How much do accountants cost for small businesses?

Managing business finances and online business accounts in the UK is of paramount importance for organisations regardless as to size or sector. The services of a good accountant or financial manager can help streamline processes, cut costs, improve efficiencies and free up cash flow for business growth. 

In addition, an accountant can help to identify potential fraud or other anomalies, helping to keep your finances on-track. They are also able to address any areas of overspending or duplication of expenditure. 

However, while all these elements are vital, they do come at a cost. 

Accounting fees

Fees for an accountant can vary significantly due to several factors. These include the size of your business, the number of employees, the accounting services you require, and where you are based in the UK. 

The cost will also depend upon whether you decide to hire an in-house accountant or outsource services to an individual freelancer or accountancy firm. Typically, for a small business, fees for general accounting services can range from between £60 – £400 per month if using a freelance accountant or small accountancy firm. 

It is also possible to pay accountants on an ad hoc hourly basis too, and fees here tend to start at around £30 an hour. Some organisations prefer to pay by service, for example, per VAT return each quarter. 

Alternatively, if you were to employ an in-house accountant, you would be looking to pay a salary of at least £30,000 a year. The higher your turnover and the more staff you have, the more it will cost to pay an outsourced accountant. There will come a tipping point for many businesses where it may make sense to employ an accountancy resource. If these costs are out of your budget, there are many affordable finance software tools which can help you in the meantime!

Accounting services

Of course, the fee you pay will very much depend on the type of services you need. For a small business, typical accounting services will include annual accounts, tax returns for the corporation and directors, payroll returns, consultancy on legislation and regulation and VAT returns. 

Businesses with greater inherent complexity, or with ambitious growth plans, may require a broader range of consultancy support, especially in the context of efficient tax planning and raising investment capital. 

Also, an external accountant or accountancy firm can advise on protecting your business from fraud or other financial threats. Once again, any such services are procured on an ongoing or ad hoc basis. Costs will depend on the level of expertise and insight required, together with the frequency with which they are requested. 

Mitigating costs

Numerous steps may serve to minimise accounting fees. Good record-keeping, such as efficient expense management, the timely provision of information and the use of appropriate software are prominent examples. It is worth asking your accountant what package they recommend.

Other cost factors

In addition to your turnover and number of employees, various other aspects will affect longer-term accounting costs for a small business. 

Transaction volumes are a key factor here; the number of sales you make as well as the number of purchases. If you are looking to acquire another company or to restructure or refinance, you will almost certainly require additional support and therefore incur additional costs. 

If you are starting to work with a new accountant, much will depend on the current state of your finances and any existing financial reporting and systems. The more information and paperwork your accountant must wade through and streamline, the higher the initial costs.

Leveraging technology

Any business can mitigate its accounting fees by implementing good record keeping and reporting processes. One obvious area in which this can be achieved is in the management of employee spending and company expenses

We know it can take quite a lot of time to manage employee expenses. Particularly when submitting employee expenses and the time required from the finance function in verifying and approving them. The Soldo expense management solution automates and simplifies these processes, reducing the time and cost associated with managing expenses. 

Time and time again, we hear of businesses that struggle to get their employees to keep track of expenses receipts, which can make reporting difficult. Soldo’s app provides the ability for employees to snap their receipts and upload them for review in a central dashboard.

Petty cash can be notoriously tricky to manage, as can cash advances – not to mention impractical. Soldo offers prepaid cards with individual limits, which can be managed by system administrators with ease. 

Implementing strict spending limits and real-time tracking of spending also means there shouldn’t be any nasty shocks for the finance team at month-end.

The right solution 

There is no one size fits all approach in securing the right accounting services for a growing business, and the variance in costs will reflect this. However, as discussed, there are several steps that you can take to mitigate the costs and ensure that you focus the budget on procuring accounting services. Choosing the right accounting option for your business will add value to the organisation now and in the future.