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Annual Accounting Fee

How much do you spend annually for external accounting? We think we may be over-paying our accounting firm and we would like some comparisons. Our accountant is responsible for quarterly and yearly financial statements (due to adjustments for depreciation). He also does our corporate tax return and intangible tax returns. We are paying him about 30K per year. Do you all think this is too much? Please let me know.

Thanks.

Denise White Accounting Manager

Our outside accountant only does our tax returns and answers questions as needed. We pay them $2,000 annually. $30K sounds really high!

Ann Adams Controller J. Stokes & Associates www.jstokes.com

Seems reasonable, but where are you located?

We pay about 6K annually for just tax work. I provide very thorough workpapers, so they have very few adjustments to charge me for and it's still 6K! I'm paying for their years of experience and keeping up to date with tax code. Worth it to me. I do all the financials and sales tax returns myself.

You need to consider the salary for an individual on staff to do this work, or you could get a bookkeeping service to do financials and only engage your CPA to provide annual tax returns for lower costs.

Roxanne Cowan

We pay around $25,000 - $30,000 a year. Depending on how many times he comes to the office.

Ed Miller

I am not sure of your geographic location; however, that seems awfully high. Our outside accountant is responsible for general business consulting, annual financial statement compilation, and year-end tax preparation, and we are paying less than fifteen percent of what your expenses have been. Hope that helps.

Terry L. Jones, Jr. Controller Harvey and Daughters, Inc.

I guess it might depend on your market and how much you call on their advice/assistance in between the quarterly/yearly services, but we have never paid that much. We have paid between $850 and $1100 per month, and within that annual contract, they review our monthly financials, and obviously compile our year-end financials/tax returns, etc.

Shelley W. Holloway General Manager

Ask your accounting firm to give you a breakdown of the number of hours they are spending on your account, plus expenses. I use to be an auditor and I know that CPA firms bill according to the kind of staff assigned to each account-i.e. a senior accountant, junior accountant or a manager, plus any expenses incurred. Once you know how much you are being charge per hour, you can shop around and make comparisons.

A way to reduce your outside expenses is to have your accounting dept do all the back up schedules for Financial Statements and taxes.

Hope this help

A. Tebbetts Controller Blu Orbit Int'l.

Before I can respond to your question there are other factors to consider. One, where are you located? Fees from accounting firms located in large metropolitan areas will exceed those in small rural areas. Two, the size of the accounting firm comes into play. Typically, large firms charge higher rates for their personnel than smaller firms. Three,...time. How much time is required for the accountants to prepare their worksheets? The longer it takes your accountant to complete his work papers, the higher the fee. Four, the amount of your billings/income. Greater volume typically means more work for the accountant. Five, the condition of your books. If your books are in poor shape, the accountants will require more time, and more time means more fees. Six, how complex is your federal, state and local tax reports. Once again, see the comment above relating to time.

marc traub

You must have very complicated returns! I found it very helpful to get comparison rates from other firms in my market. That way you can compare apples to apples and the firm can quote the exact work that your current accountant provides. Be sure to work with a CPA that specializes in service oriented businesses. The learning curve will be much shorter. Also, my experience is that the larger the firm, the larger the bill. There are many bright CPAs who have left the corporate world and have much lower overhead. Good luck.

Susan A. Medlin

Our agency pays about the same.

Laura Kennedy Finance Manager Maier Advertising, Inc.

Our outside accountant does the annual tax return, consulting, annual meeting for about $2,500 per year.

Shannon Ellis Business Manager Tackett Barbaria Design Group

It really depends a lot on a few factors:

1) Are you being audited or just a review/notice to reader for your financial statements? 2) What's your revenue and asset size? 3) Are you using a national firm or a local sole proprieter. 4) Are you getting monthly accounting/financial statement prep help? 5) Any tax work would over and above this.

I would say that for a $10M agency with 3-4M of assets getting an audit from a local firm with none of 4 or 5 than $8-10,000 would be a fair price. You can go up or down from there depending on questions 1-5.

Mike Wonnick Controller MGM Comm

We pay about $2,500 per year.

I do all financials and the only service that we require from our CPA is to review financial statements semi-annually, year end tax returns and tax planning. We are located in Atlanta and do not use one of the large CPA firms but are not with an individual.

We were recently in the same situation, paying about $35,000 per year to a CPA firm and made the following changes to lower that expense: 1) Hired a person capable of handling the accounting process through financials using C&P. 2) Hired ADP to do payroll (I think a good deal of expense from the CPA was in this area). You cannot beat ADP rates for full-service payroll/taxes. 3) It turned out that two sets of books were being kept due to the fact that no one at that time understood C&P and used it fully. Everything was re-entered at the CPA firm to produce financials. 4) Changed CPA firms.

Hope this helps!

Kim McNeill Lighthouse, Inc.

I am a CPA and used to work in the tax department of one of the Big 6 CPA firms. My old advertising agency used that CPA firm and paid about 1/3 of that cost annually, which included the tax return for our foreign subsidiary.

I agree with what some of the others have said about the bigger the firm, the higher the rates......it depends on what level of staff they use to prepare your returns........it depends on how much of the schedules you prepare in-house ( I did a lot of them)........there are a lot of competent CPA's with Big 6 experience that are working on their own and/or with others who have that experience.....

My big caution is that you need to keep in mind that you are paying for their expertise. Its their job to be sure that you file all the returns you are required to file including state and local/ income, payroll, withholding requirements, sales tax, use tax and employee benefits.....and to keep up with the law changes. The bigger firms have national and international resources to use when they don't have the expertise themselves. They are trained to know when they have the final answer on their own, and when they don't they have the resources at hand to find it!

Cheri Dryer Wilson Chapman