There isn’t a simple answer, but I will try my best to explain some general pricing guidelines.
The purchase of accounting services is similar to the purchase of a car. There are so many options available that price ranges can vary drastically.
Just as a Holden Commodore can start at around $27k with a basic package, it can quickly cost over $40k once a turbo engine, keyless start, cruise control, tinted windows and a new set of rims are added.
Why do so many people elect to get so many upgrades? The answer is because most people understand the importance of getting what they want the first time so as to not have any regrets down the road. Because most Australian’s spend over 30 minutes a day in their vehicles, they want to make sure their vehicle will provide them with comfort, quality, longevity, and ease of use.
These same principles typically apply to Tax and Accounting services and Compliance with the ATO. You want to be comfortable with your accountant and the quality of their work, you should be viewing the relationship as life long and they should be there for you when you need them.
It's best to see your relationship with your accountant as a life-long commitment. You need to interact with your accountant dealing with some of the most important decisions you're ever going to make. Picking the right options and services at the right time is crucial in ensuring the best results in the long run.
Unfortunately, some people only focus on the initial price of the accountant. This is short-sighted. If your only goal is to find the cheapest accountant, then you will do so at the expense of quality, thoroughness and a willingness to go the extra mile for the client. The accountant who competes solely on price will only do the minimum required to lodge the return and move on to the next one.
Think of it as being similar to seeing a bulk-billing doctor who sees a patient every 7 minutes, as opposed to a doctor who charges more but is willing to take longer with each patient and build up both a medical understanding and rapport. There may be times when a bulk-billing doctor is fine, but at some stage in your life you are likely to need that extra quality and it is far better when your doctor has your full medical history and knows you intimately.
There are many different “add-ons” that can effect the pricing of your accounting services. Some of the most common include:
QUARTERLY MEETING & REVIEWS
CASH FLOW AND BUDGETING
FINANICAL STATEMENT PREP
ASIC CORPORATE SECRETARIALMANAGEMENT
As you can see, there are many options available. When someone receives a quote from our company, we thoroughly examine each option so to educate the client on the option's benefits. We want to identify its overall importance to the success of the the clients finances.
DOES WHAT I PAY TO MY ACCOUNTANT DEPEND ON ME?
How you organise and present your information to your accountant can have a big effect on your accounting costs. Much of your expenditure will depend on your willingness to organise your information for your accountant.
Your accountant's charges depend on the amount of time it takes them to do your accounting tasks. For example, if you have a rental property, there is a big difference in the time it takes to prepare your return depending on how you present your information. Are you willing to take the time to complete a checklist to make sure all your information is there and correctly presented? If so, our price is discounted when you scan and send it to us and upload copies of the relevant source documents correctly. We encourage you to do this so we can offer you a favoured-client discount.
Want to see what a tax checklist looks like and how it can help you organise your tax requirements?
Use our Design and Price Tool to walk through your options and get an approximate price. It’s simple.
If you have a small business the difference is even more extreme. If you have a Xero or quickbooks file that is kept by us or by another qualified bookkeeper the cost can be about two thirds of the price than if they have poor accounting records and organization.
HOW MUCH DOES AN ACCOUNTANT COST
The same small business, in the same area, requiring the same services can be charged dramatically different prices. There are many reasons for this with accountants having different pricing methods and structure: some use hourly rates, others use value pricing. These hourly rates may differ and accounting firms will all have different cost structures and profit margins. The usual hourly rate within an accounting firm can range from $100 to $400 an hour depending on whether your work is being done by a recent graduate or the Partner/Director.
At different levels there will be different standards of work, but all work will be signed off by a director confirming the information lodged is true and correct.
Under this model, there is no incentive for the accountant to be efficient. The slower the return is completed, and the more people that review the return, the higher the fee.
Another pricing method accountants use is the concept of value pricing. Instead of pricing on how much it costs the accounting firm to produce the work, the accounting firm prices on what it feels is the value created. This method involves looking at each client individually, assessing their needs and then looking at their willingness and ability to pay. This is a journey that the client and the accountant will go on together. It does mean that the same work will be charged differently depending on the client.
A variation on this is an accountant that steadily increases a client’s bills over the years despite no more or in many cases less work. This accountant is taking advantage of a client’s inertia to charge larger fees then they should.
HOW THE LEVEL OF SERVICE AFFECTS THE COST
When someone enquires into our accounting costs, level of service is also a key factor. What I mean by this is that as a company, we have four broad packages we offer our customers. Unlike most accounting firms, we will do as much or as little as our clients would have us do. This flexibility leads to less stress and more savings for the client.
On our website we have a quote which approximates how much you will pay for different levels of service.
The accounting packages are as follows, with their corresponding price ranges:
1. THE BASE LEVEL – JUST THE TAX RETURN AND FINANCIAL STATEMENTS
This package includes the minimum service level. The client is expecting to work with us once a year. They are going to organize their financials, complete the checklist.
Although the information required to complete a tax return can be quite simple, there is still a process to be followed. Having an accountant rather than doing it yourself can make great sense. The accountant will check your information, analyse it and make sure that everything being lodged is correct. They will also give you advice on areas where you are able to make improvements going forward.
The average individual spends between $150 to $1,000 on an annual return based on the number of different income streams and complexity of deductions.
The average company spends between $1,000 to $5,000 on an annual return based on the size of the business and the quality of the records.
2. ANNUAL RETURN AND BOOKKEEPING SERVICES
This package includes the annual return and financial services as well as bookkeeping services.
Here the accountant and the bookkeeping services are combined. The day to day work is completed throughout the year, on a weekly, fortnightly or monthly basis. This allows the company’s financial to be up to date and allows further analysis and work be done so that you can really stay on top of your business.
The price of this package typically ranges from $500 to $2,500 per month, again depending on the scope of works.
3. ANNUAL RETURN AND BUSINESS ADVISORY SERVICES
Small businesses often want to run their own day to day bookkeeping but still need their annual returns done. Many are also looking for Business Advice to help run their business.
These small businesses can be receiving services such as CFO coaching, KPI assessment, quarterly or monthly review meetings, 3-way cash-flow budgeting and business forecasting.
Most small businesses will spend on average $1,000 – $3,500 per month for package #3.
4. TURN KEY SOLUTION. BOOKKEEPING, ACCOUNTING AND BUSINESS ADVISORY SERVICE
Many small business clients would rather just deal with one company instead of many. We at Black Sheep Advisory are one of the few companies that will offer our clients true 'turn-key' Financial solution. This package includes all bookkeeping, accounting and business advisory services.
There are efficiencies that can be gained when all these services are combined which allow for a lower price than if all services were provided separately. This is due to the embedded knowledge of the company and only having to learn the basics of the company once and not having to recheck work throughout.
Want to see about how much that cost will be with all the different services you require?
Use our Design and Price Tool to walk through your options and get an approximate price!
BLACK SHEEP ADVISORY
175 COLLINS STREET, MELBOURNE, VIC, 3000, AUSTRALIA
Ph: 1800 491 488