How Much Does an Accountant Cost for Self Employed

Sorting out your finances as a self-employed professional can be challenging, but having the right accountant by your side can make a big difference. Whether you’re just getting started or have been running your business for years, knowing how much an accountant might cost is an important part of managing your budget and keeping your cash flow healthy.

From one-off tax returns to monthly packages that cover a range of services, accountant fees can vary a lot. You might spend as little as £25 a month for basic help, or set aside hundreds for more complex support. So what exactly are you paying for, and how do you decide if it’s worth the money?

Let’s break it down so you can figure out what works best for your needs and your wallet. After all, the right accountant isn’t just a cost; it’s an investment in your business.

Understanding Accounting Costs For The Self-Employed

Accounting costs for the self-employed vary based on the services and support you require. Basic packages, such as annual accounts and tax return preparation, typically cost between £300 and £600 per year.

If you need monthly services like bookkeeping or VAT returns, expect costs ranging from £25 to £100 per month. All-inclusive packages, covering advice on tax legislation (e.g., IR35) and payroll management, can cost more.

Online-only firms often offer lower fees by automating processes and using flat-rate pricing. These services suit straightforward needs, like bookkeeping or basic tax filings. If your business involves complex finances, high street firms or accountants specialising in self-employed clients may provide better value through tailored support.

Transparency is indispensable. Confirm what's included in any quote: some packages exclude VAT returns or end-of-year accounts. Using tools like Accountant Connector can help you compare fees and find accountants that fit your needs. For minimal work, accounting software cuts costs, requiring only occasional professional assistance.

Types Of Accounts Available

Whether you're a sole trader or managing a growing small business, understanding the types of accounting services available will help you choose the right fit. From essential bookkeeping to advanced strategies, knowing what suits your needs can save time and improve financial efficiency.

Basic Accounting Services

Basic accounting services include essential tasks like bookkeeping, preparing annual accounts, and filing tax returns. These services guarantee your finances remain organised while meeting HMRC compliance requirements. For example, bookkeeping handles daily income and expense tracking, which simplifies tax preparation at year-end.

If you're a sole trader with straightforward needs, opting for a one-off tax return service costing £150-£300 can be cost-effective. Alternatively, monthly accounting packages, starting from £25-£50, cover bookkeeping and periodic reports. Using accounting software may reduce your reliance on accountants, but professional guidance ensures accuracy.

Advanced Accounting Solutions

Advanced accounting services provide specialised support, such as VAT returns, payroll management, and financial planning. Businesses with higher turnovers, multiple income streams, or employed staff often require these services. For instance, payroll solutions for up to 25 employees start at £150 per month.

Strategic services like tax optimisation or IR35 advice are ideal for self-employed business owners seeking maximised savings. Costs for these advisory services range from £100 to £300 per hour. Combining basic and advanced packages ensures all needs are met while streamlining processes, especially when using tools like Accountant Connector for tailored solutions.

Factors Affecting The Cost Of An Account

The cost of hiring an accountant for self-employed individuals varies based on several factors. Understanding these elements can help you choose the best services for your needs while staying within budget.

Business Size And Complexity

Smaller, straightforward businesses generally incur lower accounting fees. If you're a sole trader with minimal transactions, expect to pay between £25 and £50 a month for basic bookkeeping and annual accounts. On the other hand, businesses with complex finances, such as those with multiple income streams or employees, often require advanced services like payroll or VAT returns.

These might increase monthly fees to £100 or more. Consider the scale of your operations to decide which level of service suits you.

Frequency Of Accounting Needs

Some businesses need regular support, while others only require occasional assistance. Monthly packages, ideal for those with ongoing accounting tasks, typically range from £25 to £100. If you only need help with annual accounts or a Self Assessment tax return, a one-off service costing £150 to £300 could be more economical.

Assess how often you'll rely on accounting services to determine whether ongoing support or ad hoc assistance is the smarter choice.

Average Costs Of Accounting Services For The Self-Employed

Understanding the costs of accounting services is indispensable when you're self-employed, as they can vary significantly depending on your needs. From basic one-off tasks to all-inclusive packages, knowing what you’re paying for helps you make informed decisions.

