Why do accountancy fees increase as turnover increases?

Why do accountancy fees increase as turnover increases

At PPF we are proud to price our services as fairly as possible.  We’ve stayed away from the traditional method of charging by time, as we do not feel this is a fair way of doing things, so have looked to other factors as a way to base our pricing structure.

One of those is transactional volume, so as your transactions increase as your business grows, our fees will also increase inline for the extra work we are completing.

Another factor we use is your turnover, which affects a few of our services.  Therefore as your turnover increases as your business grows, you got it – our fees will also increase.  Now you may think that this isn’t very fair – like we’re punishing you for growing and doing well.  But I promise you, we aren’t!  In our experience as your turnover increases the work required from us also increases, for a number of reasons, which we will explore below.

More Queries

We find that as your business, and therefore turnover, grows that the number of emails/calls with questions increase too.  So we build this into our fees.  Quick queries are included as standard in all of our services, and we want to encourage the conversations.  We never want you to be scared to call, or ask that burning question, incase you get a bill as a result.

And while we’re talking questions – no question is a ‘silly’ question.  If you don’t know, you don’t know!  That’s what we’re here for – it’s our job to help and guide you – so don’t worry about feeling you have a silly question – just ask us 😊

More Transactions

With most businesses a growing turnover also means more transactions, and therefore for us means more to check, more to review, basically more to do!  Be it reviewing your bookkeeping to do year end, more things to consider when doing a budget, more reconciliations to ensure it all balances, and so on.

VAT

As you get closer to the VAT threshold we need to keep a closer eye on your sales levels to ensure we register you at the right point, so will mean more time spent in your Xero and of course doing more regular checks.  Then as you go over the VAT threshold there will be more complexity in your transactions, so more for us to review and ensure has been treated correctly – be it on your VAT return or in your year end accounts.

More Complex Accounting

Similarly to the way things are more complicated when you’re VAT registered than when you’re not.  As your turnover and business grows your accounts become more complex as a whole, there are a lot more things to consider, such as:

  • tax planning
  • levels of dividends
  • capital allowances
  • what to do with the extra profit

We will include more steps in our processes to make sure we carry out more complex reconciliations and analytical reviews.

More Accounting Policies

Sorry, I’m going to need to bring in some accounting jargon here – but basically there are a few standards of accounts, that we need to consider.  Depending on your turnover depends on which standard we need to follow for your year end accounts, and therefore which policies apply.  For the smallest of companies we can prepare what we call micro accounts (also known in the accounting world as FRS105).  Now these look very basic, but actually there is a lot that goes on behind the scenes to prepare them.

Then as your turnover increases there will become a point where we need to use a different standard (known as FRS102) which are more complex and more policies apply.  They’ll also look different to the micro set.

More Risk

And lastly the higher turnover you business has the more risks there are – the biggest being more risk of HMRC wanting to know more!  Therefore we need to minimise this as much as possible.

Not all of the points above will be relevant for all businesses – but the general theme is the same.  The more your turnover increases the more work we need to do to keep you compliant.  Overall, we just want to give you the protection and service that you need and deserve.

For more information on our pricing and how we work out our fees check out our blog: How much do you charge?

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  1. Pingback: How much do you charge? | Pink Pig

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