How to accurately and fairly compare the fees charged by contractor accountants, and what ‘additional charges’ you should look out for.
One of the main factors to consider when choosing a contractor accountant is how much you will be paying as your monthly fee.
As we discussed in our Top 10 tips, price is not the sole consideration when comparing accountancy providers, as you can find excellent accountants for under £75 per month, and woeful factory line accountants for almost double that.
How much does your contractor accountant charge per month?
When looking at prospective accountants, you need to be sure that you are comparing like with like when it comes to fees.
Unlike ‘small business’ accountants as a whole, contractor accountants tend to charge a fixed monthly fee. In a highly competitive marketplace, this fee should include the provision of core services which are common between firms.
Particularly amongst the larger firms, you will often see several levels of ‘service’ – such as bronze, silver and gold. The more you pay, the more personal the service appears to be – and various extra bolt-ons (such as free insurance) may be included as standard.
From our experience of running contractor sites since 1998, most contractors would expect to pay between £80 and £120 (+VAT) per month for a core service. In the current market, we’ve seen rates as low as £50 +VAT, and as high as £180 +VAT for dedicated contractor accountants.
See this extensive accountancy fees comparison table on our main site, IT Contracting.
Interestingly, the average cost of contractor accounting has not risen in line with inflation over the past decade.
Accountancy fees – what is included?
Most accountants will undertake a set of typical accountancy duties on a monthly basis. These duties should be sufficient to ensure your company is registered with all the tax authorities, annual accounts are submitted on time, and the company payroll, VAT, and Corporation Tax matters are dealt with when necessary. Correspondence with HMRC and Companies House should also be dealt with by your accountant, unless you state otherwise.
In addition to these core services, a wide range of extra perks are often included, such as free IR35 reviews, provision of a company registered address service, accounting software (such as FreeAgent), setting up a company bank account, and business insurance.
Most accountants provide details of what is included in their monthly package on their corporate websites. Make sure you have a written breakdown of what your monthly fee includes before signing up.
Accountancy fees – what may not be included
Alongside the standard monthly fee, many firms will charge for extra services, such as:
- A one-off company formations fee when you first become a client and wish to form a new company.
- One-off costs for undertaking an IR35 contract review (to see whether or not your contracts fall foul of the IR35 rules).
- A fee for providing a mortgage or rental reference.
- A fixed fee for completing your personal self assessment return (as this is a personal tax, it is not an allowable company expense).
- A negotiated fee for completing any unfinished accounts carried over from your previous accountant.
- A fee for closing down your limited company, or for leaving for another accountant’s services.
Only use price as one factor when choosing accountants, albeit an important one. Make sure you know exactly what is included in your monthly accounting package, and ask for recommendations / opinions from other contractors to help make your decision.
A list of some of the UK's leading specialist contractor accountants.
Top 10 tips for choosing a contractor accountant
This is a great place to start when looking for an IT contractor accountant.