Evaluating the Cost and Value of Hiring an Accountant for Your Business
Hello everyone!
As my business approaches its one-year anniversary, I’ve been reflecting on my expenses, particularly in regard to my accountant. Initially, I engaged an accountant based on a gut feeling, influenced by how well they handled my initial inquiries. However, as I assess my finances with a turnover of less than £200,000 and profits on the slimmer side, I’ve started questioning the cost-effectiveness of my accounting fees, which are approximately £2,000 plus VAT annually. This fee covers personal self-assessment, quarterly VAT returns, and corporation tax.
I’m curious: is this a standard fee within the industry? What do your accountant fees look like? Also, how often do you interact with your accountant, and how do they contribute to your company’s growth? In my experience, communication with my accountant tends to be infrequent, usually sparked by an impending tax deadline.
Edit: Thank you all for your valuable feedback! To clarify, I handle all my own bookkeeping, which includes managing around 200-300 transactions per month, primarily customer invoices. Given this, I wonder if my accounting costs should be lower. Nonetheless, your responses have led me to appreciate my accountant’s reliability, swift responses, and punctual work. The true test of their impact will hinge on the savings they achieve for me during my first corporation tax submission.
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It sounds like you’re in a common situation for many business owners at the one-year mark: evaluating costs and ensuring that every expense contributes value to your business. Let’s break down the various aspects of your inquiry and provide some advice on how to approach this.
Assessing Accountant Fees
Based on the fees you’ve mentioned — £2,000 + VAT for personal self-assessment, quarterly VAT, and corporation tax filing — this is generally within a reasonable range for small business accounting services in the UK, especially if your accountant is handling multiple tax-related filings. However, pricing can vary based on several factors:
Evaluating the Value Your Accountant Provides
Value isn’t always about frequency of communication; it’s about the expertise and peace of mind an accountant can offer. Here are some indicators that your accountant is adding value:
Maximizing the Relationship with Your Accountant
If you feel like the interaction with your accountant is limited, consider these steps:
Considering Cost Savings
Since you’re already handling bookkeeping, a major task, discuss with your accountant whether this should decrease their fees. Alternatively, if you’re comfortable with the bookkeeping software and wish to further reduce costs, consider:
It’s great to see you reflecting on your accounting costs as your business evolves! Your question about whether £2,000 plus VAT is a standard fee is very relevant, especially for small businesses navigating tight margins.
While accounting fees can indeed vary based on location, the complexity of your financial situation, and the level of service provided, it often helps to think of your accountant as an investment rather than just an expense. Given that you handle your own bookkeeping, you’re likely already managing costs effectively. However, you might want to consider whether your accountant is providing you with more than just compliance services.
Here are a few points to consider when evaluating their value:
1. **Advisory Role**: Is your accountant actively advising you on tax-saving strategies or offering insights that could enhance your cash flow? If they’re only contacting you during tax season, it may be worth discussing how to make your interactions more impactful throughout the year.
2. **Accessibility and Response Time**: You mentioned appreciating their quick responses. This is vital in business—timely advice can prevent costly mistakes. Make sure you’re leveraging that accessibility effectively.
3. **Tailored Services**: Given that your firm’s financial situation may be on the leaner side, a conversation about tailoring services could be beneficial. They might offer different packages or allow for a more bespoke arrangement that fits your needs without overextending your budget.
4. **Benchmarking Against Peers**: Engaging with other small business owners in your industry