Finding an Accountant: How Much Does it Cost for Small Businesses?

Managing finances is a crucial aspect of running a small business. Hiring an accountant can help small business owners stay compliant and financially organised when handling:

• Tax returns;
• Payroll;
• Or financial planning.

But how much does it cost? The answer depends on several factors, including the services required and business size. It also depends on whether you work with an independent accountant or an accountancy firm.

Factors Affecting the Cost of Hiring an Accountant

The cost of finding an accountant for your business will depend on:

Accountancy Services Required

Some business owners only need support during tax season. Others require ongoing financial assistance. Basic bookkeeping is generally cheaper than full financial management services. Accountants can also assist with personal tax matters, ensuring that all tax obligations are met for both the business and the owner.

Type of Accountants

Chartered accountants typically charge higher fees due to their expertise. Such as those accredited by:

• The Institute of Chartered Accountants in England and Wales ICAEW;
• The Association of Chartered Certified Accountants ACCA;
• And the Chartered Institute of Management Accounts CIMA.

Accounting technicians may also provide valuable accountancy services at a lower cost.

Billing Structure

Small business accountants usually charge hourly, fixed fees, or monthly fee retainers. Hourly rates can range from £25 to £150, depending on expertise and location. A good accountant will help you understand the pricing structure and what services are included.

Location

Accountants in London and other major cities often charge more than those in smaller towns due to higher demand and overhead costs.

The title "accountant" isn't legally regulated, so individuals can use it without formal qualifications or experience. So, when choosing an accountant who offers small business tax advice, you should consider a qualified member of a recognised professional body.

Average Costs for Accountancy Services

To give you a better idea, here's a rough estimate of what you might pay for standard accounting services:¹

• Self-Assessment Tax Return: £150 – £300
• VAT Returns: £100 – £300 per quarter
• Bookkeeping: £20 – £50 per hour
• Financial Advice and Planning: £100 – £300 per hour.

If you require a full package, including ongoing tax planning and bookkeeping, many accountants offer monthly fee packages. These packages range from £50 to £500 per month, depending on the level of service. This can also include the preparation of annual accounts. These accounts are essential for summarising the financial performance of your business over the year.

Why an Accountant is Worth the Cost

Many small business owners attempt to manage finances themselves. However, there are many advantages to finding your own dedicated accountant. A dedicated accountant brings specific expertise that can greatly benefit your business.

1. Tax Efficiency

Accountants provide valuable small business tax advice. They ensure compliance with HMRC regulations while maximising tax reliefs and allowances.² This tax efficiency can lead to significant savings for your business.

2. Time-saving

Outsourcing bookkeeping and tax filing frees up time, allowing small business owners to focus on growth. A dedicated accountant can help you regularly review your annual accounts and ensure everything is in order.

3. Avoiding Penalties

Mistakes in tax filings can lead to costly fines. A professional ensures accuracy and compliance.

4. Business Growth Support

An accountant can provide financial forecasting and budgeting insights to help small businesses scale. As your new business grows, having a good accountant can make a significant difference in your business planning.

How to Find a Small Business Accountant

Developing a strong working relationship with your accountant takes time. Therefore, it's important to carefully choose someone who understands and aligns with your specific needs.

Start by creating a shortlist of potential candidates. You can gather these candidates through recommendations from colleagues, professional contacts, and online research.

If your industry has a trade association, they may also provide a list of accredited accountants.

When finding an accountant, consider:

1. Certifications

Look for small business accountants accredited by professional bodies like ICAEW, ACCA, or CIMA.

2. Industry Experience

Some accountants specialise in specific sectors. This specialisation can be beneficial for understanding industry-specific tax deductions.

3. Software Integration

Modern cloud-based accounting software—such as Sage Accounting, QuickBooks, Xero, and Zoho Books—enables you and your accountant to access real-time financial data. This shared platform creates a seamless way to collaborate and communicate effectively. 

4. Fixed Fees Versus Hourly Rates

A monthly package might be a better option than hourly billing if you prefer predictable costs.

Conclusion

The cost of hiring an accountant varies, but the investment is often worthwhile. Whether you need small business tax advice or complete financial management, a qualified accountant can help:

• Save money;
• Reduce stress;
• And ensure compliance with HMRC.

By carefully assessing your needs and budget, you can find the right accountant to support your business's success. Whether you are a start-up or an established business, having your own dedicated accountant can be beneficial. They can help you navigate the challenges of managing your finances effectively.

Sources

1. unbiased.co.uk/how-much-does-an-accountant-cost
2. gov.uk/business-tax