Good evening,
My lowest fee at the moment it £250 for a simple tax return but I'm finding dealing with a lot of low fee tax returns a ball ache, I guess it is much easier when you have a team of employees around you but I don't, I'm really tempted to ditch the lot and have a minimum fee of somewhere between £1,000 and £2,400.
I figure there is always a minimum amount of work you must do for a client, invoicing, aml, admin, chasing up missing data etc and for £250 it isn't really worth it especially at this time when it is like pulling teeth. It always takes longer than you expect, then you have questions from the clients. I haven't worked out what the minimum time I could spend on a client for all the indirect work but as I don't have fancy accounting software I'll wager it is suprisingly large.
It will also smooth out my work load and improve my sanity. Perhaps it’s just me but I would lose all most all my pain in the [***] clients.
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Yes, s/e accounts are very definitely extra. An add-on of about £250-£600 depending on quality of information & type of work, but can go well above that.
We do have some that pay loads more but they are of the ‘chuck it all in a cardboard box’ type client (two levels up from the shoebox sized ones, and one up from the carrier bag type). I figure if they can’t be bothered to sort it, they’ll have to pay us to do that. Nice work for the juniors, gets them to see the sense of putting stuff in order before starting a job.
I guess for many long-serving old-school clients the s/e accounts have always been regarded as the major work, and the tax return the add-on.
Well done for finding a useful purpose for your juniors! I believe they should all be made to train on a set of manual books - Cathedral c/book with s/l & p/l analysis columns, sdb, sales ledger etc etc just to learn how it all dovetails together. I was speaking with some IT students recently, none of whom were familiar with ASCII; and although some had a grasp of parity they were unable to translate that into the ninth hole punch cards and paper tape, or electronic +/- magnetic tape. Nevertheless some had six-figure salary aspirations.
"so one way or another you charge a good deal extra for the supporting docs that are s/e accounts, property rental accounts, and the like"
There is also the quality aspect that requires a job to be done correctly. For example, I will never (or very rarely) prepare a set of accounts without a Balance Sheet. This applies to Rental Accounts (shows cost of property for future CGT calculations), Trading Accounts (big or small), etc, and whilst this does take a little longer to do, the Balance Sheet provides a good back-up indication that the P & L Account is correct.
Also, if a lender wants to see Accounts, most of the information they require is already shown in this type of Traditionally prepared Certified Accounts. Whilst my hourly charge out rates are not that heavy (and are shown on my website) I am doing the job properly and getting paid for all the work I do, which is good business.
In arriving at my hourly rate, I work out how many actual working hours me and my staff can work in a year (e.g 46 weeks at 5 days a week at 6 chargeable hours a day per person), divide my expected annual overheads cost by the hours that it can be recovered from, add on the actual wages costs per hour which gives me the charge per hour to break even and then add on what profit per hour I want to make for the year. This then gives me the amount to charge per hour to make a pre-calculated profit. It is a little more complex than this, of course, but the principle is correct.
The overheads include some adjustments for things like notional interest on late payers so that I don't get too worried about late payments as I have spread the cost already over all clients, etc. This saves spending too much time on individuals chasing money which can be very unproductive time consuming.
Any extra unanticipated hours worked will give me super-profits of course.
I do have a number of 'small' clients but the vast majority of these are clients that have been with us for a very long time and once had profitable thriving businesses, so I don't intend to dump them just because they are now small.
See, I'm the cheapo one you don't like. I don't want to be and am trying to move away from that, but I currently am (see my previous comment re race-to-the-bottom affiliate sites). Our £150/£200 is a file-only 2 sections service: (1) P60/P45 and (2) SE/BTL. They will have categorised CSV bank statements / or listed income & expenses, so we're just copying numbers onto the tax return.
I much prefer to only do tax returns for our company directors, far easier, can be done whenever we do the bkpg/accounts and larger (all-incl) fees.
I've seen the hourly rates on PPH and so didn't even give it a go. I get virtually nothing off Bark as prices are often way lower than even I'll go. I have semi-decent success with another site, but it really is pot luck and an awful lot of time wasters. Any margin you make on the work in yr 1 is easily eaten up my the hours you put in to win the business.
Yes, but you can never be sure when you sign up a YE client whether they're just going to be back on the site the following year looking for a still cheaper deal, or whether they're 'your' client. Frustrating to say the least when you've been chasing for records for 8 months for them to finally answer and say someone else has done it for cheaper. I've never once received a professional clearance letter re a client from an affiliate site, guess that says something about the level of accountants we're competing with.
I tend to take the view that it's the one offs or can you check this before I file it clients, where the time required is never worth it.
