When you’re running your own business, you become acutely aware of every penny that goes in and out of the bank so it’s natural (and sensible) to be wary about how much things cost.
If you’re new to self-employment or thinking about hiring an accountant to help with your business for the first time, you’re probably wondering how much you should expect to pay for such services.
While we can’t give a rundown of what everyone charges, we can go over what types of services will have an impact on the cost of hiring an account for your business.
Do I have to hire an accountant if I am self-employed?
No, having an accountant isn’t a legal requirement and if you’d prefer not to have one, that’s perfectly okay. Many self-employed people choose to manage their taxes and finances by themselves once they’re set up and registered. That said, if you can afford to hire someone, then there are usually several benefits to doing so!
The benefits of working with an accountant
- A slicker, quicker way to get things done – Working with a professional who knows what they’re doing will save you a whole lot of valuable time.
- Staying on top of tax efficiency – Sure, you have to pay an accountant to help you but by making sure you’re taking advantage of as much tax relief as possible; they could save you a lot more money in the long run.
- Avoiding omission and human error – Trained experts are far less likely to make mistakes than you are, which is a pretty important advantage when it comes to keeping accurate financial records.
- Having a sounding board on your side – Google is great and articles just like this one can be extremely helpful. However, being able to speak directly to an accountant who understands your business specifically can provide you with invaluable strategic advice and real peace of mind.
What about if I already use bookkeeping software?
If you’re already using bookkeeping software, you might think hiring an accountant would be a bit of a thankless task. However, the same benefits as above apply even when you’re already using bookkeeping tools.
In our opinion, the joint forces of great bookkeeping software and a brilliant accountant are a winning combination for any business.
It’s also worth noting, if you’re currently on the fence, that you don’t have to hire an accountant or a bookkeeper on a permanent basis.
It doesn’t have to be the huge financial commitment you might be fearing it to be either. Some people will just hire an accountant for Self Assessment when it’s tax return time, for example.
How much does an accountant cost?
Accountants typically charge on an annual basis, but lots of firms will let you pay this as a monthly fee, or offer a small discount if you pay annually.
Our price comparison page explores the fees and services of several online accounting firms in more detail to give you a clearer idea of what to expect!
Fixed fees versus variable fees
Some accountants will charge a fixed rate which is based on your turnover for the year, while others will simply charge for the time they spend on you as a client. If you choose a ‘pay as you go’ type accountant, just be aware that they often tend to charge more, and that asking lots of questions can get expensive!
Factors that influence how much an accountant charges
How much you will pay for an accountant will entirely depend on a number of factors such as:
- The type of services you need: The scope of you services you require will dictate how much you’ll pay. The more you ask your accountant to do, the higher the cost will be.
- How experienced the accountant is: Less experienced accountants will charge far less than seasoned accounting professionals who have years of experience and client testimonials under their belts.
- The complexity of your financial situation: The more intricate your accounts, the more work an accountant will have to do, and the more money you’ll need to pay.
- Where they’re based: A high-street accountant will often be more expensive because they’re more likely to have higher costs of their own to cover. An accounting firm based in a less expensive area of the UK which operates online is often cheaper.
What can I ask an accountant to do for me?
Standard things an accountant can do for you include:
- Keeping your cash flow stable
- Filing your tax returns
- Ensuring ongoing tax efficiency and compliance
- Creating financial reports and forecasts
- Helping you with better budgeting
- Streamlining your accounting processes
- Keeping you up to date and aligned with the latest rules and regulations
- Managing late payments
- Reconciling your accounts
However, other things you can ask your accountant to do for you include:
- Represent you in front of HMRC and liaise with them on your behalf
- Support with writing and updating your business plan
- Help you seek funding opportunities and compile successful applications
- Help you register for PAYE and manage your payroll
Finding the right accountant for you
Start by doing some research to compare fees and reviews, as well as asking any business contacts you have for recommendations.
Some great questions to ask an accountant before you sign up with them include:
- What experience do you have in my industry or sector?
- How can you help my business be more tax-efficient?
- What is included in your fees?
- What do I need to pay extra for?
- Which accounting programmes and software do you use?
- Do you have any customer case studies or testimonials?
- How will you communicate with me?
Asking these kinds of questions before you start working with any accountant will make sure they’re ticking all the right boxes and also enable you to figure out if you’re going to get along with them.
Your accountant doesn’t need to become your new best friend, but it does help to have an enjoyable working relationship!
Read our guide to finding the right accountant for your business or start by using our free Ask A Tax Question service to get started.
