It’s exciting, isn’t it? Starting a new venture, watching your business grow, realising your dreams. But managing finances? Not so much. Getting a handle on finances can quickly begin to feel overwhelming.
Handling your accounting in-house as a new business is often expensive and time-consuming. Fortunately, there is a solution.
Many UK startups now choose outsourcing over hiring in-house accountants. Outsourcing offers a cost-effective alternative and gives you that time back to focus on growing your business.
In this guide, we break down the real costs of in-house accounting versus outsourced accounting for UK startups, helping you decide what makes financial sense for your business.
How does it all work? Let’s explore the benefits of outsourced accounting for startups and break down the costs involved.
Key Takeaways
- In-house accountants can cost £28,000–£65,000+ per year, excluding overheads and benefits.
- Outsourced accounting for startups typically costs £300–£1,500 per month.
- Outsourcing reduces recruitment, training and compliance risks.
- Startups gain scalable financial support without hiring full-time staff.
- Predictable monthly fees improve budgeting and cash flow control.
The Benefits of Outsourced Accounting for Startups
Startups face many challenges in the early days. Financial management for new businesses shouldn’t be one of them. These are the main benefits of outsourcing accounting:
Expertise Without the Price Tag
Most startups don’t have the budget to hire an in-house accountant full-time. By outsourcing accounting, you gain access to a team of qualified professionals.
They will have varied expertise in areas such as financial management, tax advice and cash flow management. The cost of outsourcing will get you all this for a fraction of the pricing of hiring in-house.
Outsourced accounting firms working with startups are typically experienced in Companies House filings, HMRC compliance, VAT registration, R&D tax relief claims and investor reporting – areas that are especially important for growing UK businesses.
More Time to Focus on Core Activities
With accounting tasks handled by the professionals, you can focus on growing your business. Forget worrying about time-consuming financial reports and tax returns.
While your outsourced accountant is dealing with this work, you can direct your time on sales, marketing and product development.
Scalability
As your business grows, so do your financial needs. Outsourced accounting services can scale with you as you require more extensive financial management.
Your outsourced accountant can deal with payroll, VAT, tax filing and end-of-year reporting as and when you need it – without the delay or disruption of recruiting and training new in-house staff.
Access to Latest Technology
Outsourcing providers often have the latest accounting software tools. These would likely be far more advanced and expensive than most startups could afford in-house.
Access to the latest technology, like AI, machine learning and cloud-based platforms will help improve your financial accuracy and efficiency.
Related post – Outsourced Accounting vs Hiring Locally: What’s Best for your UK Firm?
How Outsourced Accounting save money for Startups?
No Overhead Costs
By outsourcing accounting, you don’t have to worry about paying for the usual in-house overheads. Things like office space, equipment etc.
Lower Employee-Related Costs
You also won’t need to provide employee benefits. These include health insurance, annual leave and pensions.
Avoiding Mistakes and Penalties
Startups are more prone to making accounting mistakes. These can lead to costly penalties. Outsourcing accounting helps reduce the risk of errors and helps you comply with tax laws, avoiding fines from HMRC.
Cash Flow Management
One of the biggest benefits of outsourcing accounting is better cash flow management. Many outsourced accounting firms can help you track receivables and payables.
Cost Breakdown: In-House vs Outsourced Accounting
Let’s talk numbers. This is the part you really want to know. Here’s a breakdown of the cost differences between in-house accounting and outsourcing:
In-House Accounting Costs
Salary: A full-time accountant in the UK typically costs between £28,000 and £65,000 per year, depending on experience and location.
Recruitment: Advertising, recruitment agency fees and interview time all add up.
Training and Software: Your startup would also need to invest in training (between £50 and £500 per course), accounting software subscriptions and office space.
Outsourced Accounting Costs
Flat Monthly Fees: Outsourcing accounting services typically involves a structured monthly fee.
For most UK startups, outsourced accounting costs range between £300 and £1,500 per month, depending on transaction volume, payroll size, VAT requirements and reporting complexity.
No Recruitment Costs: You pay only for the services you need.
Software Included: Most outsourced accounting providers include accounting software access as part of the package.
| Service | Cost Range |
|---|---|
| Basic Bookkeeping for Startups | £150 – £500 per month |
| Comprehensive Accounting | £500 – £1,500 per month |
| Payroll Services | £50 – £300 per month |
| Tax Filing and VAT | £100 – £500 per year |
While entry-level outsourced packages may start from £250–£500 per month, growing startups requiring management accounts, payroll, VAT and advisory support may invest £800–£2,000 per month depending on complexity.
Related post – The Benefits of Hiring Outsourcing Company
Choosing the right Outsourced Accounting Service for your Startup
When looking into outsourced accounting for startups, here are a few things to consider:
Experience with Startups
Make sure the accounting firm has experience working with startups like yours. They should understand the challenges startups face.
Range of Services
Look for a provider that offers a range of services, from bookkeeping for startups and tax filing to payroll and financial reporting.
Technology and Integration
Check if the provider uses modern accounting software, and whether it integrates with your existing systems.
Cost Transparency
Make sure you know exactly what you’re paying for. Check whether the outsourcing provider offers clear pricing with no hidden fees.
Communication Standards
Good communication is key to any relationship, especially an outsourcing one. Choose a provider that has quick response times and clear communication..
How much does Outsourced Accounting Cost for a Startup?
The cost of outsourcing accounting for startups can vary. It’s all down to what you need. What services do you require? How big is your business?
| Service | Cost Range |
|---|---|
| Basic Bookkeeping for Startups | £150 – £500 per month |
| Comprehensive Accounting | £500 – £1,500 per month |
| Payroll Services | £50 – £300 per month |
| Tax Filing and VAT | £100 – £500 per year |
Obviously, the more services you require, the higher the cost. But even with a full list of services, outsourcing often works out cheaper than the cost of hiring an accountant UK .
Conclusion
There are many benefits to outsourcing UK accounting services for startups. If you’re looking for cost savings, expertise and efficiency, outsourcing could be for you.
And it’s not just for startups. Even for growing businesses, outsourcing accounting services has significant benefits. It’s a smart investment and can save money, reduce risk and keep your business compliant.
FAQs
Why should startups outsource accounting in the UK?
Outsourcing accounting allows startups to access experienced professionals without the financial commitment of hiring full-time employees.
How much does outsourced accounting cost for a startup?
Outsourced accounting for startups typically ranges between £300 and £1,500 per month, depending on the services required and business complexity.
Is outsourcing accounting cheaper than hiring in-house?
In most cases, yes. Outsourcing removes employment-related costs such as salary, National Insurance, pensions and recruitment expenses, while providing predictable monthly fees.
What should I look for in an outsourced accounting provider?
Look for startup experience, transparent pricing, a range of services, strong compliance knowledge and clear communication standards.
How can outsourcing improve cash flow management for startups?
Outsourced accounting teams monitor receivables, payables and financial forecasts, helping startups maintain stronger cash flow control.
Accounting software vs outsourcing: which is better?
Accounting software helps automate tasks. However, outsourcing provides professional oversight, compliance expertise and strategic insight — which many startups find more valuable during growth phases.
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Parul is a content specialist with expertise in accounting and bookkeeping. Her writing covers a wide range of accounting topics such as payroll, financial reporting and more. Her content is well-researched and she has a strong understanding of accounting terms and industry-specific terminologies. As a subject matter expert, she simplifies complex concepts into clear, practical insights, helping businesses with accurate tips and solutions to make informed decisions.