If you decide to move to a new accountant, what happens to any accounting paperwork which is yet to be finalised? More importantly, how much will it cost in catch up fees to bring your accounts up-to-date?
So, what happens if you decide to change accountants?
Business owners change accountants for many reasons – however poor communication, customer service and missed deadlines often feature heavily in lists of grievances.
The switching process is relatively simple (in theory).
Your FreeAgent (or other) accounting software account can be easily transferred to your new accountant’s dashboard.
Your new accountant will also require the transfer of all underlying tax and accounting paperwork – often in the form or a zip file containing a series of Excel spreadsheets.
You can find out more about the switching process here.
No such things as a perfect time to move accountants
However good your timing, there is never a ‘perfect’ time to move accountants. But many advisors suggest making the move soon after your previous company year’s accounts are finalised.
The reason for this advice is obvious; over the course of a year, the bulk of an accountant’s time is spent completing clients’ year end accounts.
However, the cost of this work – and other duties – is typically spread across the year, so contractors typically pay a monthly fee rather than an annual fee.
The true cost of completing your annual counts is likely to be at least half of your annual accountancy fee.
How much unfinished business will you port to your new accountant?
Whenever you decide to move accountants, there is always bound to be some ‘catch up’ work to do to your accounts. Accountants rarely complete and file year end accounts immediately after a client’s year end date.
In fact, many contractors will be used to waiting many months for this task to be completed.
Ironically, long delays (or even missed filing deadlines) are often the catalysts which force business owners to move firms in the first place!
So, in reality, you’re going to have to port between 1 and 12 months of accounts data to your new accountant. This is on top of the work required to finalise last year’s accounts.
You could find yourself in the position where you’re waiting for your previous year’s accounts to be completed, plus be many months into your current company year’s accounting period.
How much are typical catch up fees?
As we’ve already discovered, compiling a limited company’s annual accounts is a sizeable task.
A small firm or accountants may charge £500-800 as a one-off fee to compile your accounts and submit your Corporation Tax Return (CT600).
This is assuming that your accounts are fairly simple. There might be additional time-based or one-off fees if things are more complicated.
The annual accounts process involves gathering required information (bank statements, receipts, etc.), preparing the profit and loss statements and balance sheets for each missing year, and then filing the accounts with Companies House.
If your previous accountant and/or company directors have missed any deadlines, there may also be penalties to pay.
Many contractor accountants don’t charge catch-up fees at all
The contractor accountancy market is fiercely competitive, so many of the leading providers – including our partner firms – won’t charge your company any ‘catch up’ fees when you switch.
This should be particularly welcome news to switchers – particularly if you’re coming out of a stressful time dealing with a sub-par accountancy firm.
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