A professional fee is a fee that one pays to reap the benefits of a professional service. Such a professional is an individual skilled in his/her field. The fee can be charged by any professional who is providing special services like a lawyer, accountant, teacher, dentist, doctor, architect, etc. The rate is decided by the professional and is partially or fully paid in advance. Few professionals also charge a fee on an hourly basis and few charge based on the entire service.
Corporate companies maintain professional fees as an expense in their book of accounts. As corporate houses seek professional help from time to time, they incur such expenses very often. The fee is decided well in advance before availing of the service and the charges may be levied on an hourly basis and may change from individual to individual.
The charges of a professional invariably increase with the amount of experience they incur in their field. So an architect who is a fresher may not charge as much as an experienced architect who has worked for a decade. Paying a higher fee also comes with its own set of advantages like in this case experience.
Frequently Asked Questions
What are the types of professional fees?
Professional fees vary significantly and can be grouped in a variety of ways, thus there is no single, correct response to this issue. For professional fees, however, the following frequent expenditure categories are listed:
- Accounting fees: These might include the costs associated with hiring CPAs, bookkeepers, and other financial specialists.
- Legal fees: This category includes the costs associated with hiring lawyers, paralegals, and other legal experts.
- Consulting fees: These are charged by business consultants, IT consultants, and other experts who offer advice and instructions.
How can I save tax on professional fees?
If you work as a freelancer, consultant, or professional only half of your gross annual income can be used to calculate your income tax liabilities. According to Section 44ADA of the Income Tax Act, you can accomplish this by using the Presumptive Taxation Scheme. The total annual income must be less than Rs.50 lakh, which is the only restriction.
Are professional fees same as salary?
No, professional fees is not the same as salary. Professional or technical fees are classified as income from business or profession, while salary is classified as income from employment.