In this Article:
- An overview of what impacts your price at a Portuguese accountant
- Prices at Elevate Accounting
- Why there is so much variation in pricing between accounting firms.
Getting Started
How much does an accountant cost for my business in Portugal? The answer, as you may expect, is “it depends”. It’s kind of like asking how much it costs to build a house, there are a lot of variables to consider.
We’re specifically going to discuss pricing for a supporting an LDA business in Portugal. Currently Elevate isn’t accepting new Individual clients, only new business clients. We truly want to be able to support individuals, but the economics of the situation don’t allow it at this time.
Now…On to the good stuff!
What Factors Impact Accounting Costs?
Here are the main drivers affecting the price you get charged for an accountant in Portugal:
- The quantity of documents to process (primarily focused on the number of expense invoices you have)
- Whether documents are given to accountant primarily as paper or digital records
- Complexity of the business being supported (is your business importing/exporting, are there a lot of industry-specific accounting rules, do you work with several different currencies, etc.)
- Add On Services: Standard accounting includes bookkeeping and Tax Authority declarations (like IRS and VAT). Other services that can be added are things like Payroll, Accounts Receivable, Accounts Payable, Cashflow Management, Budgeting, Consulting, and Elevate specifically offers bookkeeping in Xero or QuickBooks as an additional service.
- Different service levels: Will they return your call in 1 business day, sometime this month, or never?
Let’s Start Talking Numbers. Prices at Elevate Accounting (Not Including VAT):
One final disclaimer – at Elevate we provide a custom proposal for each client. This page is meant to give you a baseline of what to expect and educate you on what goes into pricing. Additionally, whenever possible we charge a flat rate fee for our service, so clients know exactly what to expect each month (our rates don’t vary by monthly volume).
Bookkeeping & Accounting: Our lowest level pricing for an LDA is €300/month. There are accountants near us that charge less than us and some that charge more. We increase our price by €50 for each 20 expense invoices the client has each month. So if a client averages 20 or fewer expenses per month they pay €300, if they average between 21-40 they pay €350, etc. These are our base values that apply to most companies, but they must be adjusted for more complex situations (for example if they import/export, work with multiple currencies, etc.).
Payroll: For payroll we charge €15/month/employee if they’re paid a fixed salary each month, or €25/employee/month if their pay changes based on days/time worked.
For companies with a lot of employees we often work with the client to streamline their payroll process so that we can reduce the cost below these standard rates.
Accounts Receivable: To take over Accounts Receivable (“AR”) for our clients and handle the invoicing and tracking the payments their customers make to them, we charge €100/20 invoices. This service includes ensuring proper invoices are created, collecting the payment, marking invoices as paid, following up with customers with late payments, etc.
Accounts Payable: For Accounts Payable (“AP”), where we’re paying our clients bills for them, we have a bit more work. In order to do Accounts Payable we first need to complete ongoing cash flow and budgeting analysis to ensure that the client will have enough cash in the bank as bills become due. We wouldn’t be doing a good service if we paid a bill today and then suddenly didn’t have enough money to pay employees a week later (as a side note, just having the budgeting and cash flow reporting is SUPER helpful to most business owners – it gives a nice spreadsheet view of what the business can expect throughout the month). Due to the required cash flow and budgeting analysis needed before we start paying bills, the cost for AP starts at €300 for the first 20 bills, and increases by €100 for each 10 bills after that.
Cost to Create an LDA in Portugal:
At Elevate we partner with a talented law firm to provide our clients with a single point of contact to handle their business and legal matters in one spot, including helping clients create a new legal entity, which is typically an LDA.
For LDA creation most of the fees (and work) go to our legal partners. They create the legal entity, create all of the declarations, contracts, and other forms required by the Portuguese government to legally open and do business. Elevate then handles the “activation” of the business and sets the new business up properly throughout Portuguese government portals.
The base cost for this service is €1,999 euros which includes basic legal and accounting setup, choosing a business name off of a list supplied by the PT government. If there is a complex situation involved this price might increase, but this is our standard price that is used in most situations. Additionally there are around €300 euros in charges paid directly to the government to create the business, which is in addition to our charges.
To choose a custom name for the business (not off the list), it costs €175 which is a mix of legal and government fees. If you need it processed urgently this increases to €250.
If the client isn’t physically in Portugal or doesn’t want to accompany the attorney during the creation process, a Power of Attorney (POA) form can be created and signed by the client so that the attorney can do this on their behalf. The cost for this is typically around €160.
Why are Some Accountants More or Less Expensive Than Others?
Again, this can be due to a lot of reasons. I’ll outline the cost drivers that may be impacting a firms price to be higher or lower.
Labor – The Biggest Expense:
First, understand that accounting work in Portugal is very labor intensive. Think about the last time you’ve tried to do something in Portugal…was it easy and straightforward? Now imagine that every time the government wants another piece of information or wants to add another control, they have a small subset of people (accountants) that they can legally require to provide it to them, no matter how inefficient the process is to do so. I won’t list off all the things that must be completed for proper accounting here. For now, just trust me that there are many hours of work for each company, and much of that work requires a certified Portuguese accountant to do it correctly. It’s easy to get wrong if a person isn’t working carefully.
Like any business, labor costs come down to two main components:
1) How much does your labor cost (which also correlates to experience, training, and capabilities)
2) How many people you hire
Some accounting firms run into issues with the following dilemma. They want to get new clients so they price low to draw people in – the problem is that now they must have a lot of clients just to make a modest living. They have to complete everything as fast as humanly possible with the smallest possible staff just to break even. When they do hire, the staff needs to be at the lowest rates and can only be hired after they have too many paying clients to handle on their own. They can’t take time to ensure things are being done correctly, review their clients’ books, or research answers to give to clients or they’ll miss government deadlines and be forced to pay a fee (not to mention their customers want the accounting completed now!). The result might be mistakes, clients losing money due to errors, things being completed at the last minute, and general frustration – even though the accountant believed they were doing a good deed by pricing low. The question then becomes “where is the accounting firm going to be on this spectrum?”
Like any market, employees that are very good at their job cost more than their peers. They’re an investment. At Elevate, we put ourselves on the higher end of the scale – we happily pay a premium for high quality employees who are going to do things right, save our clients money, and provide a great service. We also staff to ensure that we can answer questions quickly and get work done promptly. We’d rather cost a bit more than some firms and give a TON of value, rather than pricing low and not meeting our own expectations.
Technology:
At Elevate, it’s our goal to provide a great service and take stress away from our client. We can’t do that if our processes are the same as they would have been in the 1990’s.
Technology is another cost driver and results in higher or lower accounting fees. Most services charge per employee using the software or per client that will be managed with the software. At Elevate, we invest in software and technology, to ensure high quality and to make our client’s lives easier. These include software such as:
- “Practice Management” software that keeps track of all of the work that needs to be done by us and our clients and sends out automatic reminders to keep everyone on track.
- Secure client portal so that shared drives and files can be easily and securely shared between us and our clients.
- eSignature software so contracts can be signed online
- …and the list goes on
Real Estate / Equipment / Etc.
Other business expenses like real estate for their office, equipment (industrial printers and scanners), and more will all contribute to the expenses for an accounting firm, and ultimately, the cost passed down to you as a consumer.
Wrapping Up
This should give you a solid background on how much an accountant costs in Portugal, as well as the tradeoffs involved with different pricing structures.
Please remember that this section is providing general information – not every lower-cost accounting firm is going to have the issues I highlighted, and not every higher-priced firm is going to give you amazing service. However, this should give you insight into the cost drivers of an accounting firm and the background to make the best choice for yourself.
