Do you really want cheap accounting?

Friday, February 21st, 2020 in: Advice

Cheap accounting?

Considering cheap accounts / accounting services? There are many purely online accountants that promise to offer cheap accounting services. We have covered pricing in our blogs to quite an extensive level recently.

Value vs cheap accounting

I am not going to dive into the tech argument of Apple vs android but in the eyes of many of its customers, Apple offers value for money. Yes they are expensive but there’s a perceived element of you get what you pay for. This is not always the case but most of the time it’s not a bad rule of thumb. Can you expect the cheapest solicitor to do the best job? This is the same as accounting and tax advice. Cheap or low-cost accountants may do a job and in some cases a very good job. However, across the board it is expected that certain corners are cut, whether that is in the way of the detail they go into your accounts and tax or from a customer service perspective.

There is no cheaper than doing your own accounts or tax return

Where shall you draw the line? You can go even cheaper and possibly do it all yourself. HMRC provide a free online tax account for you to complete your own personal tax return and then there are the likes of Taxscout that act as a middle man. You do most of the work, an accountant has a quick review and it gets filed.

The Pro’s and Cons of cheap accounting services

Advantages of having cheap accounting services

• You save cash initially by paying the accountant less
• You may possibly get a good service despite the low cost
• They could still hold an accounting qualification
• It’s better than doing your own accounts and tax return online
• With modern technology, it is likely that the service can still be delivered from anywhere

Disadvantages of using a cheaper accountancy service

• There is no legal requirement for an accountant to be qualified so they may not actually be qualified.
• They are likely to have less experience than an accountant who values his services and time higher by charging more.
• A cheap accountant is highly likely to have a far higher volume of clients. This could affect the service you receive.
• Due to a high volume of clients, it may not be possible to produce a personal service.
• Cheaper providers often outsource or even offshore. This means that the staff may not be based in the UK.
• A cheaper accounting practice is unlikely to attract a higher caliber of staff due to smaller HR budgets. This could impact the level of accounting and tax knowledge that the business can provide.

The Pro’s and Con’s of a more expensive accountancy service

Advantages of using a more expensive accountancy service instead of having cheap accounts prepared

• The quality of the staff could be higher due to higher staffing budgets.
• Due to increased revenue from higher fees, there is likely to be more resources for staff training regarding tax and accounting.
• Possibly more likely to be a Chartered accounting firm due to experience.
• The business owner or partner is likely from a reputable chartered accounting firm where he or she obtained their experience and qualifications.
• There could be fewer clients compared to staff levels due to fees charged.
• There should be more time available for the accountants to provide a deeper review of your accounting and tax position.
• These types of accountants generally have a local office where you can visit them for a face to face meeting.
• There could arguably be a better level of service due to the level of staff and additional time available.
• The extra time and service could lead to additional tax savings.
• The additional tax savings could more than compensate for the higher fees.
• More expensive accounting firms are likely to have a good reputation with HMRC as they have been trading for longer.
• The staff are generally based locally to the business.

OTHER OPTIONS

Doing your own accounts and tax return online with companies house or HMRC

Advantages from doing your own accounts and tax return

• No cost.
• Not hard to set up online accounts after researching what is required.
• Software makes it a little easier than in previous years.

Disadvantages of doing your own accounts and tax return

• There are several different online accounts to set up.
• You do not know if you are doing it correctly.
• No buffer between yourself and HMRC if it goes wrong.
• No accountability.
• You could claim expenses you should not claim.
• You could lose out on tax-saving strategies.
• You may not pay yourself correctly.
• Your record-keeping may not be sufficient to support an HMRC investigation.
• No one to use as a sounding board to discuss your accounts and taxes.
• It may take you far longer than using an accountant.
• You are spending time away from your main business activity and potentially losing revenue or time from family.
• You are less likely to keep up to date with new rules as you are not required to undergo continual professional development.

Of course, we are pro using an accountant as we strongly believe in the value we offer our clients. Our two main jobs are to a) ensure you are doing everything correctly as professionals and b) to legally save you as much tax as possible. Our job is to minimalise your tax bill with HMRC.

If you would like to discuss any of this please call us on 01242 528412 to discuss further

Or book a free discovery call