Accounting Outsourcing for UK Businesses Explained

Most businesses that choose to outsource accounting do so because they no longer have the time, the staff, or the expertise to deal with it on their own.

So, if you’re thinking about outsourcing your accounting but not sure where to start, you’re in the right place. We’ll break down what’s included in the service, how much outsourcing accounting costs, what its benefits are, and more.

If you want help 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 Outsourced Accounting?

Outsourced accounting is when a business hires a third party to handle its accounting. The third party, typically an accounting firm, will be in charge of some or all of the business’s accounting and financial tasks.

This includes services such as:

• Bookkeeping
• Payroll
• Tax
• Accounts Payable
• Accounts Receivable
• Financial Reports

Some firms offer other types of accounting services besides the standard ones, like marketing and business planning.

When outsourcing your accounting, businesses can choose to outsource to a firm that takes care of every aspect of their accountancy and taxes, or they can choose to outsource only 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?

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

Saving time

If you’ve been doing your own accounting, outsourcing it to a third party will free up your time, so you can focus on growing your business. It’s one of the most appealing benefits of outsourcing payroll, especially for small owner-managed businesses.

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, freeing up your mind to focus on your business.

Saving money

Outsourcing accounting is typically more cost-effective than hiring an in-house accounting team. Even though accounting outsourcing isn’t free, it’ll cost less than paying for employee expenses like salaries, benefits, pension contributions, and training.

You’ll also save on software and hardware costs since you won’t need to pay for items like accounting software or laptops for your accounting department.

Having experts on hand

Outsourcing accounting to a firm gives you access to a team of experts, which you wouldn’t get if you were doing accounting yourself. Chartered accountants are accountants who have carried out extensive training and passed rigorous examinations, so you know they’re the best in their fields.

Plus, besides handling standard accounting tasks like taxes and payroll, accounting firms can also provide businesses with financial analysis, helping them budget and plan future investments.

Increasing efficiency

Specialised accounting firms are often up-to-date on the latest technology and processes. This means they can streamline your accounting processes, increasing productivity and in some cases, reducing costs.

It’s also their job to be aware of the latest legislation, helping you avoid mistakes like incorrect or late tax filings, which can lead to costly fines. 

Scaling your business more easily

As your business grows, your tax and accounting needs will change. Outsourcing makes this process easier, as the firm will have the relevant expertise and knowledge to meet your new needs.

Accounting firms will generally offer financial advice, and be able to advise you on how to better manage your finances as a growing business.

Average Outsourced Accounting Services Cost

Outsourced accounting services cost around £500 to £3,000 per year, although this price can change based on factors such as your business’s accounting services needs, number of employees, annual turnover, and industry.

Some providers charge by the hour, with basic accounting services typically costing around £25 to £90 per hour. Specialist services such as financial planning can cost £120 to £150 per hour. Others charge a monthly fee which can range from £50 to £300 per month for small businesses.

It’s also not uncommon to mix and match, paying a monthly fee for some services, and a one-off hourly fee for others.

Lastly, not all accounting firms are transparent about pricing, since most offer a bespoke service. They’ll usually offer a free quote and consultation, so you can get a better idea of their services and costs.

What Type of Business is Outsourced Accounting for?

Outsourced accounting is suitable for a variety of businesses, from small startups to large companies, to non-profits. It’s an especially popular option for small to medium businesses, who often don’t have the resources to hire an in-house accounting team, but could probably do with one.

It’s also used as a temporary solution by businesses that are looking for a part-time replacement for a staff member, or that need help with a specific accounting task, like an end-of-year report or an audit.

Very large enterprises (think Google) tend to have an in-house accounting team since they have specific and intensive accounting needs that require a dedicated team.

How to Outsource Accounting

Here’s a guide to finding the right outsourced accounting solution and getting started:

1. Decide how much of your accounting you want to outsource, and what tasks you’d like to outsource. You should also consider services outside of your normal accounting scope. While most firms offer core tax and accountancy services, some also offer other services such as marketing, business development, and help with funding.
2. Define your budget. It can be tricky to vet potential firms in this respect, as they’re not all transparent with pricing, which is why it’s good to have a budget in mind before you start requesting quotes. This will help you quickly decide whether a provider is within budget, and if they’re not, you can quickly move on.
3. Research providers and gather quotes from them. We recommend you look on third-party review websites, and ask for recommendations within your network to boost your chances of finding a quality provider. Next, make sure you get quotes from multiple providers since this can give you leverage at the negotiating table.
4. Carefully review your contract once you’ve decided on a provider, so that you understand the terms and conditions, and don’t get met with unexpected fees down the road.
5. Prepare all the relevant documents. Depending on which and how many services you’re outsourcing, once you’ve settled on a provider, you’ll need to hand over relevant documentation such as bank statements, invoices, and receipts.

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.

Alternatives to Accounting Outsourcing

If you have budget constraints, or you want to have more control over your tax and accountancy, there best alternative to outsourcing is using accounting software.

Accounting software 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 is generally cheaper than outsourcing accounting or having an in-house accounting team, however, it’s only suitable for very small businesses with relatively simple accounts.