How much does an accountant cost for a small business?

One of the first questions any business owner asks is what an accountant actually costs. The honest answer is that it varies, because it depends on what you need, how your business is set up, and how tidy your records are. Here's what drives the price, some rough guide figures, and how to make sure you're getting value rather than just a cheap quote.

What drives the cost

Accountancy fees aren't one size fits all. The main things that move the price are:

• Your structure: a sole trader's tax return costs far less than a limited company's full accounts and corporation tax
• Your turnover and the volume of transactions: more invoices and expenses means more work
• Whether you're VAT registered, and how often you file
• Payroll: how many people you pay, and how often
• How tidy your bookkeeping is: clean records are quicker, and cheaper, to work with than a shoebox of receipts
• The level of support: pure compliance costs less than proactive advice and planning

Rough guide prices

Every firm prices differently, so treat these as ballparks rather than quotes. As a rough guide, a sole trader's self-assessment tax return is often a modest one-off fee each year; a small limited company's year-end accounts and corporation tax are commonly charged as a monthly retainer or an annual fee that rises with turnover and complexity; and bookkeeping, VAT and payroll are usually priced on top, based on volume.

The number that matters isn't the headline price. A slightly higher fee that includes advice, planning and someone who actually answers the phone is usually far better value than the cheapest quote with everything billed as an extra.

Monthly retainer or a one-off fee?

Many firms now offer a fixed monthly fee that spreads the cost and bundles your accounts, tax and often bookkeeping into one predictable payment. Others charge a one-off fee at year-end. Monthly is easier to budget for and usually comes with year-round support; a one-off fee can suit very simple affairs. Either way, ask exactly what's included so you can compare like for like.

What should be included

Before you compare prices, get clear on scope. For a limited company, a typical fee should cover your year-end accounts, corporation tax return, directors' self-assessment, a confirmation statement, and software and support through the year. Bookkeeping, payroll and VAT are common add-ons, so ask what's in and what's extra, and the fee you're quoted is the fee you pay.

How to get value, not just a low price

Cheap accountancy can end up expensive if it means missed deadlines, penalties or tax you didn't need to pay. Value comes from a firm that's proactive, responsive and a good fit for your sector and size. Our guide to the questions to ask before you hire covers exactly what to check, and what good business advice looks like explains the difference a proactive firm makes.

Switch Books is a free service that matches you with a local accounting firm that fits your needs and your budget. Tell us your setup and what you pay now, and we'll connect you with a firm that's genuinely good value.