Cost of Accountant for Small Business in The UK: A Complete Guide

Running a small business is no small feat, and let’s face it – managing finances can feel like a full-time job in itself. Whether you’re just starting out or looking to streamline your operations, hiring an accountant could be the game-changer you need.

But here’s the big question: how much does it actually cost to get professional help with your numbers in the UK?

Average Cost Of An Accountant For Small Business In The UK

Accountant fees for small businesses in the UK vary depending on factors like your business size, structure, and the services you require. As a sole trader, you might spend between £100 and £150 per month. For startups, this could increase to £300–£400 plus VAT, while established businesses often pay between £500 and £1,000 plus VAT monthly.

Factors Affecting Costs

1. Business Size: Larger businesses with more staff, vehicles, and transactions incur higher fees due to the complexity of their operations. Sole traders, by contrast, pay less because their accounting needs are simpler.

2. Annual Turnover: Businesses with higher turnovers typically have more financial data to manage, so accountants charge more for preparing and reviewing comprehensive accounts.

3. Record Organisation: Disorganised records can lead to higher costs. Accountants often charge additional fees to sort through messy or incomplete documentation. Keeping your records tidy helps minimise expenses.

4. Service Scope: Basic services like bookkeeping and tax returns cost less compared to broader tasks such as dispute handling and corporate financial statement creation.

Common Misconceptions

• “An accountant is too expensive.” Many small business owners avoid hiring accountants, believing it’s a luxury. However, hiring one could save you money by ensuring tax efficiency and accurate financial management.

• “DIY accounting saves costs.” Managing accounts yourself can appear cheaper but often leads to errors or missed filing deadlines, incurring penalties. It's a short-term saving but long-term risk.

Suggested Practices

• Monthly Plans: Choosing a fixed monthly plan offers consistent management of your finances. A monthly package generally costs between £60 and £450, based on your business size and needs.

• Specialised Services: For year-end adjustments or HMRC disputes, you might engage an accountant on an ad hoc basis at £300–£700 per day. These specialised tasks are worth budgeting for when necessary.

• Simplify Record-Keeping: Use accounting software to organise data. This makes your accountant’s job easier, reducing their workload and your fees.

• Discuss Requirements: Clearly outline your needs with potential accountants. This helps avoid paying for unnecessary services.

• Shop Around: Compare quotes from various accounting firms. Some offer packages tailored to small businesses starting at £20 per month.

Understanding these costs ensures you choose services aligned with your budget and objectives.

Types Of Accountant Fees

Understanding the types of accountant fees can help you choose a payment structure that matches your business needs and budget. Each type offers unique benefits and suits specific scenarios.

Fixed Fees

Fixed fees are set amounts agreed upon in advance for specific accounting tasks. This option is ideal for routine services like preparing annual accounts, submitting tax returns, or handling payroll. By agreeing on a price upfront, you can avoid unexpected expenses and budget more accurately.

Some businesses mistakenly think fixed fees are restrictive, but they work best when tasks are well-defined. Ensure both parties clearly outline the scope of services to avoid misunderstandings later. For example, ask about inclusions like VAT returns, reporting deadlines, or additional advice to get the most out of this payment method.

Fixed fees excel in delivering predictability, especially if you're looking to manage costs more tightly. If you're a small business or a sole trader, this structure is often the easiest and least stressful to handle.

Hourly Rates

Hourly rates involve paying for the time your accountant spends on a task. This approach offers flexibility, making it effective for one-off or unpredictable tasks like ad-hoc tax advice, financial forecasting, or resolving a unique financial issue.

An hourly rate varies depending on the service. Basic tasks like general bookkeeping might cost £20–£50 per hour, while specialist advice like tax planning or business strategy could range from £35 to £60 per hour or more.

A common misconception about hourly rates is that they’re always the most expensive option. However, if you only need occasional help rather than ongoing support, this can be a cost-effective choice. To manage costs better, clearly define the task and request an estimate for the number of hours required before work begins.

Monthly Retainers

Monthly retainers provide ongoing support for a fixed monthly fee. Accountants under this arrangement typically cover agreed-upon services such as bookkeeping, VAT returns, or regular financial advice, giving you consistent access to their expertise.

Retainers work well if your business has more complex needs or requires continuous financial oversight. Startups and growing businesses often benefit, as they can plan ahead knowing their finances are managed throughout the year.

The main mistake with retainers is underestimating your potential needs. You might feel you're overpaying if you're not taking full advantage of the service. To avoid this, discuss your requirements thoroughly and ensure the offered scope aligns with your needs. A transparent conversation with your accountant can help tailor plans to fit your business better.

This structure offers peace of mind, with some businesses even mixing this approach with fixed fees or hourly rates to handle both routine and ad-hoc work seamlessly.

Common Accounting Services And Their Costs

Understanding the services your business requires can clarify your accounting budget. Accountants provide essential support such as bookkeeping, tax filing, payroll management, and financial planning. Each service level varies, with associated costs depending on complexity and time investment.

Bookkeeping And Record Keeping

Bookkeeping maintains accurate records of your financial transactions, including expenses, sales, invoices, and receipts. It forms the foundation of your accounts, ensuring your records are ready for tax deadlines or audits. Costs for bookkeeping vary between £100 and £500 monthly, influenced by transaction volume and business size.

Mistakes like missing receipts, unrecorded transactions, or delayed updates can create discrepancies. To avoid these, use accounting software to automate entries and simplify record keeping. If you're a sole trader or run a microbusiness, this task might require the most basic bookkeeping service, which accountants generally charge at the lower end of the range.

