The importance of fixed price agreements

Kathryn Harris, FCPA, CTA TrustOne Partners

Surprise bills hurt businesses. Make sure you know upfront what your accountant is going to charge.

The importance of fixed price agreements

We have, as a firm, offered our clients fixed price agreements for a long time now. We think it’s important for budgeting in a business to know what your accounting bill is likely to be. Obviously we don’t have a crystal ball so we do have a clause that says if something unusual happens it would be outside the agreement.

Why do I think this is important? There aren’t too many other things your business buys without knowing the price up front.

We recently had a client come to us because he got a “surprise” accounting bill. In the previous years his accountant had charged around the $2500 mark for his company financials and tax returns. He had a BAS agent keep his MYOB records up to date and he thoughts his tax affairs were simple and tidy. The staff member he had a rapport with moved from one firm to another and he followed. He assumed she would still be completing his work and that it would all be similar to previous years. Then he got a bill for $10,150! Although he had been provided with an Engagement Letter he had not been given any quote for the job or even an hourly rate that might be applied. Now he is in dispute with the “new” accountant who won’t release his documents until the invoice is settled, effectively making it difficult for him to move on.

The accounting societies won’t get involved in complaints about fees and there is no schedule of fees for accounting professionals. Rates will vary depending on the level of qualifications and experience as well as structures of firms. If you can’t resolve a fee dispute with your accountant by negotiation your next step is to apply to VCAT for your case to be heard.

How to avoid all this? Choose an accountant that is upfront about their charges.

Kathryn Harris, FCPA, CTA TrustOne Partners

Kathryn is a small business advisor and tax specialist. She is passionate about helping small business owners work smarter.