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Overcharged by CPA?

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  1. #1

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    May 2019
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    Overcharged by CPA?

    I started a company last year and the following is what's being quoted to me for book keeping by my CPA's firm.

    It's an e-commerce company, transactions are only done online. Payments received by paypal and another payment processor for CC transactions. No customers in HK.

    The CPA firm requires a daily voucher for each payment processor. That's 682 transactions calculated!
    Then for each paypal withdrawal to a HK bank account = 100 transactions. Then there's the supplier invoices and other expenses, let's say 50 transactions. In total 832 transactions or so or 69/month.

    The quoted fee for book keeping alone is almost 46.000 HKD! Excluding audit and any additional reports.

    The profits tax owed is less than the book keeping fees alone.... I believe i'm being ripped off.
    Can anyone with an online business / e-commerce business confirm? Do they really need to have a daily voucher for each payment processor and calculate each voucher as a single transaction?


  2. #2

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    Why can't you do the bookkeeping yourself? Most ecommerce platforms and payment gateways produce reports that are compatible with QuickBooks and other olatkforms.

    Also, the whole list of requirements is bogus.. No need for every transaction to be accounted for. Consolidate weekly income.


  3. #3

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    Jan 2017
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    You have to drive the conversation. If it's an old fashioned accounting firm, then they will think old school. They will quote based on YOUR information and YOUR processes that YOU give them. What are you asking them to do? Is everything to be manually recorded? Is every individual transaction hitting your bank, PayPal or other payment provider? If it's every transaction, then they need to book individual transactions. That of course will be more expensive as they need to record and reconcile each item individually. Are you asking them to prepare P&L, Balance Sheets, any other analysis? If they were a good CPA then they should help you improve your processes but of course they can't do this based off an initial conversation you had with them for the quote.

    Reduce your costs by recording your ecommerce sales once a month in your accounting books. Transfer your ecommerce income once a week to PayPal or your other payment providers. Transfer the money from PayPal or your other payment provider to your bank account once a week. This hugely reduces the amount of transactions. You definitely don't need individual transactions booked everywhere. So that's your responsibility.

    The CPA's responsibility is to have access to the back up information for these transactions. Ecommerce sales = monthly sales report from your ecommerce site. PayPal = monthly statement of transactions. Payment Provider = monthly report of transactions. If an auditor requires information on a specific transaction, then and only then, do you do a deep dive into the transactions. Otherwise monthly sales/transaction reports are more than adequate. Individual vouchers are not required if you do it like this.

    Hope that helps. It's both parties responsibilities here to help each other.

    shri, Trebor, LifeInHK and 1 others like this.

  4. #4

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    Did you not discuss the fees ahead of time? I have about that many transactions every 2 days and my auditor quoted me HK 2k per month if they are to do my bookkeeping service. I opted not to and do our own bookkeeping in house.

    JohnsHK likes this.

  5. #5

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    Dec 2013
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    HKD2-4k a month for small businesses seems to be about the norm.

    MandM! and JohnsHK like this.

  6. #6

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    @TallT has nailed it - specifically with the guidance on how to book transactions / transfer funds etc. Would give that post a 100 likes if I could.

    In our case, the auditor picks a couple of line items of every type (purchase / sales / expenses etc) at random and asks us for the invoice / delivery notes / whatever.

    HK_Katherine and JohnsHK like this.

  7. #7

    Join Date
    Jan 2013
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    OMG and that accountant probably wants you to print everything out too. The fact is if you sell everything online, your record keeping is probably better than most that do it offline. It should be pretty easy to manage your books as well. Just buy a smb type accounting software and you'll be pretty OK. I'm sure there's some import function where you can just import all your sales. Purchases and other expenses you can enter in manually. It's the auditors that you will have to pay for since I don't think you should go cheap on that.

    JohnsHK likes this.

  8. #8

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    May 2019
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    Quote Originally Posted by shri
    Why can't you do the bookkeeping yourself? Most ecommerce platforms and payment gateways produce reports that are compatible with QuickBooks and other olatkforms.

    Also, the whole list of requirements is bogus.. No need for every transaction to be accounted for. Consolidate weekly income.

    It's a custom made ecommerce platform, quickbooks etc. are not integrated.
    That's on my todo list.

    Shouldn't every transaction be accounted for final audit?
    Last edited by JohnsHK; 19-06-2019 at 01:43 PM.

  9. #9

    Join Date
    May 2019
    Posts
    6
    Quote Originally Posted by TallT
    You have to drive the conversation. If it's an old fashioned accounting firm, then they will think old school. They will quote based on YOUR information and YOUR processes that YOU give them. What are you asking them to do? Is everything to be manually recorded? Is every individual transaction hitting your bank, PayPal or other payment provider? If it's every transaction, then they need to book individual transactions. That of course will be more expensive as they need to record and reconcile each item individually. Are you asking them to prepare P&L, Balance Sheets, any other analysis? If they were a good CPA then they should help you improve your processes but of course they can't do this based off an initial conversation you had with them for the quote.

    Reduce your costs by recording your ecommerce sales once a month in your accounting books. Transfer your ecommerce income once a week to PayPal or your other payment providers. Transfer the money from PayPal or your other payment provider to your bank account once a week. This hugely reduces the amount of transactions. You definitely don't need individual transactions booked everywhere. So that's your responsibility.

    The CPA's responsibility is to have access to the back up information for these transactions. Ecommerce sales = monthly sales report from your ecommerce site. PayPal = monthly statement of transactions. Payment Provider = monthly report of transactions. If an auditor requires information on a specific transaction, then and only then, do you do a deep dive into the transactions. Otherwise monthly sales/transaction reports are more than adequate. Individual vouchers are not required if you do it like this.

    Hope that helps. It's both parties responsibilities here to help each other.
    Thank you for the detailed information.

    I have done almost daily withdrawals from PSP and paypal to bank account. Reason because I don't trust these parties to hold my money for a month, you should read the horror stories about paypal and others, closing accounts for no reason and holding the funds for over 180 days.

    I will try to find a solution to do only one withdrawal per service provider per month, that would indeed save me a lot of book keeping costs. I should have thought of that from the beginning.

    I'll also contact other CPA's because I still think the current one is just after my money. They keep insisting on individual vouchers and me having to account in detail for every single customer transaction.

  10. #10

    Join Date
    May 2019
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    6
    Quote Originally Posted by MandM!
    Did you not discuss the fees ahead of time? I have about that many transactions every 2 days and my auditor quoted me HK 2k per month if they are to do my bookkeeping service. I opted not to and do our own bookkeeping in house.
    No I didn't... I didn't even guess the costs would be so high. Not only for book keeping / audit but also for company upkeep and maintenance.
    I was a bit nave to fully trust the incorporation agent. I have not been fully informed.

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