Freelancers’ Questions: How much will an accountant cost me?

Freelancer’s Question: How much should I expect to pay an accountant per month to look after my new one-person limited company? I went onto a Zoom call with one (chartered) tax adviser I found, with an estimate of £80-130 in my head and he laughed me off the call, saying I’d get nothing for that price!

Is it a case of the more you pay, the more you get? Have accountancy prices generally risen, like they have for just about anything else?!

Also, I need to get my (personal) tax return into HMRC pronto; so should I expect to pay a premium to whoever accountant I go with, because of this requirement I need fulfilling speedily? In other words, can an accountant put up their fee because I need my HMRC self-assessment tax return sorting immediately?

Expert’s Answer: Let’s dissect my answer into three sections.

Firstly, the response from the tax adviser was justified as it’s a general practice accountant that you require. Unless you’re engaging in specialist trade and require complex advice (we’re talking R&D or complex import/export VAT), look for a general accountant.

Budgeting for an accountant

The £80-£130 price point sufficiently covers general accountancy services for a one-person limited company or business. However you may need to stretch this, based on the accounting services that you require.

As a rule of thumb – the more you trade, the greater the legwork for your accountant, which the price will mirror. To put it into perspective, the time and ‘people power’ booked in to service the financials of a £1 million company will significantly differ from a business generating half a million, so when it comes to estimating accountancy fees – remember, time is money.

Levelling-up

When calculating accountancy fees, the structural complexity of your business will shape the price bracket, including turnover, number of transactions, employees, bookkeeping and VAT registration. If you need to ‘level up’ on services (we’re talking the likes of investment advice or an audit), expect to pay more. It’s part and parcel of company growth.

When searching for an accountant, if you spot identical packages from lookalike providers but there’s a price discrepancy, do your research to uncover the basis of the pricing. How long have they been on the block? What’s their level of expertise? And more importantly, how are customers reviewing their services?

Are accountancy fees on the rise?

As the cost of living and running a business hits an all-time high, price hikes are inevitable in line with inflation.

Accountancy practices periodically review their prices and adjust them accordingly to offset any losses, so expect hiring an accountant to cost more than it historically did.

Self-assessment tax return – included or an add-on?

Although the cost of a self-assessment tax return will typically be absorbed in your fee, some accountants may charge a one-off fee – the pricing structure varies per accountant. If it’s part of your package, take note of the exceptions, such as time sensitivity.

If you need your self-assessment fast-tracked, you’ll likely be charged more as your accountant will need to factor this into their existing workload. Some accountants may request a notice period of six weeks for a self-assessment that requires completing ahead of the January 31st deadline.

Additional fees; time-sensitivities and setbacks

Penultimately, when switching accountants, expect to pay an additional fee for a self-assessment tax return if you’re ‘playing catch-up,’ and wish to bring your financial reporting duties up-to-date with HMRC.

Completing a self-assessment tax return can be done under time-sensitive conditions, although a common setback is when tax questionnaires are submitted late as the information within is vital in preparing a self-assessment. Good luck with your new accountant!

The expert was David Tattersall, head of client relations at Handpicked Accountants, an online directory that takes the guesswork out of searching for reputable and local accountants around the UK.