Chartered Certified Accountant
How Much Does a Small Business Accountant Cost in the UK?
Are you sourcing a small business accountant to keep your business’s financial management balanced? Hiring an accountant can be overwhelming if you can’t understand their actual fees. For spending too much or not enough, you have to face various problems operating business activities. In this guideline, I explained the cost of an accountant for small businesses and the ins and outs for new and existing sole traders and limited business owners. Let’s read to explore.
What Do Small Business Accountants Do?
Small business accountants work for sole traders and limited companies. They help to make business finance healthy and stay updated with compliance, including-
Accounting
Accountants help business owners operate and monitor every single transaction, profit, and expense to understand their financial position. Doing it in-house is risky due to doing multiple tasks at a time. Hiring professionals is best for accuracy and maintaining consistency.
Taxation
Understanding tax laws and submitting tax files on time, while staying updated with compliance, is more complicated. Expert tax accountants handle it easily, plus they ensure you avoid costly penalties for owing deductions.
Payroll
Payroll is a process of getting employees’ payments with PAYE. A professional accountant provides payroll services, including salary, wages, bonuses, overtime, insurance, and union fees, to ensure employees’ rights and morale.
Company Formation
Company formation refers to opening a company with legal compliance. Business clarity, registering, planning, funding, and operating are all services you can get from an accountant.
Why Do Small Businesses Need Accountants?
Hiring small business accountants is an excellent option for business growth and development. You will get the following benefits:
Efficiency
Accountants bring efficiency for small businesses by tracking finances, managing budgets and payroll, and planning taxes to ensure deductions and avoid fines or penalties.
Compliance
Small businesses need accountants to stay updated with the UK government’s small business laws and regulations. They provide tax services to meet HMRC requirements.
Time-Saving
Accountants work to balance bookkeeping, payroll, tax and VAT, and finance. So, you can focus more time on making decisions and the growth of the business with peace of mind.
Financial Insights
Professional UK accountants provide financial information by analysing data records meaningfully. These transparent overviews help to understand the actual situations of businesses for sole traders and limited company owners.
Accountant Costs for Small Businesses in the UK
The monthly costs for small business accountants in London vary from £50 to £450, depending on the services and size of the company. Basic accounting services are offered to sole proprietors by independent accountants and freelancers. Some accountants provide hourly prices for just one service, while others charge monthly or quarterly prices. Accounting firms will be the best for partnerships or limited companies. If you’re searching for accountants for your company, take a close look at these charts.
Prices for Various Services
| Service Types | Estimated Costs |
| Self-Assessment Tax Returns | £100 to £300 monthly |
| Vat Returns | £75 to 200 monthly |
| Payroll Services | £5 to £10 or £25 to £100 monthly |
| Bookkeeping | £100 to £400 monthly |
| Limited Company | £600 to £1200 yearly |
| Corporation Tax Returns | £250 to £600 monthly |
| CIS Returns | £30 to £70 monthly |
| Business Consultation | £75 to £150 hourly |
Key Factors That Influence Accountant Costs
UK small business accountant costs vary based on your demandable services, business size, location, turnover, and accountants’ experience.
- Business Type
- Specified Services
- Regularity
2. Size and Complexity
Business size and service complexity affect the costs. More workloads increase the time of your accountant, causing high or extra fees.
3. Location
South, East, and North London accounts mostly charge higher for operational costs than central London for higher living costs. That’s why accountants in different districts’ charges vary.
4. Service Categories
More work demands higher costs whereas optimise charge is less. For example, payroll service will be comparably lower than accounting management services.
5. Regularity of Service
Regular services ensure better quality and accuracy. So, whether you need monthly check-ins or just year-end reports, getting frequent support causes more fees.
Comparing Accountant Fees: Fixed vs Flexible
Modern accountants offer fixed monthly or yearly packages. Also, they have other options that are flexible, like hourly costs. Business owners need to understand all methods to choose the best one to meet their needs.
