I would be wanting £1,200 plus VAT a year for the payroll on its own and about £2,000 plus VAT for the company account and CT600 (between them) and that would be if they had very good records and were low maintenance.
Take the job on at this fee and you will earn about £10 per hour over the year I suspect!
I'm astonished that all of that could be performed in 12 hours. I would expect the 4 meetings to take probably 6-8 of those, at the absolute minimum 4. Leaving 8 hours to prepare accounts, tax returns and so on.
A fair fee for the level of service you have stated would be at least £1,800 - £2,400 I would say.
I wouldn't prepare Limited Company accounts for anything less than £750 plus VAT and that would be for the simplest, tidiest of jobs. But, we do prepare a proper file and use disclosure checklists etc. As part of our QA process which takes a bit of time to complete.
I would also be wary of someone who has met with multiple Accountants, it is very very rare that any prospects that I see have had a meeting with another firm.
If anything you should be saying to him you've reconsidered and would like to increase the fee to reflect the true value :)
I think that given the limited information provided, I would be looking for £1,500 plus VAT or more for the preparation of accounts and tax computations for a business of this size.
There is so much more work that goes into the accounts prep than is often understood by a client, and is hard to sometimes explain, and that's sometimes the problem.
Personally, I would be looking at what level of service you get and what value that adds to your business - do you feel you could be making more profit, increasing sales, saving tax, working less hours? These are all things I would expect a good accountant to be able to help you with and the fees would reflect this level of value.
So instead of focussing on price (with this accountant or another) you need to ask yourself "what do we want to achieve?"
Many times we have taken on clients where they have paid a low fee, only for the support and advice from the accountant to be below par, resulting in lost profits and higher tax bills. A higher fee paid to a better, more proactive accountant, would have paid dividends.
There is certainly a happy medium here - an office that has parking, is easily accessible, and affordable.
As many have said, you're unlikely to pick up bucket loads of clients from your location alone, although google maps is very useful for helping your website ranking.
My advice would be to get an office in a good location near the town, but not in it, and focus your marketing efforts on generating enquiries through social media and your website. Clients will travel to meetings for 20-30 minutes if you do a good job, and they are the right type of clients. It will only be a maximum of 4 times a year they need to do this - you can even agree to visit them at home half the time to make it easier.
An office is great to separate work/home life and raise your brand awareness and perception, so I would strongly recommend it, but don't be sucked in to having a city centre location just because of passing trade because it won't be the best source of new business no matter where you are.
You've just got to build it into your price, like Glenys said.
If you're already lumbered with the cost, the best way to recover this is by putting your prices up by about 5/6% a year and slowly getting the money back that way. Clients will accept an inflationary increase, especially if you are offering a good service.
Charging them all £300 a year more is going to be very upsetting to them and you will likely lose a lot of clients as a result. Don't forget that, as they use Xero, they are extremely mobile and could choose to use an accountant almost anywhere in the U.K. Especially as you aren't offering a personal service with face to face meetings etc.
That's a fair price I would say, given the total time commitment required over the course of a year. If you work it out to be around 2 hours a month overall, then you're only making £62.50 an hour which, in my opinion, is a fair rate for a qualified accountant in practice.
Extract from that the software costs, rent, printing etc, and I think you're being fair.
As many others have said, there is always someone cheaper than you, and likewise always someone more expensive, and as long as you aren't losing too many jobs on price you should stick to your guns.
Taking on clients for lower than your desired fee can soon consume all your time, and then when better clients come along you can't service them because you're too busy doing the work for the lower fee clients.
Also to be aware of the possible issues arising from sales to EU, if he is selling to consumers (not businesses) then there may be a requirement to register for VAT in the customer's country of residence if the supplies exceed certain thresholds.
Selling through EBay and Amazon can be a minefield for VAT!
As someone who is jointly responsible for the recruitment at our firm, one of the biggest barriers for us would be the salary expectation.
As others have said, coming from industry you really would have to start at the bottom and work your way up, meaning that the salary costs would have to be on par with an 18 year old school leaver almost. So, say £10k a year. As you have got some accounting experience, albeit industry based, you should find that you progress more quickly through the training and therefore your salary rises accordingly, but you would have to be prepared to earn a relatively low wage during this time in exchange for that training.
What is it about practice that interests you?
If he takes the shares personally, but the company has done work of a value that has enabled him to get these shares, then he will get taxed personally on this as a distribution from the company of some form. Unless he does the work personally, in which case he will just get taxed personally.
What I think you are saying is, you want us to tell you that if you advise your "client" to just "take the stock personally" it will get him out of this "great area".
Is this really for a client or is it you that this question relates to? What work is being performed to get these shares?
We do already charge separately, but in a nominal amount of say £80 per director. A number of client we take on have had it all billed to the company, and I was wondering how these accountants might have dealt with this in terms of the benefit in kind - I suspect they haven't!
Another part of the reason for looking to charge separately is also for KPI purposes. If the fees are only nominal, or not charged separately at all, it makes it hard to determine the profitability of each service line and also the total fees you achieve each year from each service you provide.