loss of reputation and credit rating when he comes out? etc. etc.  He has to tell you.  You can't tell him!

Then be ready to quote a small fraction of that value as your fee but, just before you do, do a quick mental check that it'll be hugely profitable for you too.

Don't distract his mind from the value; that's what he's interested in.  If the penny hasn't dropped for him, point out what a small investment your fee is in order to achieve the return that is the value he's explained to you; what a huge RoI he'll be getting.

Hope this helps.

David Winch

Make Sales Without Selling and Get Paid What You're Worth

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15th Feb 2013 11:48

Don't give it away
Your client proposal of £200 wouldn't cover 1 day of an accountant's time. Does his business trade in goods or services? If services, what does it charge per hour or day?
Is your time and expertise worth less than his?

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15th Feb 2013 12:13

just a minor point

Most businesses mark up 3-4 times labour cost.  Thus for a bookeeper charging you £12.50 you should be looking at charging the time out at around £40.  David Winch's comment above is very prudent though

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By Old Greying Accountant
to Ruddles
15th Feb 2013 14:55

In my experience ...

pauljohnston wrote:

Most businesses mark up 3-4 times labour cost.  Thus for a bookeeper charging you £12.50 you should be looking at charging the time out at around £40.  David Winch's comment above is very prudent though

... accountants work on a rule of thumb between 2.5 and 3 times for labour. We work on thirds, 1 third for the clerk, 1 third for overheads and 1 third profit, although with time and back office staff savings computers and efficient systems bring 2 times is not unreasonable, especially in a competitive market This would give 3 sixths clerk, 1 sixth overhead leaving the same 2 sixths (1 third) profit!

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By rawa363
15th Feb 2013 15:04

Prices too low

 £25 ph? I have a carpet cleaner client that gets £80 per hour. The main problem I think is you are not doing anything to differentiate your business or service. You should sell value and benefits for the client. When businesses all look the same to a prospect and offer the same services, (even accountants websites look the same) then they make the decision who to choose on price. This is the mindset the client has, he sees it as a cost and all accountants as being the same so he is looking for the lowest price. When you differentiate your business and demonstrate value you command higher prices. 3000 BK transactions at 80p each (allowing for some time spent sorting) that's £2400, plus year end, tax etc, you need to be looking at £450 per month at least. 

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20th Apr 2018 14:43

no

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By JWB
16th Feb 2013 08:03

good to know

I was pleased to read this post as I recently quoted for a new client for bookkeeping and accounts and gave what I consider to be a fair quote at £300+VAT / month for the work which is in line with the figures given above, I felt 'guilty' because it is a local business and I know the owner but I took the view in the end that I am running a business too and if they want me to do the job then I want to be paid properly for it!  

 

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16th Feb 2013 08:55

   How much  to  charge  a

   How much  to  charge  a  client  worth  500k  ?/

 

tel you  what  --  how  about  .....  500k??

 

It  will  ensure  you only  need  to  collect the one invoice  then  depart for  Antigua.

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18th Feb 2013 10:32

What has turnover to do with it?

 

 ethics is not just a word on paper.

first,from your note you already know the answer..

 I was always taught that it is unethical to base fees on a percentage of turnover or tax saved, or profits.

For other accountants to quote fees when they do not know the client, the trade,  or the work involved is questionable.

 From your own work experience you should be able to time cost this work, including a basic "Salary" for yourself.  This give you your base no-profit/no loss fee.

Then it is up to you what margins you add both for contingency and profits., 

The important points are,(on the basis of been there worn the T-shirt) in your letter of engagement make sure you exactly specify what work is covered by the s/o. You should also exactly specify what is not so covered.

Further you should also specify what standard of records and delivery you expect from the client.

Never, ever, estimate a fee inclusive of VAT, even if the client is not registered for VAT.

Being blunt, however, what is it about your presentation and PR that pursuaded this potential client to "offer" you such a deal?

Or, is he telling you, politely, to go away?

One last point, you "Estimate", you do not "Quote". There is an important legal difference.

 

 

 

 

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18th Feb 2013 13:44

Eh?

Unethical to price work on anything other than time - you need to speak to Bob Harper :)

Quite easy to give an indicative price for this work as the OP covered the basics - turnover (it is relevant), number of transactions, size of payroll, services required etc, etc.

And, why not price vat inclusive? Plenty of prospects want to know how much they need to pay  total, particularly when they 'aint vat registered.

Yours

Kent accountant (FCA)

 

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19th Feb 2013 11:58

Outsource

We have a smallish practice.  We do not have payroll and bookkeeping staff, so we outsource the former to a small firm specialising in payroll and refer to the client to a reliable bookkeeper who gets the VAT figures to us.

In a recent dispute over fees, I explained to a client he wanted Ryanair prices for a BA service with upgrades, he's in that industry.  I then pointed out the hourly rate charged by the BMW dealer on his car's service and asked if he tried to beat the dealership down on price when my qualified staff's time was about the same.  He took the point, we kept the business, he's now more sanguine about fees.

It should not be just about what the client is willing to pay, he needs to understand what he is getting and that whatever you are charging (I think it is not enough) is appropriate.

With £500,000 turnover I do not understand the VAT inclusive issue, it's presumably not a cost for him.  When we take on a tax client we make it clear there are only three justifications for our cost, either -

1 Client's time is more valuable to him than ours;

2 It's too complicated for the client to do himself; or

3 He wants the luxury and is willing to pay for it to have someone else do it.

In view of earlier girls comments unless the above context requires otherwise (it doesn't), word importing a gender shall include every gender.

 

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18th Apr 2018 12:30

Hi.
I have a client and he wants me to do his payroll, VAT, Year end accounts and tax returns. He got 2 companies and want to pay a flat fee of £1200. Is this reasonable? Or very low? How much anyone here would charge?

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to 5Mglobal
19th Apr 2018 14:31

Jesus!!! You again!!!

FFS!!!

Its too low - HE'S TAKING THE P155!!!

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