How much does an accountant cost?

This is a general outline of what business owners need from an accountant and the range of costs for the basic required tax and compliance filings.

Depending on whether you are a sole trader or a limited company the basics are outlined below. Prices are net of VAT.

Sole Trader, also known as a Self Employed, they needs two things normally:

A.  A tax return, often called Self Assessment Return SA100 using information for accounts outlined below.   Average £195 - £250

B.  A set of accounts which includes as a minimum a profit and loss, and ideally a balance sheet. These normally range from £235 to £900 depending on the amount of turnover and quality of the records.

Now the critical things here are:

1.  Number of transactions

2.  Quality of the records

3. Getting all the information to the accountant and for them to be able to do the accounts with as few interruptions as possible.  Constantly needing to go back to the client with questions or requesting missing information slows the job down and ultimately will cost the client more.  

Limited Companies: Trading versus Dormant Companies

Dormant Company - What does that mean?

Your company may be considered dormant if it is not currently carrying out any business and it does not have any other sources of income, including investment income.

There are numerous reasons why a company may be dormant. A company can be dormant from the moment it’s formed or an existing trading company might become dormant. However, ‘dormant’ can mean different things, dependent upon whose viewpoint you are looking from. For example, a company may have dormant status for corporation tax purposes, but it may not meet the stricter definition applied by Companies House.

Dormant company definition for corporation tax purposes

Dormant company accounts

Section 1169 of the Companies Act 2006 states that a company is dormant if it has had ‘no significant accounting transactions’ during an accounting period. In fact, there are only a few, very specific transactions that a company may put through their accounts and still be considered dormant,

Your company will be considered dormant for corporation tax purposes in any of the following circumstances:

a. It is not trading and does not receive any other income. This includes investment income.

b. It is a new limited company that hasn’t started trading yet.

c. It is a flat management company.

d. It is an unincorporated association or charity that owes less than £100 corporation tax.

Does your company need to file dormant company accounts? - Most likely yes !!

A company will not be considered dormant for corporation tax purposes if it is carrying on any business activity, including the buying and selling of goods or providing of services; earning interest; managing investments or otherwise receiving income.

If a company is considered to be dormant by HMRC then it will be exempt from the requirement to file an annual corporation tax return.

There are other considerations if the company has previously traded and now become dormant

On average the cost for  Dormant set of accounts ranges from £350 to £750 depending on the work necessary to establish any transactions and clarifying statutory burden.

Trading Accounts:

1.  Accounts to Companies House: Every year, companies must prepare statutory accounts for their members and must also file a version of these with Companies House. However, dependent upon the type and size of the company, different limited company accounts formats may be available.  Formats means different versions that give the same information. AKA- Filleted, Abbreviated or Abridged... For the Detail:  https://www.legislation.gov.uk/ukdsi/2015/9780111127896

2. Accounts to HMRC: These are very specific with more details in the profit and loss and balance sheet and are used to back up the company tax return (Form CT600), detailed below.  These are the accounts most business owners recognise with a balance sheet, lots of disclosure notes and a detailed profit and loss.

3.  CT600 - A Completed Company Tax Return includes the CT600 Form along with the company's accounts  referenced above, company tax computations and any supplementary documentation.

A company must complete a Company Tax Return if HMRC issues the company with a "Notice to Deliver a Company Tax Return". The deadline to supply a completed Company Tax Returnis 12 months after the end of the accounting period it covers.  The Company Tax Return is the financial information that most companies file each year to report earnings, losses, loans and matters relating to their tax liability.

Costs for the completion of these financial statements and company tax return will vary accordingly to size of the company including number of transactions and complexity of the commercial transactions, disclosure notes, any employee or directors loans, stock, WIP and other matters.  Quality of the books and records including all the VAT, CIS, PAYE and other periodic filings all add to the compliance requirements and reconciliations.

Depending on the quality of the records supplied including possible cloud accounting platforms to use for preparation of the compliance accounts, costs will range from £950 for micro entities to £7,500 for large companies up to audit threshold.

We hope this has been helpful and we look forward to hearing back from you if you have any further questions.