The cost of an accountant for your UK business

Dealing with accounting can be tedious and stressful, but it’s a necessary chore for every business owner. It can be challenging to balance your business, maintain good accounting records, analyse financial statements, and comply with tax deadlines. Hence, hiring an accountant is a wise decision. Although it’s considered an overhead expense, paying an accountant ensures that your finances are in check, that you’re compliant with the law, and often saves you far more in tax than you spend on the accountant’s fees.​​

The cost of an accountant in the UK can start from around £500 per year for the smallest and most straightforward business, but will be impacted by business structure and size, and the type of services and support you are looking for. An accountant may charge a fixed monthly fee or an hourly charge (varying from £50 to £400+). However, other factors, such as the scope of the work and the accountant's experience and expertise must be considered as well.​​

Bookkeeping and accounting are integral parts of your business’s finances. Many business owners think they are one and the same, however, there are a few key differences.​

A bookkeeper is typically involved in recording business transactions (e.g. payroll, invoicing, payment of bills). Their job is more repetitive. It does not require a lot of high-level knowledge or experience to be a bookkeeper. Normally, university graduates or business administrators with some training can take on the job. Their main focus is to make sure the accounting records are accurate and up to date. ​

An accountant provides insights based on the key financial data. Depending on their experience and knowledge, they can provide strategic advice, tax planning for the future and more. They review the business’s financial statements, budget for the coming year, prepare and file financial statements with Companies House and tax returns with HMRC, and analyse business performance. ​​

Often, accounting providers (like us) will offer bookkeeping services too.​

The cost of an accountant commonly depends on several factors such as business size, expertise, business timing, experience level, level of accounting support you need, the tidiness of record keeping, and location.​

There's a general rule that applies when it comes to the cost of a business accountant: the bigger and more complex your business is, the more the accountant needs to review. Compared to a small business that is operating under a sole trader structure, larger companies may likely have more transactions. For example, a sole trader consultant who has minimal expenses and invoices a few different clients each month will have less transactions than an e-commerce business that sells thousands of products online every day. This means accountants need to spend more time reviewing the financial data and turning this data into financial statements and tax returns. ​​

At Beany, our fees are based on your business's gross annual income or turnover. The Form Package has a monthly fee of £95 (VAT exclusive) if your annual gross earning is up to £150k. If your income exceeds this threshold, you'd move into our Flow or Flex package. ​​

Some accountants have vast experience in specific industries e.g. construction, farming, real estate. The cost of hiring an accountant who specialises in the construction industry for example, might be higher due to its complexity. Not only do they have to know and comply with specific laws and regulations, but also they need to have an in-depth understanding of job costing, revenue recognition using the percentage of completion method, and CIS.​

If you’re looking for an accountant closer to the date when your tax is due, the cost can also increase. Consult an accountant in advance of the filing date to avoid the stress of leaving it to the last minute and the extra cost of expediting the process. ​​

Another option is to hire an accountant who offers fixed monthly fees. For example, Beany breaks your accountant fees into 12 months and you’re guaranteed to pay a fixed monthly fee. The packages include financial statements, company tax return, personal tax returns for up to 2 directors/shareholders, confirmation statement, as well as unlimited support and advice for day to day queries.​

Your accounts are in good hands with Beany, we’ll send you an alert and your dedicated accountant will do everything you need after completing the hassle-free questionnaire (you save time sending heaps of paperwork to your accountant!).​

Experience plays a role in how much an accountant costs. A certified accountant with more experience will be more expensive. Although you can choose to use a less expensive accountant, be sure to do your due diligence to see if they meet your expectations. In the UK, the commonly recognised certification for accountants is ICAEW (ACA) or ACCA. Be sure to find a good Chartered Accountant. They may appear to be expensive to start with, but in reality, the services they provide to you may save you more on tax or increase business sales.​

If you need more support from your accountant, that will obviously push the fee up. If you have no idea about accounting, you are likely in need of more help from your accountant to teach you, from the basic VAT ruling, bank reconciliation and so on. However, if you have been in business for many years, you may already know all the tax deadlines, Xero functions, which requires less help from your accountant.​​

Businesses operating under different business structures have an impact on the level of accounting support you need. Sole traders won’t need the same level of support as a business operating under partnership or company structures.  The bare minimum support you need from your accountant is to meet compliance with HMRC. However, if you’re running a small business as a sole trader, your accounting and tax requirements will be more straightforward than partnerships or companies. You can read more on business structure in this article.​

The better you keep your records tidy and up to date, the cheaper your accountancy fee will be. Some business owners have the idea to dump all information to the accountant at year end, and expect things to be tidied up nice and quick. It can be done, but it will also be more costly. As more time and effort is spent digging into the records. ​​

Also, it is important to remember it is your business to start with. We generally find business owners with good record keeping and willingness to learn accounting knowledge will have good business results and keep accounting fees low. With the help of technology, it isn’t that hard. When you make a large purchase, simply take out your phone and take a photo of the invoice, and upload that to Xero straight away. This can reduce the work for your accountant at year end, asking you about an invoice from several months back, which you will find hard to recall what you bought and where the invoice is. ​​

In general, accountants in big cities such as London will charge higher fees than accountants located in smaller towns or more rural areas. However, the key isn’t to find the cheapest one, but the best one at the best price.​

It is common for small business owners to believe that they don't need an accountant if they’re using accounting software. But the truth is: it is better to have both. Technology certainly helps, but hiring an accountant will ensure you're properly guided and compliant with laws and regulations. Having them on board can not only help you improve your financial systems, but also eliminate the headache when it comes to understanding the nuances behind the key numbers and enabling you to grow your business further. ​

Read more: How to find the right accountant for your small business​

Beany are accountants for ambitious businesses, delivering big firm expertise without the big cost. We handle everything accounting-related (such as annual compliance, bookkeeping, financial insights and strategy), and help business owners make smarter decisions for their business and lifestyle through our responsive, friendly expertise. Book a call or get in touch if you want to discuss your accounting requirements and how we can help.​