Hourly Rates Vs Flat Fees

Accountants may charge an hourly rate or offer fixed pricing for certain tasks. Hourly rates typically range from £20 to £50 for services like bookkeeping or general advice. For more specialised work such as financial planning or tax consultation, costs can rise to £100–£300 per hour.

Flat fees bring predictability. For example, a self-assessment tax return might cost £150–£300, while all-inclusive annual packages, including accounts and tax returns, often range between £300 and £600. If your needs are occasional or minor, hourly payments might suit you better, whereas fixed fees are ideal for ongoing requirements.

Software Subscription Costs

Many accountants provide access to cloud-based accounting software like Xero or QuickBooks. Some include these tools in their service packages; others charge separately, adding £10–£50 per month to your costs. These platforms streamline bookkeeping, VAT filings, and invoice management, saving time and reducing manual errors.

For smaller budgets, use these platforms independently while seeking limited accountant support. But, full-service packages encompassing software access, tax advice, and email support might offer better value if you prefer an all-in-one solution.

Choosing The Right Accounting Solution

Finding the perfect accounting solution depends on your business type, budget, and personal preferences. Whether you choose to work with a professional accountant or rely on accounting software, the right choice simplifies financial management and improves compliance with tax regulations.

Hiring A Professional Accountant

Professional accountants offer expertise that can save you time and sidestep costly errors. For self-employed individuals, professional support typically includes preparing self-assessment tax returns, managing VAT filings, and offering tax efficiency advice.

Costs generally range from £150 to £300 for one-off tax returns or £300 to £600 annually for combined services, such as accounts and tax returns. Hiring is particularly useful if your finances are complex, involving multiple income streams or rental properties.

Before deciding, clarify what’s included in the pricing. Some accountants bill separately for tasks like payroll or quarterly VAT returns.

Using Accounting Software

Cloud-based accounting software, like Xero or QuickBooks, enhances financial accuracy by automating tasks such as invoicing and expense tracking. Many platforms integrate seamlessly with your bank accounts, reducing human error and saving hours of manual input. If you’re comfortable with basic bookkeeping, this is a cost-effective alternative to hiring a full-time accountant.

Most software options cost between £10 and £50 per month. For added peace of mind, you could opt for periodic reviews by a professional accountant to guarantee compliance and accuracy. Some firms offer subscription packages that include software setup and ongoing access to expert support, streamlining your accounting needs into one manageable package.

Conclusion

Choosing the right accountant as a self-employed professional is an indispensable step towards managing your finances effectively. Whether you opt for basic services, advanced packages, or a combination of both, understanding the costs involved ensures you’re making a well-informed choice that aligns with your budget and business needs.

Frequently Asked Questions

What services can I expect from an accountant?

Accountants provide services from bookkeeping and annual accounts preparation to payroll management, VAT returns, and tax optimisation. Basic compliance tasks like tax filing typically cost less, while advanced advisory services focus on maximising tax efficiency and streamlining operations.

Is it better to use accounting software or hire an accountant?

The choice depends on your needs. Accounting software like Xero or QuickBooks costs £10–£50 per month and suits those comfortable managing basic bookkeeping. An accountant is advisable if you need expertise, advanced financial strategies, or time-saving solutions.

What factors affect the cost of hiring an accountant?

Costs are influenced by the size and complexity of your business. Small businesses with straightforward finances pay less, while those with multiple income streams or complex needs may require advanced support at higher fees.

Are all-in-one accountant packages worth the cost?

Yes, all-in-one packages often offer excellent value for businesses requiring comprehensive financial management. These packages typically include tax advice, bookkeeping, payroll, and annual filings, saving time and ensuring compliance.

Can I save money by doing bookkeeping myself?

Yes, you can reduce costs by handling bookkeeping independently using tools like QuickBooks or Xero. However, this requires time and basic accounting knowledge. Hiring an accountant for periodic reviews ensures accuracy and compliance.

Do I need an accountant for tax returns if self-employed?

Legally, you don’t need an accountant to file self-assessment tax returns. However, they can ensure accuracy, maximise deductions, and save time, making their services highly beneficial.

Are fees for accounting software included in accountant packages?

Many accountants include cloud-based software like Xero or QuickBooks in their packages. Some may charge separately, typically £10–£50 per month. Confirm this upfront to understand total costs.