Tax Preparation And Self-Assessment

Tax preparation includes filing returns, ensuring compliance with tax laws, and maximising deductions. Accountants can charge between £150 and £300 annually for self-assessment tax returns, depending on the income complexity. For VAT-registered businesses, VAT return services might start from £200 monthly.

A common misconception is that tax preparation is straightforward when, in reality, mistakes like incomplete filings, missing deadlines, or overlooked tax credits can cause penalties. Asking your accountant about potential deductions specific to your trade or industry can reduce your liability.

If you use bookkeeping tools, providing complete and categorised records to your accountant speeds up preparation and reduces fees. Discussing expectations early helps balance costs and service efficiency.

Payroll Management

Payroll ensures employees are paid correctly, National Insurance contributions are managed, and compliance with HMRC is maintained. Monthly fees for payroll services range from £50 to £200, depending on employee numbers and the nature of contracts.

Errors in calculating wages, misfiling PAYE submissions, or failing to account for statutory deductions frequently occur without expert support. Small businesses often find it easier to outsource payroll during busy growth periods. If budget constraints exist, providing your accountant with employee work hours and payment structures in advance can lower costs.

Financial Advice And Planning

Financial planning services guide decisions regarding investments, budgeting, and growth strategies. Accountants offer customised solutions to minimise tax burdens and improve cash flow. Hourly rates for consultations or financial planning can range from £50 to £200.

Businesses often neglect financial advice, mistakenly viewing it as an unnecessary expense. However, a single session on budgeting or tax efficiency could yield more savings than its initial cost. For startups or sole traders, scheduling an annual financial review might be a cost-effective way to refine your business plan without committing to frequent consultations.

Working with an accountant who understands your industry brings tailored advice. Summarising your goals prior to meetings ensures discussions remain targeted and productive, saving both time and money.

Choosing The Right Accountant For Your Small Business

Selecting the right accountant for your small business is pivotal to maintaining financial health and enabling growth. While defining your needs and evaluating candidates is essential, Accountant Connector streamlines the process by matching you with qualified professionals tailored to your requirements.

Streamline the Search with Accountant Connector

Finding a reliable accountant doesn't need to be daunting. With Accountant Connector:

1. Complete a Simple Form: Share basic details about your business and financial needs.

2. Get Introduced: Connect with a handpicked accountant from our network of over 200 professionals within 48 hours.

3. Collaborate with Confidence: Work with an accountant aligned with your goals and values.

Our trusted network ensures you’re connected to accountants familiar with your industry, whether you're a sole trader or managing a limited company.

Avoiding Hidden Costs

Accountant Connector simplifies fee transparency:

• Clarify costs upfront with your matched accountant.

• Ensure quotes align with your business needs and avoid surprise charges.

Additionally, our curated network prioritizes customer satisfaction, boasting a 98% approval rate. If you’re unsatisfied, we'll introduce you to another accountant.

Expertise That Matters

By leveraging Accountant Connector, you gain access to professionals experienced in:

• Managing VAT returns, payroll, and corporation tax.

• Offering tailored financial strategies for sole traders and limited companies.

• Providing clear communication and reliable support.

Start your search for the ideal accountant with Accountant Connector today and take the guesswork out of finding the right financial expert.

When To Hire A Professional Accountant

Business Growth And Complexity

As your business grows, so do your accounting needs. Increased transactions, international dealings, or staff payroll creates complexity. A professional accountant can handle these with expertise, helping you save time and maintain accurate records. They also assist with strategic tasks like budgeting, financial forecasting, and identifying cost-cutting opportunities to promote growth.

Time And Compliance Advantages

Outsourcing accounting tasks lets you focus on growing your business. Professionals ensure your accounts adhere to current regulations, reducing the risk of penalties. This is especially important if your industry has complex tax laws or you're preparing for an audit.

Practical Techniques For Choosing The Right Help

Hiring an accountant doesn't mean losing financial control. Maintain regular communication to understand their recommendations. Discuss your business's needs, like VAT returns or financial planning, before signing a service agreement. Look for specialists familiar with your industry as it ensures tailored advice. Compare quotes and clarify fee structures, avoiding surprises later.

Avoiding Missteps

Some business owners hire accountants but fail to provide organised records, leading to higher fees and wasted time. Keep your documents updated and in order. Use accounting tools that sync with your accountant's software for better collaboration. Schedule routine reviews with them to stay aligned on financial goals and strategies.

Incorporating an accountant's expertise into your business finances doesn't just save time but offers long-term benefits like better compliance and informed decision-making. However, whether you manage DIY accounting or bring in a professional, the approach should suit your business size, complexity, and budget.

Conclusion

Choosing the right accountant for your small business in the UK is a crucial step towards better financial management. By understanding the factors that influence costs and exploring different fee structures, you can find a service that fits your budget and meets your needs.

Whether you opt for a professional accountant or manage finances yourself, the key is to stay organised, communicate clearly, and prioritise services that add real value to your business. With the right approach, you can streamline your accounting processes and focus on growing your business confidently.

Frequently Asked Questions

Is hiring an accountant worth the cost?

Yes, hiring an accountant can save time, ensure compliance, and provide valuable financial insights. While it’s an investment, it often helps businesses avoid costly mistakes and optimise their financial strategies, which can lead to long-term savings.

Can I handle my business finances without an accountant?

Yes, you can manage finances without hiring an accountant, especially if your business is small and straightforward. However, as your business grows, an accountant can handle complex tasks, ensure compliance, and enable you to focus on growth.

Do monthly accounting plans save money?

Yes, opting for a monthly accounting plan can save money. These plans offer predictable costs and often bundle essential services, helping you manage your budget while ensuring consistent professional support.