Working with an accountant (lump sum or regular direct debit)

Hi
We’ve just engaged with a few accountants and the proposition is slightly confusing us. If say we start trading in a ltd company today (20/05/18), by default the company year end should be 31/05/19. Is the following true:
  1. We can extend company year end out by 6 months so 31/11/19?
  2. Assuming we do extend it to 31/11/19, do we have 9 months to file the company accounts? So 31/08/20.
  3. Let’s say we engage with an accountant 6 months before the accounts are due, so Feb 2020. Why are all the accountants we speaking to asking us to set up a c. £150 per month direct debit fee from today. This seems like a fee in advance for work that will be done in c. 21 mons )21*£150=£3,150 for little work. The only ongoing actual cost will be payroll and access to xero which I suspects is only around £40 per month combined. Am I missing something. We are quite happy doing our own bookkeeping and also we believe it’s quite easy doing your own payroll with only 2 directors in the company.
  4. Surely then, we should only approach an accountant in Feb 2020 and ask them to prepare our accounts + 2 director self assessments?
  5. Should we insist on payment of accounts on completion rather than monthly direct debit? And is this common practice?

Thanks.

Comments

  • 00ec25
    00ec25 Posts: 9,123
    Combo Breaker First Post
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    edited 20 May 2018 at 10:29PM
    katy123 wrote: »
    Hi
    We!!!8217;ve just engaged with a few accountants and the proposition is slightly confusing us. If say we start trading in a ltd company today (20/05/18), by default the company year end should be 31/05/19. Is the following true:
    1. We can extend company year end out by 6 months so 31/11/19?
    2. Assuming we do extend it to 31/11/19, do we have 9 months to file the company accounts? So 31/08/20.
    3. Let!!!8217;s say we engage with an accountant 6 months before the accounts are due, so Feb 2020. Why are all the accountants we speaking to asking us to set up a c. £150 per month direct debit fee from today. This seems like a fee in advance for work that will be done in c. 21 mons )21*£150=£3,150 for little work. The only ongoing actual cost will be payroll and access to xero which I suspects is only around £40 per month combined. Am I missing something. We are quite happy doing our own bookkeeping and also we believe it!!!8217;s quite easy doing your own payroll with only 2 directors in the company.
    4. Surely then, we should only approach an accountant in Feb 2020 and ask them to prepare our accounts + 2 director self assessments?
    5. Should we insist on payment of accounts on completion rather than monthly direct debit? And is this common practice?

    Thanks.
    not in the first year - note the rules applicable to the first year of a company
    https://www.gov.uk/first-company-accounts-and-return

    2. note carefully you would need to file 2 corp tax returns as the corp tax cannot cover a period of more than 12 months

    just like you, accountants prefer to have a regular cash inflow, not periodic lump sums. Putting people on monthly DD is now the norm, although of course some clients refuse, and then its just a question of negotiation.

    You agree a cost for the services you want, whether you pay that in monthly instalments or a lump sum is down to what you reach agreement on. You are not paying 21 months of fess for one set of accounts. You are paying the agreed cost spread over a payment plan.

    You can try to "insist", your accountants may refuse and tell you to go elsewhere, or they may agree, there is no norm over when and how each practice will accept payment.

    you may be happy with your bookkeeping, I remain to be convinced how good at it you are, speaking from personal experience of client "attempts"....
  • dancing_star
    dancing_star Posts: 312
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    00ec25 wrote: »
    just like you, accountants prefer to have a regular cash inflow, not periodic lump sums. Putting people on monthly DD is now the norm, although of course some clients refuse, and then its just a question of negotiation.

    You agree a cost for the services you want, whether you pay that in monthly instalments or a lump sum is down to what you reach agreement on. You are not paying 21 months of fess for one set of accounts. You are paying the agreed cost spread over a payment plan.


    Not all accountants are fixed fee. Our practice much prefers to bill on a time spent basis, we try to get away from fixed fees. We do have some on standing order, mostly old timers who have paid that way for donkeys' years and are resistant to change.



    With new clients, we'll give them a ballpark quote after an initial meeting and a review of prior year accounts (if appropriate) or a feel for the business (if it's a start up) but make it clear that the quote is dependent on the quality of bookkeeping and organisation of paperwork received.




    you may be happy with your bookkeeping, I remain to be convinced how good at it you are, speaking from personal experience of client "attempts"....
    Part of the reason we don't like fixed fees. Time spent is an incentive for clients to streamline their bookkeeping so we spend less time unpicking it. We're happy to provide training if needed or provide simple spreadsheets. Something to think about when you approach accountants.



    And yes, our bills will go down if time spent decreases year on year due to better bookkeeping!



    If you're not happy with the quotes, look elsewhere. Personal recommendation is key. We get most of our new work via word of mouth. Did any of the accountants you approached mention making tax digital, and the prospect of cloud accounting?



    Hope this helps!
  • katy123
    katy123 Posts: 365
    First Post First Anniversary Combo Breaker
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    00ec25 wrote: »
    not in the first year - note the rules applicable to the first year of a company
    https://www.gov.uk/first-company-accounts-and-return

    2. note carefully you would need to file 2 corp tax returns as the corp tax cannot cover a period of more than 12 months

    just like you, accountants prefer to have a regular cash inflow, not periodic lump sums. Putting people on monthly DD is now the norm, although of course some clients refuse, and then its just a question of negotiation.

    You agree a cost for the services you want, whether you pay that in monthly instalments or a lump sum is down to what you reach agreement on. You are not paying 21 months of fess for one set of accounts. You are paying the agreed cost spread over a payment plan.

    You can try to "insist", your accountants may refuse and tell you to go elsewhere, or they may agree, there is no norm over when and how each practice will accept payment.

    you may be happy with your bookkeeping, I remain to be convinced how good at it you are, speaking from personal experience of client "attempts"....

    I can't seem to find any reference that confirms it can't be changed in the first year. Just found this:

    https://www.gov.uk/change-your-companys-year-end
  • fishybusiness
    fishybusiness Posts: 1,263 Forumite
    Maybe you would be better off passing on the completed book keeping to an accountant on a monthly or 3 monthly basis. That way it gives the accountant time to work through your trabsactions in a timely manner, sort out any errors and perhaps give you regular management accounts?

    Not all accountants will be happy using Xero - I've used 3 and non wanted to use it, saying it is slow compared to their stand alone software, eg VT.

    Best plan is to approach now, set everything up so there are no surprises and get on with running your business.
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