Overview of Different Flexible Charts
| Service Types | Yearly Costs | Monthly Costs | Hourly Costs |
| Sole Traders | £150 to £1,500 | £100 to £150 | £35 to £60 |
| Start-up | £300 to £3,000 | £300 to £400 | £35 to £150 |
| Established Businesses | £1,000 to £5,000 | £500 to £1,000 | £50 to £150 |
Fixed Fee vs Hourly Billing: What’s Better?
It will depend on your needs. Some accountants provide services in hybrid models (e.g., basic, advanced, and premium). You won’t need to choose a package when you look for an accountant to file your self-assessment tax return. In this case, go with an accountant Pay-As-You-Go (PAYG). But when you’re sourcing an accountant for your business management, a fixed payment method will better suit you.
Online vs Local Accountant: Which One to Choose?
You can choose an accountant from an online or a local accounting firm directly as your situation.
Online Services
Many UK accountants offer online services. From them, you will get the following benefits:
- Lower price than comparable physical firms
- Ideal for cloud-based tech businesses
- Instant solution by a digital platform like QuickBooks, Xero, FreeAgent
Local Accountants
Local accountants’ charges are higher, but they are good for:
- Expertise in local laws and compliance
- Understanding local business needs
- Well knowledgeable about the local markets
Smart Tips: Go with a small business accountant in London who offers online and in-house hybrid models.
How to minimise an Accountant’s cost?
To minimised accountant’s cost, operate your business smartly with compliance, including,
Organized Your Records
Unorganized records add extra work and cost you more money. You can easily avoid this problem by using accounting software to organize your records.
Take a suitable package
While selecting your service, be precise with what you need. Avoid unnecessary things and start with a basic plan. With your business growth you can select hybrid models.
All-in-one service package
Instead of paying for each service individually, choose an all-in-one package to save your money.
Use Accounting Software
Software like QuickBooks, FreshBooks and Xero helps you to automate your work bookkeeping, invoicing, expense tracking, and reduce the workload of an accountant.
Decrease Operating Costs
Paying an accountant to handle tasks such as payroll and VAT is often budget-friendly and easier than managing these tasks with employees in your office.
Is Hiring an Accountant Worth the Cost?
Yes, hiring an accountant worth your costs with:
- Avoiding HMRC penalties for late or inaccurate filings
- Maximising tax deductions, potentially saving you more than the accountant’s fee
- Freeing up your time to focus on growing your business
- Making better financial decisions with expert advice
Tips: Think of an accountant not as a cost, but as an investment in your business success.
Should You Hire an Accountant?
Yes. You need to hire an accountant for:
- File taxes timely and skip HMRC penalties
- Save money by claiming deductions
- Keeps you updated with HMRC laws and deadlines
- Give you extra time and professional guidance
How to Choose the Right Accountant?
- Check the accountant’s professional degree, like ACCA, CTA, ICAEW
- Affiliated with professional accreditation bodies such as ACCA, CIMA
- Ensure the price is transparent, with no hidden charges or VAT.
- Examine their service with a free consultation trial
- Read their case studies, client reviews, and testimonials
- Look at Google ratings and website positions
- Double-check their pricing & packages
Conclusion
Even though it can be costly, it’s always smart to contact an accountant. From Payroll management to strategic advice, whatever you need, an accountant is capable of giving you that. Choosing the right accountant is a wise investment for your small business’s financial success.
Frequently Asked Questions
- How much should I pay for a good accountant?
A good accountant can cost from £100 for basic tax returns to several thousand for services. It depends on your business needs and location. The price rises with the accountant’s level of expertise.
- What is the average hourly rate for an accountant?
Depending on their experience, location, and the complexity of the work, accountants usually charge between £50 and £150 per hour.
- Do accountants charge for advice?
Many accountants offer basic advice as part of their service. But expert-level consultations may charge additional fees.
- Can I trust an accountant?
Yes, renowned accounts are bound by professional ethics and laws. Select a certified accountant to skip risky dealings/ scams/fraud.
- What type of accountant is best for a small business?
A certified accountant with skills and experience is ideal for small businesses.