[Question] What is a fair amount to pay for an accountant?

[kernel32]

I currently pay R3,500 for completion of my tax forms (or whatever you call them) for my business. This seems like a load of money, as the business is still quite new and we hardly make enough money to cover the normal expenses. Does this sound like a reasonable amount for a small start-up to pay?

[duncan drennan]

What structure is the business, PTY, CC, partnership?

[kernel32]

What structure is the business, PTY, CC, partnership?

It's a cc

[Marq]

I don't believe the structure of the business is relevant. What is relevant is the amount of work that goes into producing the end goods.

So when you say completion of tax forms - what is done by your accountant to get to this completion point? Many businesses give their accountants a load of paper at the end of the period and expect this to be sorted , analysed and captured - and then the tax forms can be done. The end result seems to be disappointing and this small fortune paid to insert of a couple of numbers and a signature seems exorbitant.

I think the question should be - how much time has the accountant relieved me of this dreary work and if I tackled the job myself, would I save that much in costs and lost opportunities out there? If the answer doesn't add up then the solution could be, to do it yourself, get a new accountant, have an admin person rather than accountant do the mundane work, talk to the accountant to reduce the fees accordingly.

I don't believe there is a direct answer to your question as everyone has different circumstances. I do think that you should maybe look to the accountant as a finance and administration partner with a specific role instead of a grudge payment.

The monthly fee may also include the year end AFS's and other services. You are just being billed an annual fee monthly. Check with the accountant what you are paying for.

In that role as a partner, I think you should discuss this matter with the accountant and look at resolving this issue quickly before you concentrate on the problem and not at getting new business and growing your self onwards and upwards.

[kernel32]

I don't see this as a grudge payment. It's work that needs to be done by someone with the required skills and knowledge. I won't be able to do it myself, no chance of that. Even if I did know exactly what to do, I still wouldn't be able to do it because of time constraints.

What I want to know is if this guy is ripping me off. I know nothing about accounting or tax, and he could have easily told me it's R20K and I wouldn't have known any better. All I need is a basic guideline of how much is too much.

I've got a stack of invoices, and some slips. It's for the past year, but the invoices total about 200 creditors and debtors combined.

[Marq]

Accountants usually charge by the hour. An estimate would have been made of how long they would spend on your accounting work. Rates vary but I believe an average rate for an accountant would be between 250 to 350 an hour depending on the skill level and expertise (If anybody knows this answer - please let us know what he current going rate is). So R3,500 probably represents in the region of 10 to 14 hours work.

If you have a years worth of paper - 200 creditors and debtors and some slips - my guess is that sounds like a lot more hours than 15 or so. More likely double that.

So on that simple view - I think you are getting a really cheap deal.

[kernel32]

AIf you have a years worth of paper - 200 creditors and debtors and some slips - my guess is that sounds like a lot more hours than 15 or so. More likely double that.

So on that simple view - I think you are getting a really cheap deal.

Thanks! I've known the guy for quite some time, but you can never be too sure about somebody. I would love to learn more about how cc tax works, if being registered for VAT is better than not being etc. Do you know of any resources to help a complete accounting moron like myself understand these things better?

[Marq]

Tax on cc's is the same as for companies.
Vat you need to register if your turnover is above R1 mil.
Personally I wouldnt register if you are not at this level. There are certain circumstances where it is advantageous to register but generally it is just an extra paperchase.

For input you can google sites like
http://www.smallbusinessowner.co.za
and I would go through the forums where many of your questions have been asked before - there is loads of advise out there on forums like this one and business warriors (am I allowed to mention them Dave), my broadband and sabusinesshub.

Good luck out there - and just remember - do not believe everything you see on the web.

[duncan drennan]

Vat you need to register if your turnover is above R1 mil.

Is that correct? I know the intention is to change the limit, but AFAIK the required legislation has not yet been changed. So for now the VAT registration limit is R300k turnover.

[Marq]

Duncan - you are on the ball as usual and I jumped the gun.

Heres from the sars website

Media Releases 2008
Increase in compulsory VAT registration threshold

Cape Town, 28 May 2008 -- The 2008 Budget Review announced that; “The introduction of the simplified tax package for very small businesses with an annual turnover below R1 million will provide scope to increase the compulsory VAT registration threshold. It is proposed that this threshold be increased from an annual turnover of R300 000 to R1 million.”

Enquiries to SARS indicate that there is some public uncertainty about whether the increase has been implemented already or not.

The intention is that the increase will coincide with the introduction of the simplified presumptive turnover tax for very small businesses in 2009. Although some of the principles of the presumptive tax have been announced, a number of matters remain to be dealt with and refined after consultation with small business.

VAT vendors whose current taxable supplies are more than R300 000 but less than R1 million per annum, exceed the current compulsory VAT registration threshold and cannot deregister for VAT at this stage. Similarly, those businesses whose current taxable supplies have exceeded or are likely to exceed R300 000 per annum for the first time must register for VAT.

Draft legislation regarding the increase, the presumptive tax and related matters will be released later this year for stakeholders’ comments.

ENDS.
Publication date: 28 May 2008

Sorry about that

[Dave A]

If you are hardly doing anything towards preparing the final accounts, R3500.00 per annum sounds very reasonable, regardless of the size of your business.