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Stephen G.
Stephen G., Sr Financial Expert
Category: Finance
Satisfied Customers: 6182
Experience:  Extensive Experience with Tax, Financial & Estate Issues
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How much should it cost to have a very simple company

Customer Question

How much should it cost to have a very simple company financial statement put together. I needed one to prove lack of assets for an LLC. I supplied a list of revenue consisting of 3 items. (3 numbers). And a set of expenses consisting of 5 numbers. I even added them up. To give you an idea both numbers were under $3000. I asked our accountant to put together a short financial statement which he did. It was 1 page and consisted basically of their letterhead and my numbers. Not certified. It says right on the 3 page document that they did not certify. I was charged $650! Is that insane? It couldn't have taken more than 10 minutes. They billed me for 3 hours at $250/hr.
Submitted: 28 days ago.
Category: Finance
Expert:  bkb1956 replied 28 days ago.

Welcome to Just Answer. My name is ***** ***** I will be happy to assist you.

Unfortunately, preparation of a financial statement is normally several hundred dollars. Based on the information you provided, it appears that your accountant's fee is excessive. You may want to contact them to explain how the preparation of the financial statement took 3 hours and/or why the fee is so high for a simple financial statement.

Please let me know if I can assist you further.

Thank you and best regards,

Barb

Customer: replied 28 days ago.
how much should it have cost?
Customer: replied 28 days ago.
the bill said it took 2 hours for 1 person 2.5 hours to compile financial statements and then another person and hour to review what the first person did. This is outrageous. Do I have to pay it?
Expert:  bkb1956 replied 27 days ago.

As I mentioned, several hundred dollars is normal for preparation of a financial statement.

As I also mentioned, my best advice would be to contact them to explain their fee. You may be able to negotiate a lesser fee. If not, you requested their service, which they performed, and for which they charged a fee. If you do not pay it, they may start collection efforts if you refuse to pay.

Customer: replied 27 days ago.
Barbara, this is not an answer. Several Hundred dollars is not an amount. That could be $200 or $900. The information that you provided is just common sense and not expert advice
Expert:  bkb1956 replied 27 days ago.

Several hundred is $400-$500.

Basically, you are objecting to the fee that the accountant charged because you feel it is excessive. While I agree, it is excessive to a point, you really do not have the right to tell someone what to charge for their services. Perhaps you should have asked what the fee would be before you engaged their services.

I will opt out so another expert can assist you.

Best regards,

Barb

Customer: replied 27 days ago.
Just FYI. I did ask what this was going to cost and I was given a non-answer of "it should take an hour or two". The fee schedule in the engagement letter said the fees range between $175 and $250 an hour. So even at the high end of both the estimate of time and the hourly rate it should have been MAX $500. Here's my critique of you since you have an opinion of me. No one in the world knows that "several hundred" means $400-$500. This makes me question whether or not you are an expert in this area. And no one would reasonably believe that whatever price I am billed I need to pay. I don't feel it is excessive, IT IS excessive. The fact that you don't understand that is quite vexing.
Expert:  bkb1956 replied 27 days ago.

Just an FYI: The actual definition of several is "more than 2 or 3, but not many."

4 or 5 would be right on point.

Customer: replied 27 days ago.
Answers like yours is what allowed me to be over charged IMO in the first place. When someone is asking you how much something will cost or if a specific amount is excessive an answer of "several hundred" doesn't help answer the question. Especially when most financial statements would include more than 7 line items total. I gave them seven line items (just numbers, no documents to review. So this financial statement was based on my numbers only, no auditing or verifying any documents at all) So they took the information I provided, again, 7 NUMBERS and put it on their letterhead. In the form letter it read the following disclaimer, "We did not audit or review the statement of cash receipts and disbursements nor were we required to perform any procedures to verify the accuracy or completeness of the information provided by management." So they took my numbers EXACTLY as I provided them and put them into a form letter PDF and charged me 2.5 hours for one person to prepare them and then 1 hour for another to review them. That to me is outrageous.
Expert:  Stephen G. replied 27 days ago.

Ken:

Another expert here..........Please understand that it is difficult for us to give you a really good answer without more information. You gave us some information about an Income Statement, but you are talking about a Balance Sheet. If your accountant is a CPA, then we have specific standards that must be met. We can provide 3 levels of service relating to financial statements. They are Compilation (which is evidently what you requested), Review or Audit.

All three of those services have certain requirements that we have to meet to be able to perform those services. It's not just the preparation of the financial statements themselves, but it is the questionnaire, standards that must be met, and the Compilation Report itself that should identify that the financial statements were prepared in accordance with those standards.

