Determining Retainership Fee for a 40 Crore Turnover Company in India
Introduction
Chartered Accountants (CAs) charge their fees based on the time devoted by their team and the value addition they bring to the table, which is determined by the agreed scope of work. The size and industry of a company significantly influence the retainership fee, as does the complexity of the services provided. This article discusses the factors that impact the retainership fee for a company with a 40 crore turnover in India.
Factors Influencing Retainer Fee
Complexity of Services Provided
The level of complexity in the services required by the company can significantly impact the retainership fee. For instance, basic compliance services such as tax returns, audits, and financial statements are generally less expensive compared to more comprehensive advisory services.
Size of the Company
The size of the company is a crucial factor in determining the retainership fee. A Rs 40 crore turnover can be attributed to millions of transactions or a single transaction, depending on the industry and other factors. All these elements are considered before mutual agreement is reached.
Scope of Work
The scope of services provided is the primary factor in determining the retainership fee. A detailed analysis of the specific needs of the client is essential. For a 40 crore turnover company, the retainership fee might range from 0.1% to 0.5% of the turnover, which translates to an annual fee between Rs 40,000 to Rs 200,000.
Fixed Monthly Fee
Some CAs opt for a fixed monthly retainership fee, which can range from Rs 5,000 to Rs 25,000 per month depending on the services included.
Market Rates and Negotiation
It is advisable to check market rates in the specific region and industry, as they can vary significantly. Fees can also be negotiated based on the relationship between the CA and the company, the duration of engagement, and the specific requirements of the client.
Retainership Fee Considerations
Generating a Minimum Gross Margin
Retainership fee is never fixed based on the turnover of a company as it is misleading. For a manufacturing company, Rs 40 crores might not be a large number, whereas for a service sector company, it could be a significant sum. The retainership fee should aim for at least a 40% gross margin.
Fixed Based on the Following Criteria
Retainership fee is fixed based on the following:
In conclusion, the retainership fee for a 40 crore turnover company can range from Rs 40,000 to Rs 200,000 annually or Rs 5,000 to Rs 25,000 monthly, based on the services provided and the client's specific needs. However, it is best to tailor the fee based on the unique circumstances and requirements of the company.