How do you keep your accounting fees down?

In most cases, accountants charge on a per unit basis and their units can be minutes, six minute blocks, 15 minute blocks, or hours. Therefore the longer your accountant spends with you, or on your work, the more it will cost you. If you want to keep your accounting fees down, here's 8 ways we think may help:

1. Negotiate a fixed price

You may be able to set a price with your accountant for the type of work you need which is cheaper than if you allowed them to charge on a time basis. Setting a price also means it is in your accountant's best interest to get your work done quicker so they do not lose money. Time based jobs tend to result in an accountant's inefficiencies being passed on to you so there is no incentive for your accountant to improve their services.

2. Outsource basic accounting tasks

Outsourcing some of the more basic accounting work to a student or bookkeeper rather than your accountant can help reduce your overall accounting costs. Students or bookkeepers are normally cheaper on an hourly rate than that of accounting juniors in an accounting firm. This tends to work well for the more routine and process type work like data entry, scheduling or summarising information, and reconciling bank statements.

3. Provide all the information in the first instance

In most cases, high accounting fees are a result of your accountant not being given the information they need and they then have to continually chase you or third parties for that missing data. If you can provide your accountant with all the information they need at the beginning of your work then:

• Your work is done that much faster.
• The chances of your work being picked up and put down by your accountant again are reduced. Every time they pick up your work there is some time spent 're-familiarising'.
• There is less of a chance your work will be passed to another staff member due to the current staff member no longer being available.
• The overall time is reduced (and so is your final cost).

If your accountant does need additional information, you may want to consider doing most of the running around yourself (e.g. calling banks/solicitors, collecting statements ...) as opposed to your accountant doing it. And provide it quickly and in that way your work will still be fresh in your accountant's mind.

4. Summarise and reconcile as much as possible

In the case of financial statements, providing a fully reconciled cashbook or balanced accounting software data will be much cheaper than walking in with a shoebox of bank statements, invoices, and cheque books. The same rule applies to anything you give your accountant. You will end up paying your accountant if they have to spend time reconciling or summarising information you give them.

5. Understand the computer packages you buy

If you use a computerised accounting package to manage your accounting then you need to make sure the information that is processed is accurate. It is no myth "garbage in, garbage out". We have seen our fair share of accounting systems used poorly resulting in greater accounting fees for clients than in prior years. One way to ensure your computerised accounting information is not 'garbage' is to have your accountant review that information prior to the tax year end.

6. Prevention is much cheaper than cure

Before undertaking any major transaction, you should talk with your accountant first. Most major transactions have tax consequences, and those consequences can generally be fixed quicker and cheaper before you complete the transaction. If you ask for advice regarding a transaction afterwards, it is usually a lot more expensive to fix any negative tax consequences if you got it wrong (if indeed they can be fixed or reduced at all). It may cost you a little getting confirmation beforehand, but knowing you are doing it right can save you a lot of time, money and stress later.

You can also forewarn your accountant of any unusual events so they know what to expect and can ask you for any relevant documentation beforehand.

7. Your time versus your accountant's time

Ask yourself the question "can I attend to this without contacting my accountant"? There are times when we have been asked to provide copies of financial statements or tax returns which you may already have in your possession.

Of course, it is possible that it will cost you less by having your accountant do something for you than you doing it yourself (once you take into account the time you spend finding what you need versus the time you could have spent selling your product or service in your business), in which case we would be remiss if we advised you to do it yourself. Just be aware your accountant is likely to charge you for their time to source what you want.

8. Improve your accounting function

If your accountant is not advising you on where you can make improvements, then ask them ... or find an accountant who does offer suggestions for improvement. By making improvements each year (they do not have to be large ones as small changes made consistently over a number of years can lead to large results), you can improve your business results (so you can afford to pay higher accounting fees), or alternatively reduce your current accounting fees.

Is there anything you can do if you think your accountant has charged you too much?

If you have concerns that the fee your accountant is charging you is too high, then you have a number of options available:

• Query the invoice with your accountant and ask them to explain why the invoice is high (higher than last year? higher than estimated?)
• Ask for a breakdown of the time behind the invoice.
• If your accountant is a Chartered Accountant (member of NZICA) then you can use the Institute's Fee Resolution Service here.
• If your accountant is a Chartered Accountant (member of NZICA) then you can always lodge a formal complaint to the Institute here.
• If you believe you have been overcharged, and you cannot sort it out with the accountant, and the amount in dispute is less than $15,000 ($20,000 if both parties agree) then you can consider using the Disputes Tribunal. You can find out how that works on the Tribunal's website here.
• As a last resort, you can always consider getting a new accountant ... someone who listens to your needs, someone who works with you and your business helping you achieve your goals, someone whose fees are reasonable, and who offers you ways in which to manage their fees.

Brydon Davidson
January 2011