How much should I pay my accountant and what payment structure is best?

As a small business owner or a self-employed professional making the transition into a style of working where you’re the boss, there will be many factors to take into consideration, both legal and operational to prepare your business for launch day. One of the key factors is to ensure that you meet the financial reporting standards set out by HMRC, depending on your employment status. If you are a limited company director, the onus of submitting accounting records will lie with you.

The next step will be to arrange the management of financial affairs for the business. To judge what you should be paying your accountant, you will need to determine what level of support you require and your legal responsibilities in terms of recording, preparing and submitting financial paperwork. Common questions when beginning the journey to look for an accountant include -

How much should I pay my accountant and what payment structure is best? We take you through our top pricing tips to ensure you operate cost-efficiently and make a well-informed decision:

Industry knowledge and specialisms

Whether it’s a high street accountant, a contractor specialist, an independent accountant or a family friend working on your accounts, question yourself - who will be able to give you the best value for money? Are they specialists for your type of business, as if so, they will have more industry knowledge and be able to keep you updated on the latest legislative measures affecting your finances. If they are specialists in your sector, they may offer packages tailored to your needs and provide extra incentivised services, such as discounted insurance and pension advice.

Level of communication

Each accountancy practice will fluctuate in the level of communication offered, such as from a local accountant or a digital-only accountant. Realistically, the power of modern technology allows you to communicate seamlessly with your accountant without the need to meet face-to-face. However, many accountants do offer this as part of their service to encourage greater transparency and a deeper level of insight. If you’re new to the entrepreneurial world of leading your own business, it may be worth looking for an accountancy service which offers unlimited support with no caps.  

Online accounting software

A major deciding factor when engaging with an accountant includes access to online accounting software, such as FreeAgent, Xero, Quickbooks and Sage. Using industry-standard accounting software means being able to access your financial data instantly and through any device, depending on the platform. Your main company financials are typically broken down, simplified and displayed through a central dashboard, viewable between yourself and your accountant.

Cloud accounting software is as it says on the tin, all the data is stored online which means you can say goodbye to stacks of printed accounts and paper invoices. Using software designed for small businesses can make the customer journey seamless as you can digitally record invoices, receipts and expenses, delivered directly to your accountant through the click of a button.

What’s your skill level?

If you’re skilled enough to take a more hands-on approach and you’re able to dedicate a portion of your time to maintain your books, tailor your accountancy support around this to ensure you’re not paying for an all-inclusive service which isn’t required. If you are knowledgeable enough to prepare the appropriate documents but require your accountant to offer a sanity check, it may be worth paying for their time or the single task in hand.

What’s the best payment structure and payment method?

Popular payment structures include the following:

• Payment by the hour/task: This can prove worthwhile and reflect good value for money if the task is straightforward and there’s a clear idea of how long the task will take
• Monthly fixed fee package: This is an affordable payment structure which can be arranged through direct debit or standing order, depending on the accountant. A monthly package makes it easier to settle payment with an accountant if you’re thinking of switching, but remember to keep note of any notice periods or termination fees
• Annual fixed fee package: If you’re set on using an accountant for the long term and would like to financially commit to this, you can pay one bulk fee. By settling the financial liabilities in one go, you may be able to agree to a discounted rate

Some accountancy firms may determine a price depending on total turnover and the number of employees as this may require extra work, such as payroll. If you’re a contractor, freelancer, sole trader or small business, you may be able to find a tailored package from a specialist accountant using the Handpicked Accountants site.

A tipping point may be the extra perks which come with your accountancy package, saving you money in the long run. This can range from the following:

• Discounted IPSE membership (The Association of Independent Professionals and the Self-Employed)
• Discounted contractor insurance, mortgage, pension and financial advice
• Internal incentive scheme offering store and ticket discounts and tickets

It’s important to note that it can be detrimental to cut corners when employing the skills of an accountant. If the work is carried out incorrectly or deadlines mismanaged, you could find yourself facing a fine from HMRC and left to revisit documents. Ensure you carry out extensive research by analysing the level of support on offer, price and level of expertise of the accountant to make a well-informed decision.

At Handpicked Accountants, we shortlist only the best accountants across the country, ensuring that the time-consuming process of finding an accountant is made easier and levelled with trust. Make an informed choice by using the Handpicked Accountants platform to search for an accountant on a local level, near you.