Over the years I've spoken to many business owners and am part of several business groups. Time and time again I hear complaints about why accountants cost so much money, and how to best save money on accountant fees. Want to know the secret? You are probably not using your accountant correctly. Yes, that’s right, it could be your fault. As always, if you have a question or think you might want to work together, please get in touch through our Home Page. Also, never miss a blog by following us on LinkedIn or Facebook.
Qualified accountants are required to have a professional designation, years of work experience, complete annual professional development courses, and of course they need to follow all requirements to keep their licenses valid. The good ones use all of that to provide you with good value for money. They answer your tough questions, help you set up efficient accounting flows and technology, and provide financial oversight while pointing out things to help you in your business. If you get your invoice and are only thinking, that experience was terrible and oh my goodness that amount is huge, maybe you're stuck in a "compliance only" type of relationship, or even worse, you're stuck in a compliance only relationship and are also wasting their time and your money.
Consider these 5 tips to reduce your accounting fees:
1) Utilize Your Bookkeeper
Bookkeepers are essential for your business as they keep track of invoices issued to customers, the payments received, invoices to be paid, and the proper allocation of each expense. An excellent bookkeeper should understand your business and be able to correctly allocate expenses, ensure proper coding of taxes, and make sure books and records are up to date. Business owners can do their bookkeeping but delegation of this work ensures the best utilization of the owner's skills and experience. A bookkeeper can also work with your accountant for any difficult transactions. Ultimately the use of a bookkeeper will keep your fees down as accountants should find fewer things wrong.
2) Have a System for your Invoices / Receipts
Every business has expenses but some businesses don't have a good system for keeping track of their receipts. Contractual agreements and receipts are important (and are also required) to confirm the validity of expenses and provide support for the accounting treatment of certain transactions. They also help if there is ever a tax audit or your accountant needs to verify the information. There are many tools to automate your processes. If you are unsure of the best options to keep track of your invoices, receipts, and other supporting documentation, talk to your accountant and get some options that work best for business. Paying your accountant to organize and understand your information is a waste of money.
3) Separate Business and Personal Expenses
A business owner-manager could be using a personal card or personal bank account when starting a business which includes both business and personal transactions but this can get messy in your books and records. Even at the start of the business, the business should have its own bank account and a dedicated credit card. It is easier to manage and record transactions when business expenses are separate from personal expenses. Business owner-managers can get reimbursed for reasonable expenses such as office use, phone, meals and entertainment, and travel. It is important to know which expenses are reasonable and which are not, and your accountant is the best to discuss these expenses. Having your accountant try to separate personal costs from your business is not a good use of their time.
4) Make Sure to Discuss Fees Upfront
Similar to other contractors, an accountant may want to keep going to get the job done and doesn’t realize the time spent is completely over budget resulting in a significantly higher fee. Make sure to discuss your fee in advance of any work and have an agreement on hand (engagement agreement). This agreement would outline what work will be performed and for how much. It would also be recommended to be upfront about what happens if the accountant finds an issue in your books and records, and what happens if an additional fee is required. Accountants like numbers and will be upfront with you.
5) Reach Out to Your Accountant
If you have a question or concern about your books and records, don’t be afraid to reach out to your accountant. They are there to give you support and advice when you need it. It's better to resolve any issues right away and to make sure things are done correctly the first time rather than fixing them. If you don't get a response right away, be patient! Consider making an appointment or picking up the phone and calling them directly. If they don’t respond to you or you are unsure of what is going on, it might be time to find someone who can be on the same page with you.
Getting Out of a Compliance-Only Relationship
Your accountant (well, many of them) likely has more insight and qualifications than just preparing your tax return or preparing simple financial statements. If you feel that you are only getting compliance-type work without the added value of expertise and insight, you might consider asking them or it might be time to switch accountants. The valuable insights from financial modeling and budgeting, to profit and cost analysis, etc is where the rubber hits the road. You’ll pay a fair fee for the work but you and your business will be way better off.