How to reduce your ongoing accounting fees
Accountants cover a broad spectrum of services and can represent individuals, families, groups and businesses. The fee structure you pay your accountant will depend on the work they do for you, and how regularly, but the average accountant cost starts at £35 per hour for basic jobs, and can be upwards of £150 an hour for more complex tasks.
What Does an Accountant Do?
Some accountants specialise in specific services or industry sectors. Others provide several functions and might work for private individuals as well as registered companies.
The services accountants provide can include:
- VAT returns & filing
- Registrations and incorporations
- Tax and budget planning
- Payroll functions
- Filing accounts and statutory returns
- Bookkeeping and record-keeping
- Examining and auditing financial reports
- Providing professional advice
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How Much Does an Accountant Cost?
The cost of an accountant depends on the work they are doing and whether this is ongoing.
For example, you might employ an accountant on an ongoing basis to help you with regular financial reporting or day-to-day bookkeeping (find out more about bookkeeping costs here). You could ask for their assistance to set up a one-off task, such as transferring pension funds or providing an independent opinion on different financial products.
In the UK the average cost of an accountant ranges from £35-£150 per hour. At the lower end of the spectrum are simple tasks, such as completing the calculations for a tax return. More complex tasks such as managing payroll will cost more (learn more about payroll costs).
If you regularly work with an accountant, you will likely pay them a monthly cost, or a quarterly fee, rather than paying by the hour.
Can I Reduce my Accountancy Costs?
There are lots of ways to reduce your accountancy costs. However, analyse the pros and cons before deciding to undertake any projects yourself, as accountants can provide invaluable support, which is not always reflected in the rate you might be paying.
Added benefits of using an accountant include:
- Professional support to ensure that projects are completed on time, accurately and in compliance with regulations.
- Cost-savings by ensuring all claimable expenses are claimed for.
- Time savings by carrying out functions and filings on your behalf.
- Support with liaising with organisations such as HMRC on your behalf.
- The assurance of having a qualified accountant file for you, which may reduce the likelihood of audits or inspections.
Here are some of the ways to reduce your expenses:
1. Carry out basic accountancy tasks yourself
The less work your accountant has to do, the less it will cost you. Make sure that when you pass information to your accountant, you include as much detail as possible. If you can complete basic bookkeeping yourself, for example collating expenses on a spreadsheet, this will save them time, and you money.
2. Switch to digital processes
One of the lengthiest jobs an accountant needs to do is working through paper records. If you can change any of your functions to be digitalised, this means providing simple reports to work through.
For example, switch outgoing payments to bank transfers rather than handwritten cheque stubs, keep digital records or use a bookkeeping software rather than physical paying in slips, and download soft copy bank statements instead of hard copies received in the post.
3. Keep good records
Particularly if you change accountants, having a clear history of your previous returns or filings will make their job much easier. Keep copies of past returns, filed accounts, statements of account and any other functions that your accountant will be involved with. If they can save the time of having to track down previous documents, this will cost less for you.
What Types of Accountant Cost the Least?
As the modern finance world innovates, you will find many more virtual accountancy practises. This type of accountant is usually much cheaper than an accountancy practise since they offer cost efficiencies in being able to work remotely.
Freelance accountants tend to be self-employed, and also usually work remotely. If you decide to work with a freelance or virtual accountant, be sure to understand what information they need from you, and to verify their accreditations before starting any work.
If you need multiple services or ongoing support, it is advisable to use the same accountant for all of your requirements. This means they already know your background, and can provide cost savings by working on multiple tasks for you.
Traditional practises tend to cost more, but there are advantages. Many practices have multiple accountants with different specialities, meaning you have the benefit of their experience should any queries arise.
If you are looking at reducing accountancy fees, you may also want to look into a financial advisor or wealth manager to understand how you can better manage your finances. Take a look at our financial advisor cost and wealth manager cost pages to find out more.
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Frequently Asked Questions
Why is a Digital Accountant Cheaper?
Remote working is more efficient, which usually means that your bills will be lower. You can generally choose from packages to select the services you need, and pick and choose which to combine.
Most virtual accountants provide a faster service than you might expect from a traditional practise, and will meet with you via video call rather than needing to meet in person.
They are often cheaper since a virtual accountant does not incur any of the overheads of a traditional practise, in terms of having office premises, staffing those premises, and offering services such as acting as a business registered office.
Will Bookkeeping Software Reduce my Accountants Fees?
Quite possibly! If you can keep up to date with your bookkeeping yourself, or appoint a basic bookkeeper to assist you, this means that you will not need to pay an accountant for simple tasks since the information will be readily available.
If you decide to manage your own bookkeeping, be sure to check with your accountant what software or systems they use.
Should you use a software that is not compatible with theirs, there is a risk that you will pay twice for the same work if they need to complete the bookkeeping again, so it is well worth taking the time to check this beforehand!
How Can I Streamline my Records to Reduce Accountancy Costs?
One of the easiest ways to make your records more manageable is to consolidate your transactions into one main business account.
If you are self-employed, setting up a dedicated account for your business transactions separate from your personal bank account will make the records easier to manage. This avoids additional work to identify which transactions relate to your business and which do not.
The easier your records are to analyse, the quicker your accountancy work will be, so it is worthwhile separating out your business expenses since this will help to reduce your accountant's fees.
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