Wednesday 19 November 2014

Accounting the Cost

KPMG site
One of the major worries when setting up as a solo practitioner is how to deal with the financial side. Even if you are only borrowing from yourself (or perhaps especially then) you need to keep a careful record of all transactions. My strategy was to buy some accounts software and later recruit an accountant to do the end of year accounts and tax work. I asked for recommendations, visited several firms, sent enquiries to others. It was rather hit and miss. Small business is not that attractive. (It might be different if you are in a smaller local community than the heart of London and you can network with local providers). Since then accounts packages have moved into the cloud and pay by month Software as a Service has become a popular option that feeds our just in time culture. I was therefore intrigued when I received a cold call from Big Brand Accountants KPMG promoting their service which combines everything you need in the financial way from book keeping through VAT returns and payroll to the end of year accounts and tax - all bundled into one neat monthly fee and accessible from anywhere (provided the cloud is still in the sky). Prices start at £150 per month (this year but what about next?) and depend on how much of a burden you are predicted to be!

The accounting package at the heart of it is Xero - a brand I had not heard of before. You could try the Xero software for free to see if you like its approach - but it seems to be able to deal with € and $ as well as £.

The benefit of having an accountant on board when you start should be that things get set up properly. It ought to impress prospective clients too that you are well managed and regulated even if small.  That does seem to worry some transferring clients that have been used to the apparent re-assurance of big firm providers.
Xero Direct
I am not being paid to write this and I am not a user but it certainly looks an interesting and innovative approach to the problem. The idea of having an accountant that you can call with a VAT query without risking another bill seems to address exactly the problems that some small CIPA members were having as reported during Congress.

This type of product could also be beneficial to not so solo firms too. If anyone has has experience of cloud based book keeping or dipped a toe in the water please comment. What do you see as the risks and benefits of this approach?


  1. I am aware of XERO and interested to see that they now have multi-currency, which was the main reason I did not use them in the past. QuickBooks is now online and now has multi-currency. I have trialled both XERO, QB and many others such as Freeagent, Freshbooks and Liquid Accounts.

    I ended up not going with a cloud solution (I think I was too early as an adopter) because at the time there was no multi-currency and most accountants had never heard of them or would use them. I was not bothered about the accountants as the cloud solution was not for their benefit but for benefit of remote workers. Also apart from QB the others could have been here today gone tomorrow.

    One thing to think about is that the cloud solutions may integrate with other cloud solutions such as CRM, time recording, billing and project management. So there is a lot to think about.

    I don't need a cloud solution at the moment but the fact that KPMG are backing XERO has pushed them will up the list even if I don't go with KPMG. I'll give them another look as part of my forward planning.

    The KPMG model is a very interesting one. I'll mention it to my accountants. :-) I had no problem (in Yorkshire) in securing a top firm of accountants to handle our work. To them we are a robust SME. If you are fastidious with paperwork and get them to set the "accounts" in the software and stick with that they make good money and are happy to serve.

  2. Thanks Nick the Multi currency is really important and I seem to have a disproportionate number of accounts.