Accounting Outsourcing for UK Businesses Explained

If you're interested in outsourcing accounting services for your business but you're still a little hazy on what exactly that means, you're in the right place. Our expertise in this industry means we know everything there is to know about outsourcing accounting.

We're here to clarify and answer any burning questions you might have, and by the end of this article, you'll know if this is the right choice for your business.

If you want to get started with finding the right firm for your accounting needs, you can use our free quote-finding tool. Just give us a few brief details about your business, and we'll match you up with trusted companies that are right for you. They'll be in touch with tailored quotes and information.

What is accounting outsourcing?

Accounting outsourcing is when a business outsources their accounting services to a third-party. The third-party, an accounting firm, will carry out tax and accountancy services for that business.

This includes services such as bookkeeping, payroll, tax, accounts payable, accounts receivable, and bank reconciliation. Some firms offer other services, like marketing and business planning.

When outsourcing your accounting, you could choose to outsource to a firm that takes care of every aspect of your accountancy and taxes, or you can simply choose to only outsource specific tasks. This is less common, however, as businesses typically get more value from an ongoing relationship with an accountant who'll also give them advice, and help them navigate this complex area with ease.

What are the benefits of outsourcing accounting & bookkeeping?

There are several benefits that come with outsourcing accounting services, which we've outlined below:

Save money Outsourcing accounting is typically more cost-effective than keeping it in-house. You don’t need to worry about spending money and time on things like salaries, training, sick days, and insurance.
Scale your business As your business grows, your tax and accounting needs will change. Outsourcing makes this process a lot easier, as the firm will have the relevant expertise and knowledge to deal with this smoothly. 

Accounting firms will generally offer advice and be able to point you in the right direction so you can make expertly-informed decisions for your business. 

Have experts on hand You'll usually develop a relationship with your accountant, and come to rely on them for their expertise and advice. 

Chartered accountants are accountants that have carried out extensive training and passed rigorous examinations, so you know they’re the best in their field. 

Increase efficiency Outsourcing accounting doesn’t just save you time, money, and resources, but it also means that the super important parts of your business, such as payroll and tax, are looked after. 

It also means you won’t run into any trouble with the law by filing late, or incorrectly. Doing so can mean you have to face a monetary fine. Outsourcing increases your business's efficiency and so prevents this from happening. 

Increase flexibility Outsourcing means you don’t need to worry about whether or not these important accountancy tasks will be done. You can simply leave them in the hands of your accountancy firm, and have the confidence to know that the work will be processed accurately and on time. 

You also get to be more flexible with your time, and focus your time and energy on other parts of your business that better fall within the scope of your expertise and knowledge. 

Use our free comparison tool to get tailored quotes

Average outsourced accounting services cost

You can expect to pay around £500 per year for outsourced accounting services, although this price can change based on your business's needs.

Basic accounting services can typically cost around £25 to £90 per hour, whereas specialist services can cost £120 to £150 per hour.

If you run a start-up, and want some very basic tax and accountancy services, you may only need to pay a one-off fee of a few hundred pounds each financial year. As your business grows, or if you need more services carried out, this price will increase.

The cost of outsourcing depends on the services you need, and the size of your business. Not all accounting firms are transparent about pricing – but they'll usually offer a free consultation, so you can get a better idea of their services and costs.

What are services in accounting?

There are a number of different accounting services that a business could need. These are the most popular:

Bookkeeping This service tracks and records your business's financial transactions. 

Business accounting typically costs around £59 – £200 for a business with £10,000 – £30,000 annual turnover.

Tax accounting Accountants will calculate the tax your business needs to pay, as well as take into account any deductions. 

Businesses with an annual turnover of £0 – £100,00 can expect to pay around £75 – £100 for VAT returns.

Payroll Calculating and paying employees accurately and on time is a core part of the payroll process. Other relevant tasks include deductions, and payroll tax. 

Payroll costs around £200+ p/m for businesses with 10 – 50 employees.

Bank reconciliation This is the process of matching up your business's bank statements with your books to ensure accuracy, and find any discrepancies. 
Accounts payable When you owe money to other businesses or suppliers, this is held as a short-term debt. This service ensures your accounts are paid on time. 
Accounts receivable If your business is owed money, this service ensures the money owed is paid. 
Get free tailored quotes
Are you looking for an accountant for your business?
It only takes 30 seconds

How does accounting outsourcing work?

Outsourcing your accounting first involves finding the right firm for your business. While most firms offer core tax and accountancy services, some also offer other services such as marketing, business development, and help with funding.

Another important aspect is budget. It can be tricky to vet potential firms in this respect, as they're not all transparent with pricing. However, lots of firms are, and where they aren't, you can always request a free quote.

For a much quicker route to comparing prices, you can use our free quote comparison tool to be matched up with the right accountancy firm for your business, just give us a few brief details and we'll do all the hard work. You'll then receive no-obligation quotes from providers so you can compare, and save.

Once you've decided on a firm, depending on which and how many services you're outsourcing, you'll need to hand over relevant documentation. If you're switching from another firm, some firms will handle this process for you, so you don't need to do much of the legwork.

Alternatives to accounting outsourcing

Whilst outsourcing is a great option for many businesses, it may not always be the right option for you. If you have budget constraints, or you want to have more control over your tax and accountancy, there are some alternatives to outsourcing.

You could opt for accounting software, which is cloud-based and comes with built-in programs to help you carry out core tax and accountancy tasks. These include bookkeeping, payroll, and billing and invoicing.

Accounting software gives you the ability to manage various elements of accounting, all while keeping it in-house. This is typically a more affordable option, although pricing depends on the software provider you go for.

Using accounting software is cheaper than having an accounting team in-house, as you don't need to fork out on salaries or deal with training, insurance or sick days.

Is accounting outsourcing right for you?

Accounting outsourcing is a great option for many businesses, as it can save you time, money, and resource. It also means you get to rely on experts, and discuss important financial matters with professionals.

There are some drawbacks to outsourcing. For example, issues with your accountancy firm that are beyond your control can cause major headaches, as tax and accountancy are typically time-sensitive issues. You have to leave these tasks in the hands of a third party, and won't usually have a lot of control over them. That said, some firms do offer you the chance to access their software, so you can keep your eyes on the numbers as well.

Taking into account the above, outsourcing makes sense for businesses who want to rely on professionals, and focus on other parts of the business. If you're a start-up, or you have sufficient knowledge in this area, you can certainly use accounting software instead.

If you're on the hunt for an accounting firm, you can use our free quote tool to be matched up with the right firm for your business.

FAQs

What accounting functions can be outsourced?
All accounting functions can be outsourced. The most common services to outsource are:

  • Bookkeeping
  • Payroll
  • Accounts payable
  • Accounts receivable
  • Bank reconciliation
  • Tax accounting
  • Forensic accounting
Why should I outsource my accounting?
Outsourcing your accounting saves you time, money, and resource. You can also increase your business's efficiency and flexibility, as your accounting will be taken care of by experts.
What is the best accounting firm?
The best accounting firm for UK businesses is Makesworth Accountants. The firm is well-loved by its clients, and offers services such as payroll, tax returns, and bookkeeping.

We also recommend Debitam to small businesses that only need one-off accountancy services. Debitam offers tailored packages, so you can opt for one of these instead of hiring a firm.

Zara is a law grad with a penchant for wordsmithing. As Expert Market’s CRM and payroll expert, she relishes researching and writing expert content.