How Much Does an Accountant Cost Per Month?

Table of Contents

Accountant working and writing notes in office

Introduction

When you run a business or manage personal finances that involve complex tax requirements, hiring an accountant can be an invaluable decision. Accountants offer a wide range of services that include bookkeeping, tax preparation and payroll management, among others. However, the cost of employing an accountant is often a significant concern for individuals and businesses alike. In the United Kingdom, the costs can vary widely depending on various factors such as location, the complexity of your financial affairs, and the level of expertise required.

This comprehensive article aims to provide an in-depth understanding of the costs involved in hiring an accountant in the UK on a monthly basis. We’ll delve into different pricing models, what services are commonly included, additional costs you might encounter, and how to get the best value for your money when investigating ‘how much does an accountant cost per month?’.

Pricing Models

Fixed-Fee Model

A fixed-fee model is straightforward: you pay a set amount each month for an agreed-upon range of services. This is especially beneficial for small businesses or individuals who have fairly predictable financial transactions and requirements. Prices can start as low as £60 per month for basic services such as tax return filing and bookkeeping support and can go up to £300 per month for more comprehensive solutions like payroll, VAT returns, and financial advising.

Hourly Rates

Hourly rates are another common model where you pay for the time an accountant spends working on your finances. Rates can vary from £25 to £50 per hour for a less experienced accountant to £100 to £200 per hour for a specialist with a particular set of skills or qualifications.

Value-based Pricing

Some accountants charge based on the value they provide rather than the hours they work. In this model, the accountant assesses the financial benefits you stand to gain from their services and charges you accordingly.

Accountant Services Commonly Included

When you engage an accountant, particularly on a monthly retainer or fixed-fee basis, there are several services you can typically expect to be included. These services form the bedrock of accounting and financial management, both for individuals and businesses. Knowing what these are, and what each entails, can offer a clearer understanding of what you’re paying for. Here’s a more expanded look at services commonly included in accounting packages:

Bookkeeping

Arguably the cornerstone of all accounting activities, bookkeeping involves the systematic recording of financial transactions such as sales, purchases, income, and payments. This foundational service often includes categorising transactions, reconciling bank statements, and preparing financial reports like the profit and loss statement and balance sheet. If billed hourly, bookkeeping can cost between £25 and £50 per hour, or it may be part of a fixed-fee package.

Tax Preparation and Filing

An accountant will usually take on the task of preparing and filing your tax returns, which can be quite complex depending on your financial situation. For individuals, this service generally costs between £150 to £300 as a one-off fee but is frequently part of a monthly package for businesses, ranging from £200 to £500.

Payroll Management

If you’re running a business with employees, managing payroll is a critical function that often falls under the purview of an accountant. This involves calculating wages, withholding taxes, filing requisite forms, and ensuring timely payment. This can add £5 to £10 per payslip to your monthly accounting bill, or may be included in a comprehensive package.

Financial Planning and Advisory Services

While not always standard, some accountants offer financial planning and advisory services as part of their package. This could include investment advice, retirement planning, and estate planning for individuals, or budgeting, forecasting, and strategic planning for businesses. These services usually command a higher fee but can be invaluable for long-term financial stability.

VAT Returns

In the UK, many businesses are required to register for VAT (Value-Added Tax) and submit regular returns. Preparing and filing these returns is a service commonly offered by accountants, especially those serving businesses. It is generally included in monthly packages but can also be billed separately, usually costing between £50 to £200 per filing, depending on the complexity.

Management Accounting

For businesses that need a closer look at their financial operations, management accounting is often included. This service involves the preparation of financial reports tailored for internal use, to help businesses make informed management decisions. These reports can include cash flow forecasts, budget-to-actual analysis, and variance reports, among others.

Regulatory Compliance

Ensuring that you or your business is in compliance with financial regulations is crucial to avoiding penalties and legal complications. Accountants often assist with this by ensuring that your financial records and transactions adhere to current laws. They can also represent you during audits by tax authorities.

Accounts Receivable and Payable

Especially pertinent for businesses, some accounting packages include the management of accounts receivable and payable. This entails tracking all amounts due from customers and amounts owed to vendors, and might involve sending invoices, processing payments, and even managing debt collection efforts.

Year-End Accounts

Closing the books at the end of the financial year is a complex but crucial process that many accountants include in their services. This involves reconciling all financial accounts and preparing year-end financial statements, which serve as the basis for tax filings.

Additional Costs

When calculating how much an accountant costs per month, it’s essential to consider additional costs that may not be included in the initial quotation or fixed-fee arrangement. Some of these costs can be one-time fees, while others may recur depending on the complexity and scope of your financial management requirements. Here is a more detailed look at additional costs you might encounter:

Initial Consultation

Many accountancy firms offer a free initial consultation to discuss your needs and how they can assist you. However, not all do, and some may charge between £50 to £200 for this initial meeting. It is essential to clarify this upfront, so you know whether you’re incurring a cost right from the outset.

Accounting Software

While some accountants include the use of accounting software in their monthly or yearly packages, others might bill this separately. Software subscriptions for platforms like QuickBooks, Sage, or Xero can range from £10 to £30 per month. In some cases, advanced features or additional user licenses can increase this cost.

