Running a small business in the UK involves more than just delivering great products or services; it requires smart financial management from the start. Many business owners either overspend on unnecessary accounting services or underinvest and face penalties during tax season.
A significant percentage of small businesses and sole traders in the UK spend around 80 hours annually on tax preparation alone, which can result in financial inefficiencies and mistakes.
A good accountant can save you time, reduce your tax bill, and support your business growth. In contrast, poor financial decisions can drain your budget and leave you stressed when it matters most.
In this guide, we will explore the factors that determine the cost of accounting services for UK small businesses and provide insights on how to avoid overpaying while ensuring compliance and long-term success.
What Are Accounting Overhead Costs?
Accounting costs are more than just the fee you pay an accountant. They include both visible and hidden expenses that are necessary to keep your business financially stable and compliant. These costs are considered overheads, meaning they don’t directly generate revenue but are essential for smooth operations.
Here’s what’s typically included:
- Fees for bookkeeping for small business accountants, tax filing, and financial reporting
- Time spent on managing invoices, payroll, and financial records
- Cost of accounting software and tools
- Mental stress or effort required to stay compliant
- Varying service levels, from basic bookkeeping to advanced financial advice
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 Do Accountants Typically Charge in the UK?
Here’s what small businesses can expect to pay:
Service Type | Typical Fee Range |
Hourly Rates | £25 – £150 |
Monthly Packages | £60 – £450 |
Self-Assessment Returns | £75 – £500 annually |
Annual Accounts (Limited) | £150 – £1,000 annually |
VAT Returns | £50 – £150 per submission |
Payroll Services (Monthly) | £25 – £200 |
Bookkeeping | £100 – £500 monthly |
Note: Actual fees may vary based on the accountant’s experience, the complexity of your finances, and your business’s location.
Key Factors That Influence Accountant Costs.
Understanding what drives the cost of hiring an accountant can help you budget smarter and choose the right service for your business. Several factors play a role in how much you’ll pay:
1. Business Type .
- Sole Traders
Typically on the lower end of the pricing spectrum. Most pay between £100–£150 per month for basic bookkeeping and tax return services.
- Limited Companies
Face higher charges due to more complex compliance requirements and additional reporting. Monthly fees usually start from £300 or more.
2. Service Complexity .
Businesses with multiple revenue streams, international transactions, or those needing specialised services such as R&D tax claims or audits often incur higher accounting fees.
3. Accountant’s Expertise .
- Senior small business accountants or those with niche industry knowledge (e.g., for tech startups or medical professionals) tend to charge a premium.
- Newer or regional firms may offer more competitive pricing without compromising quality.
4. Geographic Location .
- Accountants based in London or major cities often have higher fees due to increased operational costs.
- Regional or smaller town firms generally offer better value for money, especially for small businesses and freelancers.
________________________________________________________
Tip: Set aside a percentage of your income each month for taxes so you’re not scrambling when the tax bill arrives.
_________________________________________________________________
Monthly vs Annual Accountant Costs
|
Learn More : When is Tax Season 2025 in the UK?
How the Autumn Budget May Influence Costs .
While the Budget didn’t directly change pricing, new regulations could have an impact:
- Making Tax Digital (MTD) Expansion:
More businesses now need to adopt digital tools, potentially raising demand—and costs. - VAT Threshold Changes:
Revised limits mean more businesses may need help with VAT returns, increasing accountant workload and fees.
Key Highlight Track Expenses Regularly: Don’t wait until year-end to track your expenses. Regularly updating your records ensures you don’t miss out on potential tax deductions. |
Do You Really Need an Accountant In Uk?
Some small businesses, especially in the early stages, try to avoid hiring an accountant to save money. However, this decision can lead to several hidden risks:
- Tax Penalties – Incorrect or late filings can result in costly fines.
- Loss of Time – Handling accounts yourself takes time away from growing your business.
- Missed Financial Opportunities – Accountants can help identify savings, such as eligible expense deductions or suitable VAT schemes.
An accountant is more than just a number-cruncher. They help keep your business compliant, efficient, and financially healthy.
Practical Tips to Reduce Accountant Fees .
Worried about high accountant costs? These simple strategies can help reduce fees while still getting the support you need:
- Compare Different Accountants – Request quotes from at least three professionals to find the best value.
- Use Accounting Software – Tools like QuickBooks or Xero can automate basic tasks and reduce the workload for your accountant.
- Bundle Services – Many accountants offer discounted packages when you combine services like bookkeeping and payroll.
A few smart choices can lead to long-term savings.
Spotlight: How to Choose the Right Accountant .
Choosing the right accountant is about more than just price. Here are key things to consider before hiring:
- Check Their Qualifications – Make sure they are certified by reputable organisations such as ICAEW or ACCA.
- Look for Industry Experience – If your business operates in a specific field, find someone who understands its financial challenges.
- Consider Their Tech Skills – With digital tax rules becoming more common, choose an accountant who is comfortable using cloud-based accounting software.
The right accountant can become a trusted partner in your business journey.
Services Every Small Business Should Know .
Hiring an accountant offers far more than just number crunching. For small business owners, understanding the key services accountants provide can help in making better financial decisions and getting the most value from their investment.
Here’s a breakdown of common services and what they typically cost in the UK:
Service Type | Description | Average Cost (UK) |
Bookkeeping | Recording daily transactions and categorising expenses for tax and reporting. | £100 – £500 per month |
Payroll Management | Managing salaries, tax deductions, and pension contributions for employees. | £25 – £200 per month |
Tax Planning and Returns | Ensuring tax compliance and identifying ways to reduce tax liabilities. | £75 – £500 annually |
VAT Returns | Preparing and filing VAT reports with HMRC. | £50 – £150 per submission |
Financial Reporting | Creating financial statements like profit and loss reports and balance sheets. | £250 – £1,000 annually |
Business Advisory | Providing advice on growth strategies, funding, and financial planning. | £50 – £150 per hour |
Building a strong working relationship with your accountant helps ensure they understand your business goals and can tailor their advice to your specific needs. Regular communication and clarity about expectations can turn your accountant into a key asset in your business success.
What Determines Value in Accountant Services?
Not all accountants offer the same value. While price is an important consideration, the true value lies in how effectively an accountant helps your business succeed. Here’s how you can assess their value:
- Accuracy: An accountant ensures accurate tax filings and financial reporting, preventing costly mistakes.
- Compliance: Staying updated with HMRC regulations is vital, especially with the growing demands of Making Tax Digital (MTD).
- Efficiency: An efficient accountant saves your time by handling tasks like payroll and VAT returns.
- Strategic Insights: A good accountant identifies opportunities for tax savings or business growth.
Top Questions to Ask Before Hiring an Accountant .
When evaluating potential accountants, ask the following questions to ensure you’re getting the right fit for your business:
- What is included in your fee structure?
- Are there additional charges for urgent tasks?
- What software do you recommend for Making Tax Digital (MTD) compliance?
- How do you prefer to communicate with clients (e.g., email, phone, or in-person meetings)?
Making the Right Choice for Your Business’s Accounting Needs.
Understanding the cost of accounting services is essential for small business owners to make informed decisions and manage their finances effectively. While costs can vary based on factors like business structure, service complexity, and location, it’s important to prioritize value over price. At Quilliam Marr, we are dedicated to providing expert accounting services that help businesses stay compliant, optimize tax savings, and ensure financial stability. By carefully assessing your business needs and working with a qualified accountant, you can avoid unnecessary expenses and set your business up for long-term success.
