If you have asked more than one accountant for a quote, you may have found that the prices are nowhere near each other.
One firm might quote £60 a month. Another might quote £175. That can make it look as though one accountant is simply much more expensive than the other.
Before comparing the prices, ask a more useful question: are they actually offering you the same thing?
Accountancy fees for limited companies vary because 'looking after the company accounts' can mean very different things. One accountant may expect you to keep accurate bookkeeping all year and hand over finished records. Another may be doing the bookkeeping, VAT, payroll and answering questions throughout the year.
The monthly price only makes sense once you know what is included.
What are you actually paying the accountant to do?
At a basic level, most limited companies need annual accounts and a Company Tax Return. Beyond that, services can vary considerably.
A quote may also include bookkeeping, VAT returns, payroll, your personal Self Assessment return, accounting software, help with routine questions, regular meetings or management reports. Or it may include none of those things.
Neither approach is automatically better. What matters is whether the service matches what you want help with.
Ask what will still be left for you to do
This is often the easiest way to compare two quotes.
Suppose one accountant charges less, but you are expected to maintain the bookkeeping, keep the bank matched up to the records, file your own VAT returns, run payroll, correct any bookkeeping problems, answer all the year-end questions and pay separately whenever you need additional help.
Another accountant charges more but takes most of that work away from you. The second service may cost more because you are buying more of somebody else's time.
The useful question is therefore not just 'How much is the accountant?' It is 'Once I have paid the accountant, what am I still responsible for?'
Bookkeeping makes a big difference
If you are happy doing your own bookkeeping and keeping it accurate throughout the year, you may not need to pay an accountant to do it for you. That can keep the fee lower.
If you would rather send over the paperwork and have somebody else maintain the records, you are asking for a larger service. That will normally cost more.
The important thing is knowing where your responsibility ends and the accountant's begins.
Check what 'VAT included' actually means
Two accountants may both say VAT returns are included. But the service may still be different.
With one firm, you may be expected to keep the bookkeeping fully up to date and they simply prepare the return from those records. With another, the accountant may also maintain the bookkeeping, check unusual transactions and correct problems before the VAT return is filed.
If your business has straightforward VAT, the difference may be small. If you sell through several channels, deal internationally or have products with different VAT rates, there may be much more work involved.
Ask what the accountant expects you to do before each VAT return is prepared.
Payroll works the same way
A company with one director does not have the same payroll needs as a company with ten employees.
If payroll is included, ask how many employees are covered, whether workplace pensions are included, how starters and leavers are dealt with, whether statutory pay is included and what happens to the fee if you hire more people.
This avoids discovering later that the advertised package covered much less than you expected.
What happens if your bookkeeping is wrong?
This is worth asking before you sign up.
Suppose you have kept your own bookkeeping all year, but something does not add up when the accounts are prepared. Will the accountant investigate and correct it? Will they charge extra? Will they ask you to fix it yourself?
There is nothing wrong with charging more for work that was never included in the original fee. The problem is finding that out after the work has already started.
How much help do you want during the year?
Some business owners mainly want somebody to prepare the annual accounts and tax returns. That may be all they need.
Others want somebody they can speak to when a question comes up. Can I afford to employ somebody? Should I register for VAT? Can I take another dividend? Should the company buy this vehicle? Why does the business show a profit when the bank balance is low?
If you expect that kind of help, ask whether it is included in the fee. A low-cost annual service may be perfect for somebody who rarely needs support. It may be the wrong choice for somebody who expects to speak to their accountant regularly.
A monthly fee does not always mean monthly work
Many accountants spread annual fees across twelve monthly payments. So a £100 monthly fee might mainly be paying for work that happens later in the year. Another £100 monthly fee might include bookkeeping or payroll happening every month.
Again, the payment amount does not tell you what you are buying. Ask what work is actually carried out during the year.
Cheap does not automatically mean bad
There is nothing wrong with choosing a lower-cost accountant if the service is right for your business. A small company with tidy bookkeeping and straightforward accounts may not need an expensive service.
Equally, a higher price does not guarantee better advice or better communication. The aim is not to find the cheapest accountant or the most expensive one. It is to find a service that covers the work you want done at a price you are comfortable paying.
Before accepting a quote, ask these questions
Make sure you know whether annual accounts and the Company Tax Return are included, who does the bookkeeping, whether VAT and payroll are included, whether your personal tax return and accounting software are included, what happens if the records need correcting, whether you can ask questions during the year and what would normally result in an additional charge.
Once you know those answers, comparing two quotes becomes much easier.
How Thames Williams approaches a quote
We ask about the business before giving a price. That means understanding whether you are VAT registered, roughly how much bookkeeping there is, whether you employ anybody, whether you want to keep the bookkeeping yourself and how much ongoing help you want from us.
A company that keeps good records and only needs annual accounts does not necessarily need the same service as a company that wants us to handle bookkeeping, VAT and payroll throughout the year.
The quote should make that difference clear. You should know what we are doing and what you are still responsible for.
If you are comparing accountants, our guide to whether you need an accountant may also help you decide what level of support makes sense.
