If you’re looking for an accountant to help manage your business taxes, one of the most important factors to consider is the cost. In this guide, we’re going to be looking at the average price and accountant charges depending on your business and the services you require.
How Do Accountants Charge for Their Services?
The way in which accountants charge for their services differs from one accountant to the next. Some charge by the hour, whilst others use a monthly retainer and some even charge a percentage of the business’ turnover, so it’s important to consider what will be best for your business in the long term before deciding which accountant to work with.
Why Do Accountants Charge So Much?
Accountants can be responsible for making sure you pay no more tax than you need to by informing you of the allowances and exemptions your business is eligible for, helping you to save thousands of pounds each year.
They can also ensure your company is fully tax compliant, meeting all of HMRC’s strict regulatory requirements, helping you to avoid landing in any trouble and having to pay hefty fines, or in more serious cases, going to jail.
For many business owners, such significant long term savings and guidance make working with an accountant a very worthwhile investment.
Who Do Accountants Work With?
Accountants generally look after the tax affairs of the following:
- Sole traders and partnerships
- Limited companies and their directors
- Landlords (residential and commercial)
- Contractors and freelancers
Each individual company type will require different services, resulting in different fees. Additionally, the larger your company is in terms of turnover and the number of transactions it processes, the higher the cost of services are likely to be.
Below are some examples of different company sizes and turnovers and an estimate of their accountancy fees.
Sole Trader with Sales Under £50k a Year
This business trades as a sole trader with no staff. They expect sales under £50,000 a year and want to automate their bookkeeping system and take care of their tax returns. They also want a point of contact to call whenever they need assistance with this.
For a business of this size and the services they require, they should expect to pay around £60 per month or £720 per year. It also works out as roughly £2 per day, helping them to stay on the right side of HMRC and keep their taxes in order, with the availability of help on the phone whenever they need advice.
Limited Company with Sales Between £50k - £85k a Year
This limited company with two directors is growing rapidly but isn't yet VAT registered. They currently prepare invoices on Microsoft Word and then email them to customers or take notes of sales on paper when making in-store sales.
To begin with, they need to automate their bookkeeping. They also want some advice on tax planning and want to continue to grow their business.
For a business of this size and the services they require, they should expect to pay around £120 per month or £1,440 per year. It also works out at about £4 per day, helping them to fill in their annual accounts, corporate and personal tax returns and process their payroll with HMRC for the directors’ salary.
They’ll also be able to use bookkeeping software to automate their invoicing or till sales which then sends information to the accountant, helping them to give more specific advice every quarter.
Limited Company with Sales of £250k a Year
This is an established business with five members of staff and two directors. They are VAT registered and some members of staff are enrolled on the company pension scheme.
They require monthly updates and reports with information about the business’ performance as well as reminders for what tax is due when.
For a company of their size and turnover, they should expect to pay around £360 + VAT per month or £4,320 + VAT per year to receive accounts, tax/VAT returns filed with HMRC and Companies House, bookkeeping software and support with staff payroll, including help with sick pay, holiday pay, maternity pay and auto enrolments for their company pension scheme.
They will also receive quarterly reports detailing sales, expenses, profits and other valuable insights to give them a full picture of their business, helping to identify any problems or highlight successes.
Limited Company with Sales of £1m a Year
With such a high annual turnover and 10 members of staff which are paid weekly, this business will frequent support.
They aim to expand the business even further and want to plan ahead, potentially requiring funding. They also need to know what tax bills are due when so cash flow doesn’t become a problem.
This company should expect to pay around £600 + VAT per month or £7,200 per year to receive all of the necessary HMRC and Companies House filings as well as bookkeeping software and the processing of weekly payroll wage slips sent directly to staff.
They will also get a cashflow forecast to help give them an entire picture of their current situation as well as what is to come in the future. This will be used in combination with their monthly management reports and quarterly meetings to help plan for growth.
By having an accountant on hand and effective business planning, they should be able to apply for funding or approach investors much more easily.
Limited Company with Sales of Around £5m a Year
With such a high turnover and over twenty members of staff, this business will likely need an accounts department as well as full-time support.
Managing twenty members of staff brings opportunity for all kinds of issues, so this business must ensure they are very well organised and fully compliant with HMRC.
Staff are finding that chasing clients for payment is becoming time consuming and is negatively affecting cash flow. They also need to closely monitor how the business is performing on a weekly basis to identify issues and highlight successes.
Many large businesses will employ full time bookkeepers and in-house accountants, however, thanks to the latest accounting technology, this is no longer necessary.
So long as the company can assign a member or staff or use their website to invoice customers, an external accountant should be able to handle the rest for around £1,100 plus VAT per month or £13,200 per year.
For this, they will receive weekly bookkeeping, assistance with chasing clients for payments as well as a surrogate financial director who will organise monthly meetings and updates.
For a business of this size, working with an external accountant is incredibly cost effective. After all, a part-time in-house bookkeeper would likely cost around £14k a year and an in-house accountant would cost roughly £30k per year.
Instead, by using an experienced accountancy firm they can receive a wider range of knowledge and advice for significantly less.
At Ryans, our team of chartered accountants can help you to make and save more money as well as assisting with any bookkeeping and other accounting requirements, helping you to stay tax compliant.
In order for us to do this, we work much more closely with you than other accounts would. Expect us to get to know your business as well as you do and point out the problems as well as providing the solutions.
Don’t hesitate to get in touch today to discuss how we can help your business flourish.