Running a small business or limited company can be one of the hardest things you will do so it’s important to have a professional at your side. Many decisions need to be made and steps followed to comply with the thousands of pages of tax and accounting legislation.
A lack of money may be one of the contributing factors to you trying to do everything for your small business, but is it a false economy?
How much does an accountant cost for a small limited company? An accountant for your small limited company can cost between a few hundred pounds to thousands of pounds a year depending on the services you need. Paying for an accountant has many benefits as their knowledge gives you time to concentrate on what you do best.
Whilst you do not legally need to use an accountant for a small business or limited company, a time may come when you do need to think about the expertise and knowledge, they will bring with them.
Getting it wrong could prove costly from a financial and time point of view. Running a limited company is a stressful time for you. Do you need to compound that by trying to learn the rules and nuances of being an accountant to save a few pounds?
It is a false economy in the long run.
We are pretty sure you did not set up a small business as a limited company to become a part time bookkeeper or accountant which can very quickly become a reality. The average micro-business spends 15 hours per week or 19% of their time doing financial admin tasks.
You should consider hiring an accountant if you need help with your statutory accounts, corporation tax, VAT, payroll, and self-assessment.
There are several things to consider, all of which we’ve outlined for you below.
How much is an accountant for a small business?
There are several tasks that need to be completed when running a small business. Asking ‘how much is an accountant for a small business?’ is a bit like asking how long a piece of string is.
It depends.
Factors to take into consideration will be how much work you are prepared to complete and more importantly the quality of what you do. Some of the fee you pay to an accountant goes into correcting your work rather than the advice, support, and guidance you think you are paying for and what your accountant ultimately would like to be delivering.
If you have Googled this question, you will get a whole host of solutions costing as little as £30 per month offering everything a small business needs. That’s just 10 medium Latte’s from Starbucks.
Really?
Getting the accounts and tax of your business wrong can have disastrous consequences. The cheapest option might not be the best route.
You must weigh up the size of your limited company, potential tax, and complexity of your business affairs to see what a good fit would be.
We would recommend getting at least three quotes and make sure they are on a like for like basis. Don’t get suckered into thinking that all quotes cover the same services.
Make sure you get a full breakdown of the services provided so you can ensure they all meet the same requirements. Here is a list (keep you compliant) as a starting point of what a small, limited company needs:
- Statutory accounts.
- Corporation tax.
- Payroll.
- P11D.
- VAT returns.
- Confirmation statement.
- Registered office.
- Self-assessment (Directors).
If you are paying any less than £1,200 +VAT per year for the above, then you will be doing well. Not to say that anyone charging less than that is not going to do a great job but as with any purchase do your homework.
How much does an accountant cost per month for a small limited company?
If you are still paying your accountant annually then have a rethink. Paying your accountant monthly gives you certainty as you know how much you are going to be paying. You can manage your cash flow better as you can budget for the monthly payment.
If you are still living in fear waiting for the accountant’s bill to come through the door stop. It doesn’t have to be like that. A lot of accountants have moved to working on fixed fees paid monthly. Both parties know what they are getting and certainty over cash flow.
So, how much does an accountant cost per month for a small limited company? Well, that all depends on the services you are being provided and what was quoted. Whatever it is at least you will have clarity and consistency over what is being paid and when.
For small businesses and small limited companies, an accountant’s monthly fee can be as low as £60 or as high as £250 depending on things like turnover, services provided and where you are in the UK.
Businesses with more employees and higher complexity can expect to pay more.
Paying an accountant monthly you can expect unlimited support included. Contact your accountant with those small queries as they arise without fear of that unknown annual bill is getting bigger.
How much do accountants charge for year-end accounts?
Before we get into the subject of how much do accountants charge for year-end accounts we need to stop for a moment and consider what doing a set of year-end accounts entails.
These are the typical steps an accountant would take for completing a set of year-end accounts:
- Fixed asset register.
- Depreciation.
- Accruals.
- Prepayments.
- Bank reconciliations.
- Profit and loss review.
- Balance sheet reconciliations.
- Fixed assets.
- Inventory.
- Bank.
- Aged receivables.
- Aged creditors.
- Other Debtors.
- Other creditors.
- VAT.
- PAYE.
- Pension.
- Workpapers and lead schedules.
- Queries.
- Review.
- Prepare notes and disclosures.
- Prepare accounts.
- Director’s report.
- Balance sheet.
- Profit and loss.
- Notes and disclosures.
