Setting up small Ltd business - reasonable accountancy fees?

steviewander2000

Hello,
I am considering moving from a sole trader status to setting up a Ltd company business as a sole director. I have been advised that it is a a more tax efficient way of paying myself a pension through the company rather than personal contributions as a sole trader. Building up the pot fast is my main priority having only set up  a pension rather late in my 40s. A prospective accountant has given me an estimate of fees which are:
 - a one off set up fee of £200 + VAT
- annual service of costs £600 + VAT
- monthly fee the pay roll and issuing wage slips of £28. + VAT
Do these fees sound reasonable or are they excessive?
Thanks in advance.

Pennywise

First two look reasonable if not cheap.  Payroll cost looks extortionate.

[Deleted User]

Pennywise said:

First two look reasonable if not cheap.  Payroll cost looks extortionate.

Agree - first two not unreasonable. Over £400 for a one employee, presumably monthly, payroll is crazy money!

oldbikebloke

looking at the package price of accounts + payroll @ £936 + Vat per year that is slightly low to bottom of average.
However, as others say, taken individually the payroll cost is huge.
For example, I know people paying £10 for single person payroll, but that is as an add on to the accounts cost, so the overall package price is back to around £900 - £1,000. As I'm sure you appreciate, accountants are no different to other businesses when pricing, they have some "enticing" items and some fat items mixed as a package on the basis it can be more awkward to get items done individually by different suppliers. Yes there are loads of payroll companies out there but your accountant is pitching on the basis a "one stop shop" may have "value" convenience and so he is profiting (price inflating) on that aspect 

silvercar

No reason you can't administer the payroll yourself. Hmrc provides free software for firms with only a few employees, called "Basic PAYE tools -RTI", since this year it also produces payslips for you. It isn't difficult and hmrc produces YouTube videos for guidance and runs webinairs to assist.

PipneyJane

It costs less than £20 to buy a company directly from Companies House and takes about 5 minutes.  (When I did mine in 2016, it cost £12.50.) 

For a one-stop, all inclusive service, the other fees look reasonable.  When I worked in an accountancy practice in the mid-1990's, we charged £240/quarter plus VAT for a service which included payroll, director's tax returns, VAT services, company statutory accounts, HMRC and Companies House filings.

HTH

- Pip

[Deleted User]

setting up a ltd company costs c.£20
depending on the complexity of your business accounting is actually quite simple, £600 per year seems a lot for something that can be done with Excel

csgohan4

I would say 600 pounds sounds good, But depends  on your turnover, I've seen accounts charge triple that. If you give your accountants an organised excel spreadsheet with expenses folder to boot, they may discount you. 

but yes you could do it yourself and file accounts with companies house and HMRC, personal choice, I left those to my accountants to do

Pennywise

nerox said:

depending on the complexity of your business accounting is actually quite simple, £600 per year seems a lot for something that can be done with Excel

But anyone can do most things themselves if they have the time, ability, willingness to research etc.  We quite liking decorating so have saved many thousands of pounds by doing it ourselves rather than paying a decorator.  My brother services his own cars.  I don't think "I could save £600 by decorating my lounge rather than getting a decorator" - we decorate it ourselves because it's more convenient and we get a better finish.  If our circumstances changed I'd just pay the going rate for it.

Pennywise

nerox said:

setting up a ltd company costs c.£20

But what about the time?  An accountant will be charging for time, not just the Co House fee.  Most people would want advice, i.e. difference in roles of director, shareholder, secretary, etc., whether a ltd co is appropriate or whether sole trader or LLP is better, what share capital means, how to split the investment between shares, loans, etc.  Yes, people can google for all that, but if they don't want to research it themselves, then they need to pay the going rate for an accountant's time.

PipneyJane

csgohan4 said:

I would say 600 pounds sounds good, But depends  on your turnover, I've seen accounts charge triple that. If you give your accountants an organised excel spreadsheet with expenses folder to boot, they may discount you. 

but yes you could do it yourself and file accounts with companies house and HMRC, personal choice, I left those to my accountants to do

Pennywise said:

nerox said:

setting up a ltd company costs c.£20

But what about the time?  An accountant will be charging for time, not just the Co House fee.  Most people would want advice, i.e. difference in roles of director, shareholder, secretary, etc., whether a ltd co is appropriate or whether sole trader or LLP is better, what share capital means, how to split the investment between shares, loans, etc.  Yes, people can google for all that, but if they don't want to research it themselves, then they need to pay the going rate for an accountant's time.

I don't disagree with either of you.  I do my own, but then I'm an accountant.

Something else to consider is the "Making-Tax-Digital" requirement for limited companies.  It will soon be very difficult to just keep your books on a spreadsheet and then enter the numbers into the form on HMRC's website which generates/submits your statutory accounts together with creating the company's tax computation. 

I think the proposed fee is quite reasonable.

- Pip