Hiring an accountant is often a necessary step you need to take as your business grows. Although many small business owners initially handle accounting tasks by themselves, such as bank reconciliation, invoice and credit note generation, bookkeeping, and tax returns, these tasks can eventually become too overwhelming. Thus, to keep on top of these tasks, you may need to hire an experienced accountant who can handle everything efficiently and accurately.
Not only can an accountant manage these time-consuming tasks for you, but they can also advise you on how to improve your cash flow and legally reduce your tax liability, which can save you a lot of money in the long run. In fact, despite the initial cost of hiring an accountant, you could find that their financial advice actually offsets this expense, making this a worthwhile investment.
But what will these initial costs actually be? There are a lot of factors that influence what an accountant will charge you, such as your business’s turnover, number of employees, and location. To learn more, just keep on reading.
One of the most important factors affecting how much an accountant will charge you is the size of your business, in terms of both turnover and the number of employees. Naturally, larger businesses with a higher turnover can expect to pay more for accounting services, whereas smaller businesses will face lower costs.
Often, the size of your business will dictate the kinds of accounting services you need, which will also have a huge impact on the overall cost of hiring an accountant. For example, if you need payroll services for a large number of employees, you can expect to pay more for this compared to a much smaller business with just a handful of employees.
It’s common for businesses to pay a monthly fee for a range of accounting services delivered as a package. For small businesses, a standard accounting package could cost between £60 and £250 a month. That is depending on your turnover and requirements. This package would typically include:
If your business has more specific requirements and needs additional services, such as business planning advice, expect to pay more. Make sure you compare different accounting firms to see what’s included in their standard accounting packages. If you need additional services, ask if these services can be added to your monthly package and what this would cost.
Paying your accountant a monthly fee for a standard set of services is a straightforward option for most businesses. But, if you have different requirements, you could benefit from a mix-and-match approach. This is where you pay one-off or hourly fees for more specialist services in addition to your standard monthly accounting services. This will allow you to only pay for these extra services as and when you need them.
Or, if you don’t want to lock yourself into a monthly fee or you only require a couple of accounting services, you could choose to only pay hourly and one-off fees. For basic accounting services like bookkeeping, an accountant will typically charge around £25-£35 per hour. For specialist services like business planning advice, you could expect to pay your accountant between £125 and £150 per hour. As mentioned earlier, these charges will be affected by your business’s turnover and number of employees.
If there’s an accounting service that only needs to be performed once per year, it makes sense to pay a one-off fee for each of these services. For example, you could do this with your tax returns and VAT returns as the deadlines approach.
So, what are the typical fees for these kinds of services? Again, this will depend on the turnover of your business. Businesses with a turnover of £20,000-£30,000 can expect to pay £150 for business accounts. Whereas businesses with a turnover of £250,000-£300,000 will pay around £600 for the same service. For VAT returns, businesses with a turnover of £0-£100,000 will pay around £100. However, businesses with a turnover of £200,000-£400,000 will pay around £200. A Self Assessment tax return will usually cost between £150 and £250 depending on the complexity of your finances.
Monthly fees will also vary. If you’re looking for payroll services, you can expect to pay around £100-£200 per month if you have between 10 and 50 employees. This fee will rise to around £500 per month if you have 100 employees, with the fee increasing as you hire more people.
Turnover and the number of employees in your business are clearly very important factors in determining your accounting fees. However, another factor you shouldn’t overlook is location. Although the rise in remote working since the Covid pandemic has made it easier to form business relationships without having to meet in person, your business’s location can still affect how much you’re charged for accounting services. In particular, London-based businesses can expect to pay higher fees than businesses located in more rural areas.
Now that you know how much accountants typically charge for their services in the UK, you’re probably wondering how you can reduce this cost as much as possible. Hiring an accountant is a worthwhile investment. But, as a business owner, it’s important to always be financially savvy and get the best deal.
First of all, you should always shop around and compare fees from different accountants. This can help you find the best price. But be aware that accountants with the cheapest fees may not offer the best service.
Next, make sure you consider what you really need for your business. If your business is still small, you may be able to do some of the accounting tasks yourself. Thus, reducing the amount of money you have to pay for accounting services. To help you get to grips with accounting, you can invest in accounting software. This allows you to easily generate invoices, create financial reports and calculate taxes. Always do your research to find the best accountants and software packages for your business.