This is not an exhaustive list but what you might see for a typical small, limited company.
For a small, limited company you can expect the amount accountants charge for year-end accounts to start from £600. You will also need to pay for the corporation tax return which will start from £150.
How much does an accountant cost for tax returns?
Accountants will typically charge a one-off annual fee for the completion of a personal tax return. If your accountant bundles this up into the monthly fee your business is paying don’t be surprised to see this appear on your P11D as a benefit in kind as the service is for you personally and not a business expense.
As a guide we would expect you to pay somewhere in the region of £150 to £250 for an annual self-assessment tax return. This should be sufficient to cover your typical self-assessment tax return that has a P60, P11D and some dividends.
If you have property income, property disposals or other asset disposals which require additional work you can expect to pay for this on an hourly basis.
Included in these fees you are paying for the accountant to prepare and submit the self-assessment tax return on your behalf. They will not be carrying out tax planning as standard.
If you would like your accountant to look at your tax strategy and plan different scenarios, you will need to engage them on a separate piece of work.
For tax planning work you can expect to pay upwards of £150 per hour. Some firms will work on a % of the saving depending on the type of tax planning being carried out.
How much does an accountant charge for a VAT return?
If you are using a piece of cloud accounting software such as Xero or QuickBooks, you could be fooled into thinking that submitting a VAT return is as simple as clicking a button.
Well, you would be right. Any fool can click a button on software solutions and submit a VAT return to HMRC. That is where the real fun can begin.
How much an accountant charges for a small limited company’s VAT return is reflective of the knowledge and expertise they have. The amount of work that an accountant will put into filing your VAT return goes far beyond clicking a button, regardless of what the huge marketing budgets of software vendors will tell you.
Work carried out by an accountant to file a VAT return:
- Check bank accounts reconcile.
- Check everything is posted (sales, purchases, expenses).
- Review reports.
- Check profit and loss for any variances (missing/unusual transactions).
- Review VAT reports for VAT applied (No VAT, Exempt, Reverse Charge, Zero Rated).
- Review VAT reports for inconsistent treatment.
- Adjust.
- Reconcile to Trial Balance.
- Turnover reconciliation.
- Compare to previous return.
- Lock VAT period.
- Draft to client.
- Sign off from client.
- Submit to HMRC.
- Confirm receipt by HMRC.
- Make payment.
Whilst you can take your chances and go it alone by clicking the ‘submit’ button the ultimate consequence could mean you trigger an HMRC investigation.
So, while we can look at what accountants charge for a VAT return as a cost to the business it can also be viewed as paying for peace of mind.
How much does an accountant charge for a VAT return? For a small limited company business for the items listed above we would expect the cost to start from £75.
An accountant should detail in their engagement letter what services they cover. Make sure you are getting the full service and they are not just clicking the ‘submit’ button. You can do that yourself.
How much do accountants charge for payroll services?
How much accountants charge for payroll services will vary for each small business. There is no one size fits all as the frequency, complexity and number of employees will all play a part in working how much accountants charge for payroll services.
Processing payroll for clients is a very emotive subject. The risk versus reward of dealing with payroll needs contemplation. When engaging the services of an accountant the relationship is between business and accountant.
When you are processing payroll, it is probably the only time it switches to employee and accountant. Clients are not averse to throwing the accountant under the bus if a mistake has been made, internally or not.
Typically, you will see there being a charge per payslip. Often there will be a minimum charge applied as processing a payroll for one person will not vary much from processing a payroll for five employees.
As an example, it would be fair to see a minimum charge of £15 per month for a payroll of up to 5 employees with an additional £2 per payslip for each payslip above 5.
If you have a payroll with lots of leavers and joiners because you work in an industry with a high turnover of staff this can also be a contributing factor. You may even be charged for each leaver or starter processed.
If you operate a payroll with largely salaried employees with very few changes then I would expect that the fees would be lower than a payroll with lots of changes each pay period for overtime, sickness and employees paid variable amounts as they are paid by the hour.
You do not have to use your accountant to process your payroll. You may find that using a specialist payroll bureau provides a better solution at a competitive price as this is the only service they provide. Accountants will typically be providing payroll as an addon because they already work with you.
How much do accountants charge per hour?
The amount an accountant will charge per hour will vary depending on the level of skill and expertise required to carry out that role.
You may find in a smaller firm where it is the same person completing the tasks that the hourly rate is the same for each task.