As well as a minimum fee, at similar level to others here, I do use a minimum engagement period of three years (subject to a fee if they leave early) and we do the complete job, or not at all.
We do not take on tax only clients anymore we only do the tax returns of directors of business clients.
We are busy every month with a lot of reporting, coaching etc so found having a load of tax only work too much of a distraction and it impacted too much on the decent work we have so dropped them. Best thing I ever did.
Still busy in January though no matter what we do, as doing a lot of set up of business plans etc.
I am moving to your manor in a few weeks so can catch up for a coffee/beer, and we can discuss who to send this work to.
Not a good appointment Mr Howe, I suspect its a year in the Championship before we bounce back, which is not the end of the world.
What about sole traders or unincorporated property businesses?
They'll all be gone when MTD comes along.
No sole traders unless a proper business with staff etc, (Have 2) only property tax returns we do are for directors of business clients.
Landlords for some reason think January is the only month they can do their return in, never owe any tax and don't accept that interest is no longer fully recoverable. Got shot of them all.
£250 is probably not enough even for a very straightforward tax return.I started off charging £50 an hour;then increased individual fees by RPI each year.A few garage service and repair bills and plumbing bills,soon made me realise that £50 an hour was way too low. You really do need to factor in all the “off” costs;such as AML,PI cover,stationery,depreciation,office costs,dead time costs (pick up/deliver),phone costs,motor expenses and on and on.I am guessing the hourly rate for equivalent work at a mid tier firm is now £200 an hour ?
Talking of bench marking..
Husband and wife tax return with employment income, 2 fhls and a tiny ltd co with a turnover of aprx £25k.
Are the 2 fhls operating within the tiny ltd company with a turnover of £25k?
If so, just over £1.1k+VAT
Or are fhls and tiny ltd company separate entities / income streams?
If so, then around £1.4k+VAT
Thanks. The limited company is separate to the fhls. I was thinking £1,650 + VAT which might seem expensive but the tiny ltd co is pushing up the price.
Slim, if your clients are in the south-east then I suspect they'll wear a few hundred quid premium.
Southcoastacc I have Brighton / West Sussex clientele who happily subscribe to Slim's rates; and others in the Bournemouth / Dorset locale who won't cough up any more than your estimate. IMHO Hampshire's the divide - fees seem to drop off round about Southampton, all the more so the further westward you travel.
You're welcome, SCA. Rightly or wrongly I charge clients at the same rates regardless of geography, but whereas in Sussex they seem pleased (and you can always tell when a client's pleased by the way they pay up pronto) in Somerset they moan and haggle a bit (and that displeasure seems to manifest itself by their taking forever to stump up).
Worst payers for me have been from Gloucestershire - I've had quite a number of won't pays from there over the years. Worst for haggling and chiselling, Birmingham.
Most of my clients are in the home counties and london, I don't tend to win many outside the area but that is ok for me although I'd love to have a reputation which attracts clients far and wide.
It's really interesting to see the geographical differences especially on such a local level, I've a good friend who has a small practice on the coast in cornwall and he finds it very price sensitive, it's amazing how much of a difference it makes.
I'd stick with the South East, Slim. Price sensitive doesn't begin to describe the attitudes to cost outside of there.
The odd thing is that many people living in the west country originate from the south east, but I suppose they too become naturally accustomed to lower prices and shopping around. When I lived in Oxford I didn't bat an eyelid at paying £4 to £5 for a pint of beer or £15 - £20 for a meal out; since moving to Dorset I've gradually attuned to £3 or less a pint. Sunday Lunch for less than a tenner? - no problemo! All the better if you're fond of carrots.
By the looks of it HMRC are going to get a load more unrepresented taxpayers come MTD......
I meant that lots of accountants won't deal with sole traders and property rentals under MTD and lots of taxpayers won't pay the fees needed to make it worthwhile doing.
When I was a bit bored one Friday afternoon a couple of years ago I created a schedule of my fees and then worked out the fee % of each client to my total fees for a year.
And the 80: 20 was just about right
80% of my fees come from 20% of my clients. Its an eye opener.
The problem comes in ditching your current ('low' paying clients).
I've a few sticky ones who won't leave no matter how badly I ignore or overcharge them. I guess we all have some of those.
I'm contemplating fixed term, say 12 months, quotes and LofEs. The same way motor insurances work, I suppose; so that we can decline to quote and thereby refuse service when the period's up.
I've got an email ready for those clients but I keep putting it off :(
I regret not sending it everytime.
I've got an email ready for those clients but I keep putting it off :(
I regret not sending it everytime.
Just do it.
It's very liberating.
Now's the time. With MTD coming up sometime-maybe-never. Great excuse.
When I was a bit bored one Friday afternoon a couple of years ago I created a schedule of my fees and then worked out the fee % of each client to my total fees for a year.
