Reducing the cost of preparing your Annual Accounts
Are you conscious of your business costs and do you want to reduce the cost of getting your annual accounts and tax done? It’s a common issue and one I will address in this article.
As you may know, I am a qualified accountant with many years of experience. When I worked in management positions in the industry, we always used external accountants for audit and tax work. In that role, I was very focused on keeping costs down.
Now, in practice, I work with a wide range of clients. In a surprising number of cases, these clients were paying more for accounts than they need have. This not because they were being overcharged. It’s because of what they were asking the accountant to do.
Are you asking your accountant to do work you could do cheaper?
When you send you accounting records to your accountant, are they well organised? Are you asking your accountant to organise the information he/she is receiving?
Like you, your accountant is running a business and will have to charge you for that work. Why not either do it yourself or have one of your staff do it. If you have no staff, investigate if can you outsource it to someone who will charge less than your accountant. Click here to understand why accountants are expensive.
Do you send in information that is amiss?
Your accountant starts working, then realises he/she doesn’t have all they need. They request that from you and then wait to receive it. This is just inefficient.
You know that when you stop and start a job, you lose time because you have to have to get back up to speed every time you get back to the job.
It’s the same for accountants. If a job is broken up and I don’t look at it for a couple of weeks, I have to invest an extra bit of time refreshing myself on where I was.
Do you send in information in a uniform fashion?
Maybe you think that I have some of the information so I’ll send that in and I will send in the rest when its ready.
This is the same as sending in incomplete records and is inefficient.
Do you send in information that contains errors?
If you send in errors the accountant must find and fix them. If you find and fix them before you send the information in, the job will take the accountant less time. It is better you do it yourself for costs to go down.
Do you check your accounting records?
When I get information from a client, I have to check it first, before I start working on the accounts, to make sure that it is right ie complete, and accurate.
Accounts call this type of work reconciling, but basically its just proving that the numbers are reliable.
With accounting software now, it’s easy for the client to do some, if not all, of these checks. You can do bank reconciliations and you can do checks on the customer and the supplier balances.
Do you use accounting software?
For an accountant, getting information that is already entered into a reasonable system is much better than getting the raw data. The accountant will just have to review and analyse it, making some corrections.
It doesn’t take as much time and I know that I prefer that sort of work. To learn more click here.
Do you use cloud accounting?
Cloud accounting can be a big help. The accountant can review the records during the year and maybe give your feedback on the quality of the records earlier in the year.
The software will make you organise the information and you can do many of the reconciliations yourself and costs will be low.
Cloud Accounting Software lets the accountant work remotely. I have clients using Xero and Kashflow and we can have Skype calls to review accounts and discuss issues. This saves me from having to travel to the clients’ premises which reduces the cost.
Are you making your accountant do data entry work?
Data Entry can be done cheaper in most cases by an entry level admin person. Even if your accountant puts a junior staff member on the job, they will still want to recover the wage cost and overhead cost of that staff member and they will want to make a margin on it.
You must have access to someone who can do data entry cheaper and your costs will go down.
Do you leave it to the last minute to send in your information?
If this is the case, the accountant may have to work overtime – evenings or weekends. That’s going to cost more money. Staff have to be paid overtime. It’s also more difficult to do a good job as there may not be time to find full answers to any questions the accountant raises.
Does your accountant do an audit even though you are below the audit exemption threshold?
Some clients like getting an audit done because it gives them more comfort about the numbers. However, auditing is very regulated and the auditor will have to compile lots forms to satisfy the auditing regulations. You could ask your accountant to review the accounts without going through a full audit.
Are you using an expensive firm for all your accounting work?
Larger firms tend to have high overheads and therefore have to charge more. I know some clients who split up the work into different areas and use different firms for different elements.
For example, if your accounting records are good and you are just getting the accounts done for compliance purposes, you could get a smaller, possibly cheaper firm to do the accounts and reduce the cost. If you need more sophisticated tax or maybe corporate finance advice, you could have a different firm advising you on that.
For many client’s there are a number of things that they could for costs to be low. However, depending on your circumstances, you may not want to take on some of this extra work. However, you need to think it through. There may be other cheaper ways of getting it done through using part-time admin or book-keeping staff.
Don’t think your accountant will resent this.
I prefer working with clients to help them use their accounts to improve and grow the business. In addition to that, I feel that I can be much more effective if I am working on analysis and advice than if I am doing data entry or filing/organising. I also find it much more enjoyable working on providing analysis and advice.
Next time, you notice yourself resisting or resenting the accountants fee, use my checklist to see if you could do anything to reduce the fee.
This article is based on my own experience working with clients. If you have any comments or feedback, I would love to hear it. Feel free to leave a comment or send me an email.