Also, realize that it isn't just the numbers your presented, but we have to determine that they are reasonable in the circumstances and that it is reasonable that there are not other assets or liabilities that aren't disclosed. In the case of a compilation, that is basically accomplished by for example, asking you questions or by comparing the information you provided to other information (such as tax returns, etc.).

All that said, just to provide you with a little background, if you were an existing client, and if the LLC and related numbers are as basic as you described, as an accommodation to you, I would probably have charged you $250. and considered it a "loss leader", just to try to assist you for whatever reason that you required the financial statement. That presumes that this isn't connected with any litigation requiring a financial statement, etc. Otherwise, I would only agree to perform the Review service and we are talking a different ballgame.

Hope this helps you to understand a little better.

Customer: replied 27 days ago.
maybe this will help: I gave them seven line items (just numbers, no documents to review. So this financial statement was based on my numbers only, no auditing or verifying any documents at all) So they took the information I provided, again, 7 NUMBERS and put it on their letterhead. In the form letter it read the following disclaimer, "We did not audit or review the statement of cash receipts and disbursements nor were we required to perform any procedures to verify the accuracy or completeness of the information provided by management." So they took my numbers EXACTLY as I provided them and put them into a form letter PDF and charged me 2.5 hours for one person to prepare them and then 1 hour for another to review them. That to me is outrageous. The following is ALL the information I provided to the account and exactly what appeared on the financial statement. Revenue:
shirts $XXX.XX
adsense $XXX
Ad $XXXTotal: $XXXX.XXExpenses:Annual report $XX
shipping and handling $XX
Software:$XX
website expenses:$XXX.XX
Home office (if same as last year) $X,XXXTotal Expenses $XXXX.XX
Expert:  Stephen G. replied 27 days ago.

OK, one more comment after reading your last transmission.

It appears that all they did was a "Cash Receipts & Disbursements" statement?

No Balance Sheet, etc.

One Page Statement, no footnotes, no explanations, etc.

$650. is indeed outrageous and I wouldn't pay it.

I'd suggest $250. period. And that's borderline outrageous too in the circumstances.

I presume that you may be upset enough to go elsewhere for your tax services, etc. in the future. So, by treating an existing client this way, they probably have lost a client.

So it's a lose, lose situation.

Something has probably broken down within the firm whereby they are billing based upon someone's time sheet without looking at the reasonableness of the charges in the circumstances.

Too bad, they aren't going to do too well if this is the way they treat their clients.

Sometimes firms do this when they really don't want small clients anymore. Perhaps this is the case, I have no idea of course.

It's too bad -- I hate to see this as it sometimes gives us all a bad name. Obviously, I'm only trying to help here, not expecting to profit by the time I've given you.

Steve G.

Expert:  Stephen G. replied 27 days ago.

What did you need this for anyway?

Could you have just used a copy of a Schedule C from your tax return or from what would appear on a tax return?

Just a thought.

You are definitely right; it is outrageous. $650. is way out of line for what this is. I couldn't agree more with you. I've been doing this for 45+ years, so perhaps they just don't have enough experience or something. I'm guessing the main man may not have been involved; if he or she was, you probably need to go somewhere else in the future because you'll never trust what they charge you going forward.

Steve G.

Customer: replied 27 days ago.
Thanks for that. I was beginning to think that this was "usual". We are clients of theirs and we probably pay $4000-$5000 per year for tax prep. and they handle our investments. So yes I was pissed when I saw the bill. It makes me very concerned what the bill for our tax prep. will be this year. This letter should have literally taken 15 minutes. I honestly thought we might get charged at all since we are already clients and this was so basic. I'm still hoping it a mistake and they'll respond that they are sorry. Otherwise I will be looking for new accountants for our personal and business.
Expert:  Stephen G. replied 27 days ago.

OMG, Ken, under those circumstances, I wouldn't have charged you anything. Period.

Ken, call the Partner or Principal on your account.

As I said, he/she may not be aware of this.

If one of my managers did this to a client like you, he'd be looking for a new job.

In my case, I insisted on reviewing all billings before they were sent, just for this reason.

Steve G.

Customer: replied 27 days ago.
The accountant is a partner unfortunately. I feel like one of those types born every minute! Thanks for your time and advice
Expert:  Stephen G. replied 27 days ago.

Ken:

I'm disappointed to hear that. If it were me I'd have a face to face meeting to express my displeasure and give him a chance to make it right; ie. acceptable to you; if he/she isn't willing to do that and doesn't offer any reasonable explanation and is unable to clear the air, then if I were you I'd simply say that "it's been nice working with you but I think it's best if we part ways & I expect you to co-operate with my new accountants". In other words "Sayonara!"

I'd appreciate it if you would take a moment to rate my response.

Thanks very much & if I can assist you further in the future, you can reach me personally by indicating "For Steve G" at the beginning of your question.

Steve G.

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