How much should I be paying? A guide for accounting fees for small business

Every day you make decisions that impact financially on your business. Having proper procedures in place makes it easier to track money that is coming in and out of the business.
It takes a lot of time, skill and effort to create a set of compliant accounts. This is why a lot of small business owners choose to hire an accountant to handle this for them. But how much do accounting fees for small business owners add up to?
Our guide explores the typical fees that you can expect to pay when hiring an accountant to manage your business’ financials.

What are the needs of your business?

There is no set fee for the services a UK accountant offers. Your accountancy fees will depend on various factors including the type of business you own. By this we mean, if you operate as a sole trader, partnership, or as a Limited company:

Limited company

A director of a limited company has a lot of responsibility and some directors choose to handle the accounts work on their own, others feel it is better to outsource this to an experienced accountant.

Limited company accountancy fees include:

Year-end accounts

Your company year end is set by Companies House, depending on when the company was incorporated. Your company will be given an Accounting Reference Date (ARD), which is usually the last day in the month when the company was incorporated. Your company must file a set of year-end accounts with HMRC and Companies House, within 9 months of this date (12 months for the company tax return).

Corporation Tax calculations

Corporation Tax is the tax on your limited company profits. Currently, Corporation Tax is set at 19%.
Your Corporation Tax year end is usually the same as your accounts year-end. You have 9 months and 1 day from this date to pay your corporation tax, and 12 months to submit the company tax return.

Administering payroll

If you are a director of a limited company, you will probably pay yourself a small salary and the remainder via dividends, as this is usually the most tax efficient way to operate.
Paying yourself a salary requires you to register with a PAYE scheme with HMRC and administer a payroll that is compliant with Real Time Information (RTI).

Sole trader

The accountancy needs of a sole trader are less complex than that of a limited company. An accountant can file your year-end accountants and submit your tax return via self-assessment on your behalf.

Self-assessment

Self-assessment is system that HMRC use to collect income tax. Tax is usually deducted automatically from wages, pensions and savings but not from other income, i.e. trading income.

You have to submit details of your income via your self-assessment and pay Income Tax and National Insurance Contributions on all taxable income above your personal allowances. You may need to compile accounts to complete a tax return. You also need to fill in a tax return if you are a company director.

Additional services

Accountants tend to bundle their services into a monthly accountancy package. Depending on the cost of the service, some may include the following services as standard or as an additional add-on:

VAT Returns

If your company turnover exceeds the VAT threshold (currently £85,000) in a rolling 12-month period, or you expect it to in the next 30 days, you are required to register for VAT.
An accountant will advise you which VAT scheme is best suited to your needs. This could involve calculating and submitting a VAT return on a quarterly basis, or annual basis. It could also be in a cash or invoice basis.

Bookkeeping

Bookkeeping is the recording and organising of a company’s financial transactions. This information is used to prepare your accounts, so it is vital that your records are accurate and organised.
The administration of bookkeeping can be time-consuming, and an accountant will be able to offer a service that can manage this for you.

As a team of UK Chartered Accountants and small business consultants who work with limited companies, sole traders and small businesses in and around Yorkshire, Lincolnshire and London, we can offer you a package that suits your individual needs.