Not really IT but slightly Ethical, advice needed. 1

[waiterm]

Hiya folks,

Not really an IT related issue but thought this to be the most appropriate forum.

My business partner and I have stumbled on a slight ethical conundrum regarding out end of year accounts. It's the first time we've actually had to do them. We initially got our advice from one of my family friends, who's been great and given loads of free advice. He quoted about £600 ex VAT to do the annual returns and our tax returns, my business partner then approached some other accountancy firms and got quotes in the region of £400 to £450.

The conundrum, how do we raise the issue with my family friend about him being more expensive than other accontancy firms? Obviously it would be very rude to take his advice and then get our returns completed by another accountant, but if we're paying over the odds it's eating into our profit (and dividends!!).

Any advice would be greatly appreciated as we're both in a halfway house trying to figure out what to do.


Rob Waite

http://www.hostpipe.co.uk?src=TT

 

[Thadeus]

Was the previous free advice worth £150 to you? If so, then maybe you ought to go with him this time round.

Is it worth having someone do you taxes that is interested in your bottom line? not just their bottom line?

For future, I would suggest that you work out an annual retainer fee that encompasses the free advice... then you may feel more free to take advantage of his services throughout the year. When it comes to this time next year, he'll be another vendor and you can let him know outright that his price is not competitive and give him the opportunity to re-bid.

Just my thoughts,
~Thadeus

 

[OhioBill]

Free advice is worth exactly what you've paid for it. Good or not, the advice was given freely and without coercion (I hope).

Tell your friend that you appreciate his offer, but that you can't afford him this year. You're in business to make money, and there isn't a thing wrong with that. Since your friend has been helpful, somewhere down the road you can return the favor if you so desire. Any small service would do, whether it's shoveling snow off his front walk or providing some other kind of assistance.

 

[chiph]

Here in the US, with the new Sarbanes-Oxley Act (CEOs are responsible for the accuracy of their books, enacted in the wake of Enron), a better question to ask is: Which firm will do a better job for the similar amount of money?

I admit, there's a fairly large gap between £450 and £600, but maybe there's a reason for it. Perhaps your friend is better at it, and will give you more personalized service. For £450, all you might get is the books done, but at £600, he'll also do your personal returns, or offer you other business financial advice.

Chip H.


____________________________________________________________________
Click here to learn Ways to help with Tsunami Relief
If you want to get the best response to a question, please read FAQ222-2244 first

 

[waiterm]

Many thanks for all your feedback, my business partner has offered to speak with my accountant friend as he has no personal ties with my friend and try to find out exactly what we would be getting for the £600 fee and mention that others have quoted less. Hopefully this will be the most diplomatic way arround the situation.

Rob Waite

http://www.hostpipe.co.uk?src=TT

 

[willir]

You actually presented two ethical issues...
- take or refuse more expensive offer by a friend
- arm's-length objective contract or a more subjective offer

First, in my opinion, any "free" advice may cause problems later especially if there may some expectation of compensation later. My kids shovel a driveway for a couple down the street who are not capable of such -- they do it for free. At first, they felt good about it -- act of charity, but now, I can see they want to buy things, and now they would like to pay for service rendered. I am hoping their act of charity will not turn into resentment.

On the other hand, I give technical advice for free. (And, yes, I have been offerred money -- always turn it down, but I do suggest they could make a donation to Tek-Tips) My expectations are that I wont get paid in cash for this technical advice.

I think your friend may fall into the delima my kids have with shovelling snow.

Next, objectivity can be much more important. Obviously, you are not a mighty corporation with loads of resources. A friendly gesture here or there are part of networking and making a living in a small business -- more tolerance, more flexibility, and perhaps more committment to excellence. This is the stuff that allows small businesses thrive.

But Chip clearly shows how laws have changed since the big scandles and huge losses inccurred by all too many.

Ethically speaking, your books have to honest, they have to be accurate, you have to show objectivity, you have to avoid a conflict of interest, and to stay in business, they have to get good value for your money.

Having said all this, is your friend "good" at what he does?

Have you considered offerring him some form of compensation for his other work? (Avoid the resentment)

Prioritize the expectations you need for your accounting...
- honest
- accurate
- objective
- value
- sense of moral debt
... to help you with your decision

 

[Kaycek]

One thing that willir didn't mention, what is the reputation of the two accounting firms? Having just taught a tax prep course here in the states, I know that it's one of those cases where you "get what you pay for" which firm will be the most reliable if you were audited.


I quit a tax firm in February because I didn't want to be a guest of Uncle Sam's, and one of the owners actually was telling people (in Spanish) how to do some illegal things. Unfortunately for her I understand more spanish then I let her know.

Even if it's more, if that one can do the best for you, go with him. When it comes to financial accounting, you want the person who is going to dot the i, and cross the t, and be able to tell you why you have to do things this way, or that way. A good accountant usually won't let you file taxes that are in the "gray area"

good luck!

Kaycek, A+
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Keep trying no matter how hard it seems it will get easier