London is not just a place with various large businesses but many small businesses are also present here. No matter a business is large or small, one common thing is the high costs of business operations. Fortunately, there are many small business accountants in London to help business owners deal with the costs of their businesses.
But what exactly is the cost of hiring a business accountant? Many small business owners have a misconception that hiring an accountant would cost them a bomb. However, in reality, the cost of accounting services often depends on various factors and you may hire one at a reasonable cost.
Before discussing the cost of hiring small business accountants in London, let’s find out why you need them and how they benefit your business.
Reasons you need a small business accountant
Here are certain ways how small business accountant can help you with your business:
- Keeps your book updated and clean.
- Improves your invoicing and cash flow.
- Boosts business profitability.
- Accurately does your taxes on time.
- Enhances business performance over time.
- Helps with business planning.
- Makes better financial decisions.
- Avoids interests, penalties, and audits.
- Reconciling bank accounts.
- Removes unnecessary expenses.
- Ensures that a business complies with changing rules and regulations by the government.
Thanks to small business accountants, business owners can take their business to another height with their advice on a business plan. Furthermore, accountants also help a company manage its legal structure and finances.
Various financial records that small businesses need to keep
After selecting a specific accounting technique and entity, a company starts to run. But what financial documents do they need to maintain their expenses?
Well, they need to keep records of all the documentation that demonstrates their expenses, income, credits, and deductions during the tax returns.
All these often consist of:
- Receipts and bills
- Previous tax returns
- Cancelled checks
- Credit card and bank statements
Some other proofs supporting an item of credit shown or income deduction from your tax return also need to be considered. While there are some cases a business owner wishes to preserve their business’ financial records for a long time, you’d want to keep all the financial documents for around three years.
What is the cost of hiring small business accountants in London?
The cost of hiring small business accountants in London depends on a specific business and its turnover. But typically, small businesses have to pay approximately £60 to £450 per month for hiring an accountant. The cost also varies depending on all the accounting and tax services offered by them.
Factors involved in the cost of small business accounting services in London
Here are various factors that affect the cost of accounting services:
- Business type
- Size of the business
- Number of directors
- Number of employees
- Business location
- Number of transactions
- Business turnover
- Service requirements
- Complications of taxation
- Status of business VAT registration
Whether you need a small business accountant or a VAT accountant in the UK, all these factors are most likely to impact the cost of hiring them. Furthermore, the payment options may be either an hourly rate or a fixed fee.
Two methods of calculating a small business accounting fee
Typically, a small business accountant would use these two techniques to formulate the fee:
Charge out rate
The accountants determine an hourly fee using the cost of practice and a profit margin. While the clients can estimate the accounting service costs, it’s quite challenging to anticipate practice costs and the appropriate profit margin.
The accountant provides a fixed price quote for the main services included in the package. Here, clients can see pricing clearly and contrast them with those of other accounting firms to choose the best deal.
How to decrease small business accounting costs?
Accounting services are becoming an essential component of all sizes of companies. However, employing accountants in London is more expensive than in other UK regions. As a result, small business owners can engage freelancers and part-time staff to lower their accounting costs, or they can outsource these activities to accounting services.
These people are in charge of particular services, and you will pay them either an hourly rate or a fixed cost. There is no need to offer any employee perks and pay them whenever it’s not needed.
The cost of small business accounting services can be quite expensive for small companies with less annual turnover. But all these services may help your firm grow, as well as increase turnover, manage financial issues in a company, and resolve tax complications. When looking for a small business accountant, you can ask for referrals or search for the best ones online. You must, however, remember that an accountant will handle all your crucial financial documents. So, you need to select one carefully and tactfully.