Hiring an accountant for small business: when to start

Published Friday 20 March 2026

Table of contents

• Why hire an accountant for your small business
• What can an accountant do for your small business?
• When should you hire an accountant?
• How much does an accountant cost?
• What to look for when choosing an accountant
• How accountants and Xero work together
• Make your business better with the right accountant
• FAQs on hiring an accountant for small business

Key takeaways

• Hire an accountant when you're spending more time on bookkeeping than growing your business, as their expertise typically saves more money through tax deductions and compliance than their fees cost.
• Choose an accountant based on your specific needs: AAT-qualified bookkeepers handle basic tax returns and bookkeeping, while chartered accountants (ACA, ACCA, or CIMA) provide complex tax planning and business advice.
• Budget between £50-£200 per hour or £75-£300 monthly for ongoing support, with costs varying based on your business complexity, location, and the accountant's qualifications.
• Use cloud accounting software like Xero to work more efficiently with your accountant, enabling real-time data sharing that reduces fees and improves the quality of financial advice you receive.

Why hire an accountant for your small business

An accountant saves you time, reduces risk, and often pays for themselves through tax savings and better financial decisions. They bring expertise you'd take years to develop on your own.

Hiring an accountant gives you:

• Time back: stop spending evenings on bookkeeping and tax paperwork
• Greater accuracy: get tax filings and compliance right the first time
• Better decisions: get clear financial data to guide your business choices
• Tax savings: claim all the deductions you're entitled to
• Peace of mind: know an expert is handling your finances correctly

Many small business owners try to manage their own accounts to save money. Learn more about small business accounting basics. An accountant's fees often deliver greater value than the hours you'd spend on financial admin, plus you gain deductions and stay compliant.

What can an accountant do for your small business?

Accountants do far more than file your tax return. The best ones become trusted advisors who help you make smarter financial decisions and grow your business.

Core services an accountant provides:

• Tax compliance: filing returns, calculating liabilities, and ensuring you meet deadlines
• Bookkeeping oversight: keeping your financial records accurate and up to date
• Financial reporting: producing profit and loss statements, balance sheets, and cash flow reports
• Payroll management: handling employee payments, tax codes, and pension contributions
• Business advice: helping with pricing, cash flow planning, and growth strategy

Some accountants specialise in specific industries or business stages. Others offer broader support across all financial areas. The right choice depends on what your business needs most.

Learn more about what accountants do beyond the basics.

When should you hire an accountant?

Hiring an accountant gives you expert financial support without the commitment of a full-time employee. You can bring one in for specific tasks or ongoing advice, depending on what your business needs.

Many small business owners worry about the cost. But consider this: if it takes you 10 hours to do your taxes and your time is worth £100 an hour, that's £1,000 spent on a task an accountant could handle faster and more accurately.

The real question is how much value an accountant can add to your business.

When you're writing a business plan

Hire an accountant when writing your business plan to build realistic financial projections from the start. Their expertise helps you create accurate forecasts that strengthen your credibility with lenders or investors.

An accountant can help you:

• create accurate revenue and expense projections
• identify startup and operating costs you might overlook
• produce professional financial reports that strengthen your plan

Getting financial advice early delivers better value and sets you up for success. The business plan template can help you get started.

When choosing your business structure

Your business structure affects your tax obligations and personal liability. An accountant can explain your options for your situation. Learn how to choose an accountant that's right for you.

The main structures to consider:

• Sole trader: simpler to set up and you may offset some living expenses against tax. Your personal assets and business assets are treated as one.
• Limited company: your personal assets are protected from business liabilities, though setup and reporting requirements are more complex.
• Partnership or LLP: shares responsibility and liability between partners, with different tax implications.

The right structure depends on your risk tolerance, growth plans, and tax situation. An accountant can model the financial impact of each option before you decide.

When you're ready to delegate and focus on growth

Hire an accountant when you're ready to delegate and focus on growth. If you're spending more time on bookkeeping than building your business, it's a sign you need expert help. Learn more about bookkeeping for small business.

Handing over financial tasks to an expert helps you stay energised and accurate.

Delegating your finances to an accountant frees you to:

• focus on revenue-generating activities
• make decisions based on accurate financial data
• feel confident about tax deadlines and compliance

Smart business owners know when to bring in specialists. Your accountant handles the numbers. You handle the business.

When dealing with taxes and government compliance

Hire an accountant when dealing with taxes and government compliance. Tax filing is the most common trigger for bringing in professional help, but accountants handle far more than annual returns.

A good accountant will:

• file your tax returns accurately and on time
• prepare statutory accounts and Companies House filings
• keep you compliant with changing tax laws and regulations
• manage payroll, including tax codes and pension contributions
• identify legitimate ways to reduce your tax bill

Getting your tax documents right could save you more than your accountant's fees. They'll spot deductions you might miss and help you stay compliant with all filing requirements.

When your finances feel overwhelming

Hire an accountant when your finances feel overwhelming. If you're losing track of who owes you money, struggling with cash flow, or spending too much time on bookkeeping, it's time to get help.

An accountant can:

• organise your accounts receivable so you know exactly what's owed
• track key metrics like payroll costs as a percentage of revenue
• set up dashboards that show your financial position at a glance
• monitor cash flow so you can spot problems before they become crises

With cloud accounting software, your accountant can share real-time reports you can access anytime. You'll spend less time on admin and more time running your business.

