How Much Does a Small Limited Company Accountant Cost?
Small business accounting in the UK typically costs between £60 and £250 per month, but how do you know you’re not overpaying?. According to the Federation of Small Businesses, nearly 4 in 10 small business owners aren’t confident they’re getting fair value for what they’re spending. And it’s not just about price, it’s about staying compliant, making smarter financial decisions, and protecting your time. In this guide, you’ll discover what UK accountants charge, what’s included, and how to avoid unnecessary costs. Whether you’re just starting or reassessing your current setup, you’ll walk away with clarity, confidence, and cost-saving insights. Why Accounting Matters for Small Businesses Accounting is essential for small business success. It keeps you compliant with HMRC rules, helps track income and expenses, and supports better financial decisions. In the UK, failure to maintain accurate records can lead to penalties starting at £100. According to Xero’s report, businesses that updated their books monthly were 3x more likely to grow revenue. As Emily Coltman FCA, Chief Accountant at FreeAgent, explains in her expert commentary: “Accounting isn’t just about ticking boxes for HMRC, it’s the financial language of your business. When you understand it, you gain control over your decisions, spending, and profitability. Did you know ? Small businesses in the UK are responsible for nearly 99% of the private sector workforce? Yet, many spend a large chunk of their time just managing taxes! What Services Are Included in Accounting? Accounting isn’t just about crunching numbers, it’s a suite of structured services that help businesses stay compliant, organised, and financially sound. Below is a breakdown of the core services most UK accountants offer to small businesses. Bookkeeping Bookkeeping is the day-to-day tracking of income, expenses, invoices, and bank reconciliation. It forms the base for all financial reporting and decision-making. Typical cost: £20–£40/hour or £100–£300/month depending on volume. Example: A small design agency with 30–50 monthly transactions may pay around £200/month for regular bookkeeping through a cloud-based tool like Xero. “Good bookkeeping isn’t just data entry, it’s insight delivery,” says Emma Rawson, Technical Officer at the Association of Taxation Technicians (ATT). “It shows you where money leaks happen and how to tighten your operations.” Payroll Payroll services manage employee salaries, PAYE tax deductions, National Insurance (NI), and HMRC submissions. It’s a legal requirement if you employ staff, even part-time. Typical cost: £5–£10 per employee/month, plus setup fees. Example: A retail business with 5 employees might pay around £50/month, including payslip generation, RTI filing, and pension contributions. In a 2025 ICAEW Payroll Trends report, over 65% of small business owners said outsourcing payroll saved time and reduced errors compared to DIY methods. VAT Returns For VAT-registered businesses (earning over £90,000 annually), accountants handle quarterly VAT filings to HMRC, including input/output VAT reconciliation and compliance with Making Tax Digital (MTD) rules. Typical cost: £50–£150 per return, or bundled in monthly packages. Example: A small wholesale supplier that’s VAT-registered with variable cash flow might pay £100 per quarter to ensure accurate filing and avoid MTD penalties. “VAT mistakes are one of the most common causes of HMRC investigations,” notes Glen Foster, former Director at Xero UK. “Regular filing with professional oversight is a safeguard, not a luxury.” Year-End Accounts These include the preparation and submission of annual accounts, Corporation Tax returns (CT600), and balance sheet summaries to Companies House and HMRC. Typical cost: £750–£2,000+ depending on company size and complexity. Example: A limited company with moderate turnover and one director may pay around £900/year for full year-end reporting and CT600 filing. According to a UK Finance Study , small companies using structured year-end reviews were 40% more likely to access funding or credit compared to those with incomplete or delayed accounts. Tax Planning & Advice This service goes beyond filing, tax advisors help identifying allowable expenses, capital gains strategy, director salary/dividend optimisation, and future planning (like retirement, exit, or investment). Typical cost: £150–£300/hour, or built into packages for regular clients. Example: A tech startup planning to raise funding might hire an accountant to model different tax scenarios based on scaling revenue or hiring. “Tax planning is where the real savings happen,” says Carl Reader, author of The Startup Coach. “It’s not about dodging tax, it’s about paying fairly and keeping more of what you earn.” Accounting Cost Breakdown in the UK Service Average Cost Fixed/Hourly Bookkeeping £20–£40/hour Hourly/Flexible Self Assessment £100–£300 Fixed Annual Accounts (Ltd Co) £750–£2,500 Fixed VAT Returns £50–£150/month Monthly Payroll £5–£10 per employee/month Monthly Note: Actual fees may vary based on the accountant’s experience, the complexity of your finances, and your business’s location. Fixed Fee vs Hourly Accounting: What’s Right for Your Business? When choosing a small business accountants, you’ll typically come across two pricing models: fixed fees and hourly rates. Each has its pros and cons, and the right choice depends on your business size, complexity, and stage of growth. Feature Fixed Fee Hourly Billing Cost Predictability High same amount monthly Varies with time spent Best For Growing businesses needing regular help Freelancers/startups with occasional needs Scope of Work Clearly defined services in a package pay only for what you use Budgeting Easier to plan and allocate Harder to predict monthly costs Risk of Overpaying Low, if needs are consistent High, if time spent increases unexpectedly Surprise Bills? Rare (unless scope changes) Possible, depending on time required What Factors Affect the Cost of Accounting? The cost of accounting services for small businesses isn’t one-size-fits-all. It depends on several key factors that shape how much time, expertise, and attention your accountant needs to dedicate to your business. Understanding these can help you budget smarter and avoid paying for services you don’t need. 1. Business Size The bigger your business, the more complex your financial needs and the higher the cost. A sole trader with basic income and expenses will need minimal support. In contrast, a growing limited company with employees, suppliers, and multiple revenue streams requires more attention, more time, and more in-depth financial reporting. Example: A
