With costs rising across the board, it makes sense to review your business outlays. Accountancy fees are one of the regular costs that most limited company directors can’t avoid.
You can reduce your accountancy costs by doing more of the bookkeeping yourself, using the right software, and working more efficiently with your accountant. Our guest accountant explains that many savings come from reducing the time your accountant spends on routine admin.
A thorough review of all costs, including the need to review the spending on accountancy, should be at the top of your current “TO DO” list.
For most contractors, accountancy fees are largely driven by how much work the accountant needs to do on your behalf. If your records are clean and up to date, fees tend to stay low. If not, costs can quickly increase.
With this in mind, Elaine Clark, the founder and MD of CheapAccounting.co.uk, has written three top tips for saving on your business accountancy costs.
Keep it neat and embrace technology
Staying up to date with your record-keeping is a great way to save on accountancy fees, especially those associated with bookkeeping.
Gone are the days when you’d pop all your receipts, invoices, bank statements and credit card bills into your accountant’s office at the end of the financial year.
The use of technology such as Cloud Accounting (robust software for recording transactions and reporting to HMRC and Companies House) or Challenger Banking Apps (newer-to-market technology providing a bank account with built-in accounting software) makes capturing and recording financial transactions for your business very simple.
Key to this is having a dedicated business bank account so that the software pulls everything through via a bank feed. You can set this up in minutes, and you’ll occasionally need to re-verify the feed.
The analysis of transactions is made easier by automation, meaning the system will remember where you previously posted items and categorise them the same way, awaiting approval.
If you use an accountant to do the bookkeeping, you should see an immediate reduction in your accounting costs as embracing technology helps to reduce the time spent on capturing and analysing transactions, provided you do it correctly and regularly.
Top tip – Cloud accounting system favourites include FreeAgent, QuickBooks and Xero. Challenger banking apps are provided by Mettle (part of NatWest), Tide, Starling and many others.
Review your software
If you’ve already embraced technology, or are about to, make sure that you choose the best software for your business at the best price.
The cost for using cloud accounting systems or challenger banking apps is often charged monthly, and if you stop paying, you may lose access to your accounting data.
A vendor will often offer a free trial or low-cost trial period for the software, with fees increasing afterwards.
As this is going to be a long-term cost for your business, it is worth securing the right solution from the outset or switching if your current software has become too expensive.
Top tip – Some business bank accounts include accounting software as part of the package, so it’s worth checking what is included before paying separately.
| Action | Impact on fees |
|---|---|
| Keep records up to date | Reduces bookkeeping time |
| Use cloud accounting software | Speeds up processing and reporting |
| Do basic bookkeeping yourself | Lowers monthly fees |
| Work closely with your accountant | Avoids costly errors |
Get accountant ready
Either you do the work or your accountant does – but someone has to.
Obviously, the more that you do yourself (as long as you are doing the right things), the lower your accountancy fees will be.
The best approach to getting things right and reducing your fees is to invest in your relationship with your accountant.
Set aside time to talk with them about what they need from you both during the year and at the year end.
Reach an agreement on what software you’ll use and how they will access your system.
Top tip – to maintain ownership of your accounting, make sure that you own the subscription to any software. This means that you can control who you invite into your accounting system.
Should you want to switch accountants in the future, you can simply remove the authorisation for your existing accountant and invite your new accountant to access your system.
This approach prevents the “golden handcuffs” that some accountants hold over clients where they own the software subscription and provide the system as part of their package.
Ask your accountant to tell you if something is wrong in your record keeping and how to rectify this going forward. There is no point in your accountant pointing out issues if they do not explain what “right” looks like.
Remember that your accountant is a supplier – you are paying them for a service.
So take control of the relationship and ask them to explain what corrections they have needed to make and what you should do to avoid these in the future. If they are not happy to do this, find an accountant who is.
In most cases, reducing your accountancy costs comes down to being organised and proactive. The less time your accountant spends fixing issues, the less you’ll pay.
Top contractor accountants
- SG Accounting – First 3 months half price (£59.50 per month)
- Bright Ideas Accountancy – 5 stars on Google, from £109 per month
- Clever Accounts – IR35 FLEX. Take on any contract type
- Aardvark Accounting – Complete service from £89 per month
- Integro Accounting – Fixed fee – 6 months half price
We've worked with all of these firms for over 8 years. Always check current pricing and service details before signing up.