When you're scaling your business

Hire an accountant when you're scaling your business. Growth creates financial complexity. New employees, bigger premises, and increased cash flow all require careful management.

An accountant helps you scale by:

• setting up payroll and managing employee tax obligations
• analysing cash flow to ensure you can fund growth
• reviewing pricing and margins as your costs change
• advising on the financial timing of new products or services

They handle the financial detail so you can focus on the opportunities driving your growth.

When applying for business funding

Hire an accountant when applying for business funding. Lenders want to see solid financials and credible projections before approving a loan or overdraft. An accountant strengthens your application.

An accountant can help you:

• prepare accurate financial statements that lenders trust
• create realistic revenue projections backed by data
• answer questions about your business finances during the application
• compare loan options and evaluate interest rates and terms

Having an accountant signals to lenders that you're serious about your business. Their professional reports carry more weight than DIY spreadsheets.

When facing a tax audit

Hire an accountant if you're facing a tax audit. Audits are relatively rare for small businesses, and professional support makes them manageable and straightforward.

An accountant can:

• guide you through the investigation process
• ensure your responses are accurate and complete
• help you stay compliant in future

Hire an accountant before an audit happens. Some offer tax investigation insurance, which covers their fees if HMRC, the UK's non-ministerial department for tax (established in 2005), opens an enquiry. This gives you predictable costs and peace of mind.

Good accounting software also helps by maintaining a clear audit trail of all transactions, making it easier to demonstrate compliance.

How much does an accountant cost?

Accountant fees vary based on the services you need and how you work together. Most small businesses pay between £50 and £200 per hour, or a monthly retainer of £75 to £300 for ongoing support.

Common pricing models:

• Hourly rate: pay for specific tasks like tax returns or financial reviews. Good for occasional needs.
• Monthly retainer: fixed fee for ongoing bookkeeping, payroll, and advisory support. Predictable costs.
• Project-based: one-off fee for defined work like business setup or year-end accounts.

What affects the price:

• Qualifications: chartered accountants typically charge more than bookkeepers
• Location: rates are higher in London and major cities
• Complexity: more employees, transactions, or VAT schemes increase costs
• Software: accountants using cloud software like Xero often work more efficiently

Ask potential accountants for a clear quote before you commit. A good accountant should explain exactly what's included and flag any likely additional costs.

What to look for when choosing an accountant

The right accountant understands your business and communicates clearly. Qualifications matter, but so does finding someone you trust and can work with long-term.

Key things to check:

• Qualifications: look for chartered status (ACA, ACCA, or CIMA) for complex tax and advisory work. Bookkeepers (AAT qualified) handle day-to-day accounts
• Industry experience: an accountant who knows your sector understands your specific challenges and opportunities
• Technology skills: choose someone who uses cloud accounting software like Xero for real-time collaboration and efficient workflows
• Communication style: you need someone who explains things clearly and responds promptly when you have questions
• Service scope: make sure they offer what you need now and can support you as your business grows

Ask for references from businesses similar to yours. A good accountant should be happy to connect you with existing clients.

Find a Xero-certified accountant who already knows the software you use.

How accountants and Xero work together

Cloud accounting software makes working with an accountant easier and more efficient. When you both use Xero, you share a single source of financial truth that updates in real time.

Benefits of using Xero with your accountant:

• Real-time access: your accountant sees your latest transactions without waiting for you to send files
• Faster responses: questions about your accounts get answered quickly because the data is always current
• Greater accuracy: clean version control and streamlined data entry
• Better advice: your accountant can spot issues and opportunities as they happen, not months later
• Lower fees: many accountants charge less when clients use efficient software

Xero connects to over 1,000 business apps, from payment systems to inventory management. Your accountant can help you build a connected system that automates routine tasks and gives you clearer financial visibility.

Find an accountant who uses Xero in the advisor directory.

Make your business better with the right accountant

The right accountant makes running your business easier. They handle the financial complexity so you can focus on what you do best. Ready to find the right accountant? Search the Xero advisor directory to connect with accountants who understand small business.When you and your accountant both use Xero, you get real-time visibility into your finances. You can see exactly what's happening with your business, anytime. Get one month of Xero free.

FAQs on hiring an accountant for small business

Common questions small business owners ask about working with accountants.

How much should an accountant cost for a small business?

Most small businesses pay between £150 and £500 for a basic annual tax return, or £75 to £300 per month for ongoing bookkeeping and support. Costs vary based on your business complexity and the accountant's qualifications.

Is hiring an accountant worth it for a small business?

Yes, for most small businesses. A good accountant typically saves more in tax deductions and avoided penalties than they cost in fees. They also free up your time for revenue-generating work.

What type of accountant is best for a small business?

For basic bookkeeping and tax returns, an AAT-qualified bookkeeper or accountant is sufficient. For complex tax planning, business advice, or audit requirements, choose a chartered accountant (ACA, ACCA, or CIMA).

Do I need a full-time accountant or can I hire one part-time?

Most small businesses don't need a full-time accountant. Hiring one on a retainer or for specific tasks like tax returns is more cost-effective until your business reaches significant scale.

What should I prepare before hiring an accountant?

Gather your bank statements, invoices, receipts, and any previous tax returns. Having organised records helps your accountant understand your business quickly and may reduce their initial fees.