How Much Does an Accountant Cost for a Limited Company?

The cost of an accountant is one of the first questions directors ask. And it's a reasonable question. But it's also the wrong place to start thinking about the problem.

Let's be honest about accountancy fees, what you get for your money, and how to avoid overpaying without getting second-rate service.

What You Typically Pay

For a limited company in the UK, accountancy fees usually range from £800 to £3,000 per year, depending on:

Your turnover. A £50,000 turnover company costs less than a £500,000 turnover company.
Complexity. Simple service business: straightforward. Multiple directors, VAT, multiple sites, payroll: expensive.
Your records quality. If your bookkeeping is messy, it costs more to get you compliant.
What's included. Are you getting monthly reviews, quarterly planning, or just year-end compliance?
Whether you need payroll. Payroll adds £20-50 per month depending on staff numbers.

If an accountant is quoting you £300 a year for a limited company, they're either not giving you much or they'll struggle financially and might cut corners. If they're quoting £10,000, ask whether you're getting what you're paying for.

The Fee Banding Model

Most accountants charge based on turnover bands. It looks something like this:

£0-£50,000 turnover: £800-1,200
£50,000-£100,000 turnover: £1,200-1,600
£100,000-£250,000 turnover: £1,600-2,200
£250,000-£500,000 turnover: £2,200-3,000

These are ball-park figures. Your accountant should be transparent about which band you fall into and why.

The logic is fair: bigger companies have more transactions, more complexity, more tax planning considerations. They take more work.

But don't just look at the band your turnover falls into. Ask what's included in the fee.

What's Actually Included?

This is where fee comparison gets tricky. Two accountants might both quote £1,500 a year for a limited company, but one includes:

Year-end accounts filing
Corporate tax return
Basic personal tax advice

...and the other includes all of that plus:

Monthly management accounts
Quarterly tax planning reviews
Payroll for up to 5 staff
VAT advice
Ad-hoc business questions

Clearly, the second is better value even at the same fee. But you won't know unless you ask.

The Difference Between Compliance and Proactive

Here's the crucial divide in what you're paying for:

Compliance accounting is cheaper. The accountant files your accounts and tax return. They react to what happened. You might not hear from them until January when it's time to discuss your tax bill. Many accountants charge £800-1,200 for this.

Proactive accounting costs more—typically 30-50% more. The accountant reviews your numbers monthly or quarterly. They spot tax planning opportunities before the year ends. They challenge figures that don't look right. They warn you about cash flow issues before they become problems. You get monthly management accounts.

The irony: the proactive accountant often pays for themselves through tax savings alone. The cheaper compliance accountant might cost you £3,000-5,000 in missed tax planning opportunities.

Don't Just Pick the Cheapest

Price is one factor in choosing an accountant. But it shouldn't be the only one.

A £600-a-year accountant who does the bare minimum might cost you money:

You overpay tax because nobody's planning
You make decisions without proper financial advice
Your bookkeeping gets messy because there's no oversight
When you need them, they're not responsive

Compare accountants on value, not just on price. What do you get for the fee? How responsive are they? Will they give you proper advice or just file compliance work?

Hidden Costs to Watch Out For

Beyond the base fee, ask about:

Payroll setup and running. Usually £20-50 per month per company, but get a quote for your staff numbers.
VAT returns. Some accountants include this, some charge extra (£100-300 per quarter).
Management accounts. Monthly profit and loss reports. Should be included in proactive accounting, not so in basic compliance.
Fixed asset register maintenance. Accounting for equipment, depreciation. Usually extra unless your accountant is proactive.
Bookkeeping service. If your records are messy, accountants often charge extra (£50-150 per hour) to get you in order.
Ad-hoc questions. Some charge per hour for extra queries. Some include reasonable questions. Get clarity.

Get a written proposal that spells out what's included and what costs extra.

The Real Cost of the Wrong Accountant

You save £400 by choosing the cheaper accountant. But if they don't spot that you could save £8,000 through salary and dividend planning, have you really saved money?

The math is worth doing. Interview at least two accountants. Ask them to review last year's accounts and tell you what tax planning they'd recommend. The one with better ideas is worth the extra fee.