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.
How does it all work? Let’s explore the benefits of outsourced accounting for startups and break down the costs involved.
Related blog – 6 Reasons Successful Businesses Outsource Accounting Services
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.
- 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. Or even more complex needs without having to hire or train in-house at short notice.
- 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 can cost from £25,000 for entry-level to anything up to £150,000 annually for the most senior positions. These figures will depend on experience and location.
Recruitment: Cost of hiring an accountant, advertising, recruitment agency fees and interview expenses all add up.
Training and Software: Your startup would also need to invest in training (between £50 and £500 a course), accounting software (£5 to £30 a month) and office space (varies depending on size, location etc).
Outsourced Accounting Costs
Flat Monthly Fees: Outsourcing accounting services typically involves a flat monthly fee. This can range from £50 to £300 a month for small businesses requiring basic accounting functions.
No Recruitment Costs: No hiring expenses – you pay only for the services you need.
Software Included: Most outsourced accounting providers will offer integrated software as part of the service.
To make comparison easier, we’ve summarised the estimated costs of in-house accounting versus outsourcing for a small UK startup:
| 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 |
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 .
Related post – Choosing the Right Proposal Tool for UK Accounting Practic
FAQs
Why should startups outsource accounting in the UK?
Outsourcing accounting allows startups to access skilled professionals without the high costs of hiring full-time employees.
How much does outsourced accounting cost for a startup?
The cost of outsourcing accounting for startups typically ranges from £250 to £2,000 per month, depending on the services required.
Is outsourcing accounting cheaper than hiring in-house?
Yes, outsourcing is usually more cost-effective than hiring full-time accountants, as it removes the need for salaries, training and software costs.
What should I look for in an outsourced accounting provider?
Look for experience with startups, clear pricing, a range of services, and strong communication standards.
How can outsourcing improve cash flow management for startups?
Outsourced accounting for startups takes care of tracking receivables, payables and overall cash flow management UK startups.
Accounting software vs outsourcing: which is better?
Accounting software helps automate tasks. Outsourcing provides expert support and allows you to focus on business growth, making it a better solution for startups.
What are some startup finance tips UK?
Startups should track expenses, manage cash flow carefully and research VAT implications. Seek professional financial advice for long-term success.
What are the best accounting options for small startups in the UK?
Small UK startups can choose between using accounting software for managing accounts in-house. Alternatively, they can outsource to professional accounting firms for a more hands-off approach.
Can you explain how UK startups can save money with outsourced accounting?
Outsourcing accounting helps UK startups save on recruitment, training and software costs. It also offers access to expert services which improves financial efficiency.
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.
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Parul is a dedicated writer and expert in the accounting industry, known for her insightful and well researched content. Her writing covers a wide range of topics, including tax regulations, financial reporting standards, and best practices for compliance. She is committed to producing content that not only informs but also empowers readers to make informed decisions.