How much should an accountant cost?

Make sure you're not getting ripped off

Written by 
James Morgenstern
Updated on
March 1, 2024

How much should an accountant cost?

If you are self-employed or have a small business, it is important to keep your finances in order to avoid fines and legal action from HMRC.

This usually means hiring an accountant to help you with your bookkeeping and tax. But how much should you expect to pay for this accounting services? 

In this blog post, we will discuss the cost of accountancy and what you can expect to get for your money. We will also explore ways that you can reduce the cost of accounting services. 

So whether you are just starting out in business or are looking for ways to save money, read on for more information!

In the article we will cover:

  • What is the role of an accountant?
  • Do you need an accountant?
  • How do different accountants charge
  • How much should an accountant cost?
  • What services should be included?
  • How to lower the cost of accountancy?

What is the role of an accountant?

The role of an accountant is to provide financial advice, guidance and support their clients submit their accounts each year. 

This can include preparing financial statements, tax returns, analysing financial data, providing accounting advice and making sure that all legal requirements are met.

Do I legally need an accountant?

Legally you do not require an accountant and there is nothing stopping you from preparing and submitting your annual accounts directly to HMRC yourself. However for most contractors, freelancers and small business owners that operate through a limited company, having a good accountant is essential.

Not only will they make sure that you are compliant with tax law, but they can also ensure that you are maximising all available tax breaks and getting the most from your money. 

How do different accountants charge?

Often accountants charge by the hour, however this can get very expensive with typical rates of between £60-£120 per hour depending on their experience and expertise. However, sometimes you can agree a fixed fee in advance - do this where you can to control costs and avoid being ripped off.

The most cost effective way to complete your accounts is to harness technology to automate your accounting for you.

Accountancy can now be completed by technology and is where services like like Mighty come in. Mighty provides everything you need into one package for a fixed fee of around £400 a year. All your bookkeeping, tax and accounts done for one fixed, low price.

How much should an accountant cost?

The cost of an accountant primarily depends upon the size and complexity of your business. In other words; how much revenue you make, how many transactions you make each month and how much specialist advice you require. 

If you operate a limited company, with turnover below £250,000 you could expect to pay between £400 to £1500 per year - inclusive of all bookkeeping and account preparation fees.

There is a wide gulf because on the higher end, many 'traditional accountants' place a premium on their time. Manually doing your accounts by hand for you.

However for companies with simple accounts, there is very little need to pay an expensive human accountant to manually prepare your accounts for you.

Tech services such as Mighty that do all you accounting and bookkeeping for you for in one platform for just £40 per month.

Harnessing technology will save you hundreds of pounds a year in fees and tax

What services should be included?

When looking at the cost of accountancy, you should ensure that all of the necessary services are included in the fee. For a simple limited company, a typical package will usually include: 

  • Automated bookkeeping software
  • Monthly payroll & PAYE submission
  • VAT calculation & submission
  • Annual accounts & corporation tax
  • Tax advice & support

Are there any additional fees?

With traditional accountants there are often many additional fees for advice. When you ask a question, you can expect to be charged for the answer.

In contrast, with a packaged accountancy service like Mighty there are no additional costs - everything is included. You should double check that there are no hidden fees with an accountant before you sign up. 

Other things to look out for

When choosing an accountant be sure to choose one that specialises in working with similar clients to yourself.

For example if you're a contractor, e-commerce platform, or marketing agency make sure you pick an accountant that has experience working with other similar clients.

This will mean they likely have more knowledge to provide you with the best tax advice to save  money in the long run. 

How to lower the cost of accountancy?

The best way to reduce the cost of your accountancy services is to use automated software such as Mighty that will much of the heavy lifting for you.

If you have simple accounts, there is very little need to pay an expensive human to do your bookkeeping, VAT, Payroll or Corporation Tax. Computers can do it seconds, not hours.

Submitting your quarterly VAT return or payroll for the first time might seem scary, but in reality the software does all the calculations for you. In fact, software is often significantly more accurate than humans doing the same task.

Over the course of a year this will save you hundreds of pounds of needless accountancy fees. 

Conclusion: 

For a small limited company with turnover up-to £250,000 you should expect to pay around £40 per month. For larger businesses with many employees the cost can be considerably more.

Doing some of the work yourself, or using technology to automate simple tasks can also help you reduce costs significantly. Ultimately though, doing your accounts is essential for any self-employed person or small business owner as your must keep compliant with HMRC.

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