In a larger firm where they may be multiple people looking after your account the hourly rate will vary depending on the person that completed that task. Ideally, as the client you will want the right person carrying out the right task at the best possible hourly rate.
We have put together a list of potential prices based on a small accountancy practice:
| Service | Cost per Hour |
| Bookkeeping | £35 |
| VAT | £50 |
| Management accounts | £75 |
| Year-end accounts | £75 |
| Tax returns | £75 |
| Tax planning | £150 |
If you are paying less or more than these prices it is not an indication of whether you are paying too little or too much. Every accountancy practice will set a price dependent on their circumstances over which we have no visibility. For example, a person working on their own from a home office will have lower overheads than a 5-person firm with a hight street office.
FAQs on accountancy costs for small limited companies
How much does an accountant cost for a small business?
A small business does not have to have an accountant, but you need to consider the complexity of your business, the filing and tax requirements.
An accountant trains for many years to provide a service to small business owners and completes ongoing continual professional development.
How will you manage the various rules and regulations attached to running a limited company for example without that knowledge, skill, and experience.
Here is a list (keep you compliant) as a starting point of what a small, limited company needs:
- Statutory accounts.
- Corporation tax.
- Payroll.
- P11D.
- VAT returns.
- Confirmation statement.
- Registered office.
- Self-assessment (Directors).
If you are paying any less than £1,200 +VAT per year for the above, then you will be doing well. Not to say that anyone charging less than that is not going to do a great job but as with any purchase do your homework.
Do I still need an accountant if I use QuickBooks?
To answer the question of whether you still need an accountant if you use QuickBooks, we need to unpick what it is that an accountant does for a small business.
We have listed some of the top reasons why you need an accountant:
- Saves you time.
- Save you money.
- Accountability.
- Support and advice.
- Improve cash flow.
- Remove worry.
- Reliable management information.
- Tax estimates.
- Planning, forecasting, and budgeting.
- Best practice.
Can QuickBooks do that?
Whilst we are not knocking QuickBooks or any other accounting software provider for that matter, we need to recognise that they are simply a repository for your accounting records. QuickBooks does not replace the work an accountant does or what they can bring to your business.
Using QuickBooks may hinder your accountant as much as help them. We have all heard the adage of rubbish in, rubbish out, well that is never truer than someone let loose on their own bookkeeping.
How much is an accountant for a small business?
Whilst there is no legal requirement for a small business to have an accountant, we think you have enough on your hands dealing with sales, marketing, distribution, staff, customers to name a few.
No, you do not need an accountant as a sole trader. You may want one to help you prepare your year-end accounts and tax filings. Depending on the size of your sole trader business you will likely have to:
- Produce accounts.
- Calculate capital allowances.
- Complete self-assessment tax return.
- Payroll.
- Bookkeeping.
- VAT returns.
These are all time consuming and complex tasks. Bookkeeping alone covers raising sales invoices, processing purchases, paying suppliers, recording expenses and mileage claims, reconciling the bank accounts, VAT returns etc
These are just the things to keep you on the straight and narrow. An accountant can also serve as business advisor and support for your business to help you grow your business.
You should consider hiring a professional (for example an accountant) if you need help with your tax return.
For a small business owner such as a sole trader for the above services we would expect the cost to start from £800.
Conclusion
With over 11,500 pages of tax legislation governing the UK tax system and the Companies Act split into 47 Parts with the Contents page alone running to 59 pages that is why you need an accountant for your small limited company.
Accountants spend years learning their trade and become qualified professionals. To retain their professional qualification, they must also complete several hours Continued Professional Development (CPD) each year to ensure they are keeping up with the changing business and tax legislation.
Not having an accountant working with your business could mean you make mistakes which could cost you time and money which could have been avoided. There is a tendency when running a small business that you want to do things yourself and save the cost but what is the costs in the long run to your business of making mistakes?
A good accountant should be viewed as an investment to the business not a cost. Any good accountant should save you more money than they cost even if that just equates to the time, they save you from doing things yourself.
You might also like…
- Reasons to not register for VAT as a limited company
- How to buy a car through a limited company
- Can a limited company lend money to an individual?
Image in header via https://pixabay.com/photos/calculator-paperclip-ballpoint-pen-178127/
Jon has been in business since 1999, and in that time worked with more than 300 small business clients. As well as being an accountant, he is also an early adopter of tech, and has helped small businesses to leverage the power of their computer systems by creating software to automate and simplify accounting tasks.