Onboarding Fees

Some accountants charge an initial onboarding fee to cover the time and resources needed to familiarise themselves with your financial records and set up your account. This is generally a one-time cost and can range from £100 to £500, depending on the complexity of your finances.

Ad-Hoc Services

If you require services outside the agreed-upon package or scope of work, expect to pay extra. These can include services like handling an audit, business valuations, or one-off financial reports and can vary widely in price, often requiring a custom quote.

Specialist Services

Complex financial operations like mergers and acquisitions, business restructuring, or dealing with an HMRC (Her Majesty’s Revenue and Customs) investigation often require specialist services. These services are generally not included in standard accounting packages and can be quite costly, ranging from £1,000 to several thousands of pounds, depending on the complexity and time involved.

Late Fees

Missing a deadline for submitting financial reports, tax returns, or other necessary documentation can result in late fees. Some accountants charge extra for the expedited work needed to meet a rescheduled deadline, and this can range from £50 to several hundred pounds, depending on the urgency and complexity.

Correspondence and Communication

Although most accountants will include a certain level of correspondence and communication in their standard fees, excessive meetings, phone calls, or emails may incur additional charges. Make sure to discuss the communication expectations with your accountant beforehand.

Paperwork and Documentation

Some firms charge extra for the printing and mailing of essential documents. While this may seem trivial, it can add up, especially if you prefer to have hard copies of all your financial records. These fees are usually nominal but are worth considering for a comprehensive understanding of the total cost.

Getting the Best Value

Making the most out of your investment in an accountant involves more than simply opting for the least expensive option. The accountant you choose should provide a comprehensive range of services that align with your specific needs, backed by the appropriate qualifications and experience. Here are some additional points to consider for ensuring you get the best value.

Credentials and Experience

First and foremost, it’s important to check the qualifications of your prospective accountant. Look for credentials from a recognised UK accounting body like the ACCA (Association of Chartered Certified Accountants) or ICAEW (Institute of Chartered Accountants in England and Wales). Besides, an accountant with experience in your particular industry can offer invaluable insights that others may not. They’ll understand industry-specific tax laws, incentives, and potential deductions that can benefit your financial situation.

Transparent Pricing

Understanding the complete cost of services upfront prevents unexpected surprises down the road. Choose an accountant who offers transparent pricing, provides a detailed invoice outlining each service, and is willing to discuss costs openly with you. Some firms, like Swiftbooks Accounting, offer fixed-price packages which make it easier to budget your accounting costs.

Bundle Services

Many accounting firms offer package deals that can be more cost-effective than paying for each service individually. For example, a monthly package might include bookkeeping, tax preparation, payroll management, and even financial advice, all for a lower combined rate than if you were to pay for each separately. Review your requirements and discuss with potential accountants about the packages they offer, to identify if one could be particularly suited for you.

Technology and Software

In today’s digital age, the use of advanced accounting software can add significant value to the services provided. Software can automate many routine tasks, increasing efficiency and potentially lowering costs. Check if the accountant uses reputable accounting software and whether the cost of the software is included in the monthly fee or if it’s an additional charge.

Free Initial Consultation

Many accountants offer a free initial consultation. This is an excellent opportunity to not only understand the cost structure but also to gauge the expertise and responsiveness of the accountant. Use this consultation to ask pointed questions about how they can add value to your business or personal finances.

Reviews and Recommendations

Personal recommendations from friends or business associates can offer insight into an accountant’s reliability, competence, and the quality of service. Online reviews and testimonials can also be helpful but take these with a grain of salt as they can sometimes be manipulated.

Assess and Reassess

Even after hiring an accountant, it’s prudent to periodically reassess the relationship. Are they providing the value that was promised? Are your needs being met? If your financial situation changes or the accountant fails to deliver as expected, don’t hesitate to revisit your choice.

Negotiate

It might be counterintuitive, but accounting services are not always set in stone when it comes to pricing. Depending on the range of services you need and the complexity of your finances, there may be room to negotiate. This is especially true if you’re bringing considerable business or have a long-term relationship in mind.

Conclusion – How Much Does an Accountant Cost Per Month?

The cost of hiring an accountant in the UK varies considerably depending on multiple factors. Monthly accountancy costs can range from as low as £60 for basic services up to £300 or more for a comprehensive suite of accounting solutions. To ensure you’re getting the best value for your money, it’s vital to understand what services you require, the pricing models available, and any additional costs that may apply. Always remember to consider the accountant’s credentials, experience, and transparency in pricing when making your decision.

Swiftbooks Accounting: Fixed-Price Packages for Varied Needs

Swiftbooks Accounting offers a tailored approach to meeting your accounting needs through its fixed-price accounting packages, designed to serve sole traders, limited companies, and partnerships

Recognising that every business or individual has unique financial requirements, Swiftbooks Accounting provides a comprehensive range of services within these fixed-price packages. These services can include everything from bookkeeping to tax preparation and payroll management. The advantage of opting for a fixed-price package is the predictability it offers; you know exactly what you are paying for each month, allowing for easier budgeting and financial planning.

With a focus on providing high-quality and professional accounting services, Swiftbooks Accounting aims to deliver value for money while alleviating the financial complexities that come with running a business or managing personal finances.