When we start working with a new client part way through their accounting year, we charge an alignment fee. It’s common practice for many accountants in the UK (and beyond), but you might have a few questions when you see it in your proposal. Let’s look at what it is, why we charge it and what it means for you.
What is an alignment fee?
An alignment fee is a charge that lines up your accounting fees with what you would have paid if you’d signed up with us at the start of your accounting year. It makes sure that we get paid in full for the work we do at the year end even though you weren’t with us throughout all of your financial year.
In other words, it makes sure we’re all caught up with your fees in a normal accounting cycle.
It only applies to annual services
An alignment fee will only be charged if you’re onboarding part-way through your accounting year onto our annual services, including:
- Statutory / sole trader / partnership accounts
- Corporation / partnership / personal tax returns
- Confirmation statements
We usually spread the cost of annual services over the whole year. If a set of accounts costs £1,200, you’ll be billed a fee of £100 per month over 12 months. This avoids us sending lumpy invoices that can cause problems with your cashflow.
Example:
Let’s say your accounting year runs from 1st July 2023 – 30th June 2024 and you sign up with us in January 2024.
If we were to invoice you in January, February, March, April, May and June, we’d only be charging £600 for the set of accounts – which in this example cost £1,200. It means there’s still £600 left to pay.
To bill the correct amount for the service, we charge an alignment fee to catch up for any annual services where we can’t bill in 12 monthly instalments.
You can choose how to pay your alignment fee
We’ll always give you the choice between:
- Paying the fee in one go (if you prefer)
- Spreading the remaining cost over the remainder of your financial year
In the example above, we would give you the choice of being invoiced £600 in January OR that cost spread over the remaining six months of the financial year.
If you have any questions or concerns about alignment fees, send us a message and our team will be in touch.
