Discussion:Accounting & Consulting Fees
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Discussion Forum Index --> Accounting Questions --> Accounting & Consulting Fees
| 14 February 2007 | |
| I'm doing a little research on accounting & consulting fees. I work for a nationwide niche firm that has about 1,500 accounting clients (including tax prep) averaging about 700-800K per year in operating revenue. I believe we are undercharging for our services. Our average accounting fees are about 1% of revenue or 7-8K per year on an average client. We do perform some other services like collections, payroll, financial planning, etc. on some clients raising the total amount to 1.2-1.3%. Do those seem like appropriate percentages? I'm curious what type of benchmarks others have in their accounting and tax businesses or if anyone knows of a good source of information for this type of thing. Any input would be much appreciated as I am looking to possibly buy this business in the future. | |
| 14 February 2007 | |
| buy the business before the fees go up, it will be cheaper. Pay for the business based on retention of the client (in spite of your fee increase) You may have to limit the fee increase to 10% a year or 25% over 3 years or something to get the seller to agree to a retention payout. | |
| 14 February 2007 | |
| I agree Kevin but what do you think of the current fee structure? Does it seem low to you? Is there a benchmark for this kind of thing? | |
| 14 February 2007 | |
| An average client who pays 7 to 8 K in accounting fees is definitely reasonable. Do you provide audited f/s or just compilations? Do you provide review services? The monthly accounting fees are usually just considered the "bread and butter" of an accounting firm and these revenues offset the expenses during the year.
Most accountants know that tax prep work is the most lucrative (due to knowledge, liability, etc.) but if you only provide internal financial statements for clients and then prepare the returns from them, this sounds reasonable. Of course if you don't provide the tax work for the accounting clients, then the fees should increase for those :) | |
| 14 February 2007 | |
| Thanks Sandy. We are not auditing the financials, just compilations. I'd say 99% of our clients have us prepare their business income tax returns as well as the income tax returns for the key personnel. Accounting services also includes other tax prep (payroll, sales tax, personal property, etc.). All of this is included in the approximate 1% figure I stated. We only bill significant extra amounts for advanced services like succession planning, estate planning, etc. and nominal extra fees for collections, payroll preparation, etc. | |
| February 14, 2007 | |
| The way I evaluate my services is by the amount of time spent on them. Doesn't the firm track time that's put into the work product? If not, it's hard to say whether those numbers are good or not. | |
| 16 February 2007 | |
| Agreed Natalie.....You have to make a profit on any services, but if write up services take one hour for a paraprofessional and you pay them 15.00 an hour but bill 40.00 an hour, then with overhead this still seems it would be be beneficial. Do you write up/write down the accounting services in your billing system? | |
| February 16, 2007 | |
| Sandy, if your question is for me, most of my work is fixed-fee based, and I don't have any employees. I'm learning that I tend to under-estimate my time, so I am now including a range when I quote fixed fees for new clients. I've also had some tax clients who've seen some pretty big increases in fees percentage-wise this year because I under-estimated them in the past.
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| 16 February 2007 | |
| Nope Natalie; I knew you were a "pro" and the note was only to the original poster. :) | |
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