The fee for hiring a chartered accountant in London for your business can vary significantly. It is subject to the size of your company, the extent of your activities and the accounting services you need. However, once you know how these things work, then it will be relatively straightforward to estimate the expected cost of hiring an accountant in London, UK.
Why You Need An Accountant For Your Business
Needless to say, before you plan to hire your accountant, you must first understand how he or she can help your business and why you actually need to hire an accountant in London, UK.
Some of the reasons why you need to hire an accountant for your business are:
- They cut the burden of paying more tax
- Help you take full advantage of every allowance
- They ensure to give correct figures to HMRC and companies house at the right time
- They are knowledgeable about the 17000 pages UK tax law
- They examines your expanses and discover all areas where you are likely to cut costs
Also Read: How To Start Accounting Business In UK
General Accounting For Small Businesses
A small business ranges from a self-employed contractor to a limited company with up to 50 staff. Accounting for this kind of enterprise includes services such as:
- Annual accounts
- Corporation tax returns
- Director’s personal tax return
- Monthly & annual payroll returns
- Quarterly VAT returns
- Advice on tax avoidance legislation (IR35)
- Ongoing daily advice
The above is a moderately standard core package, however, some accounting firms in London may provide extra services and is usually delivered for a fixed monthly fee or sometimes yearly depending on your company's budget and accounting needs.
The monthly fee for smaller businesses can be as low as £60 or as high as £250 depending on some factors like turnover of the company, depth of service and your location in the UK. Businesses with more employees and huge monthly or yearly turnover can be charged more.
Self-assessment And Tax Returns
How much do accountants charge for self assessment in UK?
In UK, accountants will charge a one-time fee for a yearly self-assessment tax return, which will typically range from £150 to £250 and above, subject to the difficulty and scope of your finances. Generally, the higher your income and the more income streams you have, the higher the fee could be. Fees up to £250 would generally cover basic self assessment services, while more complicated tax returns would need extra work and so involve a higher charge.
How much does an accountant charge for a VAT returns?
The charge for VAT returns depends on the size of the business, the expected turnover and the accounting firm involved. For turnover of £0 to £100,000, the charge is around £100. For turnover between £100,000 to £200,000, the charge is around £150. Lastly, for turnover between £200,000 to £400,000, the charge is around £200.
Generally, a good accountant should help you save at least some of the fee by identifying tax savings, together with the time they can help you save. Sometimes, your tax bill may decrease to such a level that you end up saving even more than the fee you paid to hire an accountant.
Other Ways To Pay Your Accountant
Several businesses have become accustomed to paying their accountants monthly as this provides certainty. Nevertheless, you can also decide to pay your accountant per hour, or for each service rendered.
You can also combine things, for instance, paying for some services via a fixed price or monthly fee, while paying for more tailored services by the hour.
In the UK, an accountant doing the basic accounting services will charge between £25 and £35 per hour. More specialised services such as tax planning and business planning advice are much more expensive. They charge approximately £125 to £150 per hour.
Also Read: How To Become An Accountant Without A Degree
Accounting Fees Per Service
Some businesses hire their accountants on a service-by-service basis, such as for end of the year accounting, VAT returns or payroll services. This means that the business contracts an accountant to do a particular task and get paid immediately the task is completed. Typical one-off fees for service-by-service accounting are as follows:
Turnover / size: £20,000 to £30,000
Typical fee: £150
Turnover / size: £100,000 to £130,000
Typical fee: £400
Turnover / size: £250,000 to £300,000
Typical fee: £600
Payroll services (including PAYE)
Turnover / size: 50 employees
Typical fee: £200 per month
Turnover / size: 100 employees
Typical fee: £500 per month
Director’s tax return
Turnover / size
Typical fee: £300
Turnover / size: £0 to £100,000
Typical fee: £100
Turnover / size: £100,000 to £200,000
Typical fee: £150
Turnover / size: £200,000 to £400,000
Typical fee: £200
From a broader perspective, the amount charged for accounting services in London like business accounts and VAT returns will rise if the company's turnover increases.
Similarly, payroll fees will increase if the number of employees increases. If you own rental properties, then this can add to the cost of your personal tax return.
Bear in mind that the fees stated in this guide are for guidance only. You should consult your accountant about what accounting services you need and request that they quote their own rates.
You might get cheaper rates and sometimes, higher rates. Do not hesitate to shop around and compare their fees before you decide on who to hire, and be reminded that– the cheapest may not be the best, and the most expensive isn’t necessarily the best either.
You have an important role to play in keeping your accounting fees to a minimum by maintaining good financial records, providing all necessary information on time and using the right accounting software.