And the 80: 20 was just about right
80% of my fees come from 20% of my clients. Its an eye opener.
The problem comes in ditching your current ('low' paying clients).
I have always seen this the other way around - I would rather have 5 £200 clients that I deal with once a year and spend about an hour on each than 1 £1000 client that takes me all day.
One reason is that if one of the £200 goes its no bother, if the £1000 goes you are left crying into your beer.
Glass half-empty approach ... which is fine if it aligns with your personality.
The converse (my approach) is that it's much easier to double the fees of the £1,000 client than a £200 one ... and usually more rewarding (in terms of satisfaction not just financial returns).
But each to their own ... and thank goodness for human variety.
Glass half-empty approach ... which is fine if it aligns with your personality.
The converse (my approach) is that it's much easier to double the fees of the £1,000 client than a £200 one ... and usually more rewarding (in terms of satisfaction not just financial returns).
But each to their own ... and thank goodness for human variety.
Actually in my experience it is quite the opposite, in fact one of our £200 clients is now a 10k a year job. Even the run of the mill small clients often add a BTL, trust or a small company at some point in the journey or at the very least spread the word.
I have always taken a long term view
Vive la difference!
I have always seen this the other way around - I would rather have 5 £200 clients that I deal with once a year and spend about an hour on each than 1 £1000 client that takes me all day.
Eggs in 5 different baskets, then?
One reason is that if one of the £200 goes its no bother, if the £1000 goes you are left crying into your beer.
Hugo, that might just blow a hole in your theory by replenishing WW's half-empty glass.
My fault for sloppy (nay incorrect) wording ...
"it's much easier to double the fees of the £1,000 client than a £200 one" should be
"it's much easier to double the fees of one £1,000 client than of all five £200 ones".
But my 'theory' is just a matter of perception & personal style, which is what I was trying to justify - as to why I prefer to give very best attention but to fewer clients.
EDIT: just seen that this has crossed with Winnie's latest response - and totally concur with the final sentiment.
Folks this has been a great topic to read through and very helpful to me.
We are a small home based Wife and Husband team (Wife is the accountant and I assist her with literally anything I can do (onboarding, record chasing, payroll) Ive also implemented AM and Brightpay)
Anyhoo, what do I know about fees and the going rate? Only whatever my wife tells me based on her previous practice experience.
I have recently been pushing her to up our fees, lifting ltd company min fee from £750 to £1k but im yet to tackle the SATR.
We currently charge £150 for a SATR basic (high earner type thing) maybe £200 for a rental then more for a sole trader with a set of accounts.
Let's be honest we are not earning enough for the effort and stress, something has goto change. The Wife is working until 23:00 at the moment and putting in some weekends (is that par for the course?)
Onboarding has been massively simplified by using AM but still takes time and effort.
In conclusion I think we need to up prices even if we lose some clients, I take a tiny wage for my efforts and the wife is making no more than when she was employed in practice (ie little stress and no working until 23:00 ). Ive stopped taking on clients due to workload too, I suppose it was easy to gain clients if we are too cheap!
Thanks for your posts, most helpful (im new here)
Anyhoo, what do I know about fees and the going rate? Only whatever my wife tells me based on her previous practice experience.
Let's be honest we are not earning enough for the effort and stress, something has goto change. The Wife is working until 23:00 at the moment and putting in some weekends (is that par for the course?)
Obviously I know nothing about you or your clients so i am making huge assumptions here, and you should take my comments with a pinch of salt but my initial reaction is that the fees are not the problem.
You are charging in line with what you know about the practice where she used to work so thats probably about the market rate, plus you are working from home, clearly lots of other practices are making good money on those rates but you are not (or do not feel that you are).
Putting it bluntly perhaps you need to look at your working practices closely, it is possible to do too much for a client as well as too little, are you doing now what you used to do for a wage in practice, or are you now doing everything (that you may not be experienced in) rather than a more narrow remit (that you knew like the back of your hand).
For example I have had very qualified members of staff that take all day to do what I can do in a couple of hours for the same result, there is no way that they would be able to manage in practice on their own.
There are many other issues that could be mentioned but no its not normal to be working around the clock in this game and not earning good money for the fees you charge (apart from in January of course).
Interesting thread on commerciality. My profitability stems from doing as little as possible time wise for clients but doing it very efficiently. No flippancy intended.
Interesting thread on commerciality. My profitability stems from doing as little as possible time wise for clients but doing it very efficiently. No flippancy intended.
Ditto, I have seen many times over the years perfectly well qualified people who are very fixed in their methods, preparing umpteen schedules for everything, unable to see the more efficient methods of getting to the same place