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Outsource Accounting Services in the UK - Why, When, & How?

Outsource Accounting Services in the UK - Why, When, & How

Octa Accountants

Reading Time

10 Min Read

Publish Date

Mar 28, 2023

Blog Category

Accounting & Bookkeeping

Many UK-based small business owners and SMEs are reluctant to outsource accounting services to an accounting firm. Several startup owners manage the accounting by themselves, which helps them save some costs in the short term. But in the long term, it takes up the time that they can invest in growing the business. 

According to Onpay Small Business Finance & HR Report, only 30% of startups work with accountants. 17% of businesses hire in-house and external accountants, while only 13% of companies completely outsource their accounting to firms and freelancers.

Another report by Investopedia depicts 50% of businesses fail due to insufficient funds and ineffective business planning. Accounting reports help make sound economic decisions, the reporting errors can put your business to risk.

So, is it smart to manage the accounting by yourself? In the short term, probably yes. But in the long term? Definitely not!

You need certified accountants to handle your administrative burden. But hiring on-site accountants might be too costly for small & medium-sized businesses.

Here, accounting firms and external accountants can be of great help as they help save hiring and operational costs.

So let us answer the “Why’s, When’s, & How’s”!

Onpay Report
Source: Onpay

What are outsourced accounting services? What do they include?

Before explaining why you need accounting services, let’s see “what are accounting services?” 

Outsourced accounting services feature various activities to support clients with their admin and financial burden. 

You have two options! 

Either you can choose a freelance accountant or go with an accounting company. An accounting firm provides you with the dedicated accountant(s) who handles your books and accounts.

Here are the core features offered by an outsourcing accounting company:

Why is outsourcing accounting services beneficial for a business?

Outsourced accounting services serve various benefits for a business. First of all, there’s no need to create an on-site finance department as you don’t have to employ the accountants in your office. So it helps with saving hiring and operational costs. 

But you get more benefits in comparison to hiring an internal team. Here’s a list of benefits:


  • More cost effective option as the hiring and operational costs are reduced
  • Independent accountants and external accountants have a more versatile skill set as they have experience of working with businesses from various industries.
  • If you partner with an accounting company, they provide the necessary accounting software and tools (client doesn’t have to buy the automated software & tools)
  • Digitised invoicing and transactions along with data backups, so the information is available even in the case of a disaster
  • Financial reports are available at any time you need to assist you with making sound economic decisions
  • Error-free tax calculation and submission to HMRC; your accounting partner can also suggest strategies to help you claim tax relief
  • Finance experts ensure compliance with HMRC and other regulatory authorities


This way, the benefits of working with an accounting company exceeds that of an on-site finance department. Furthermore, you do not have to consider the geological location of your office as you can hire a UK accounting firm from anywhere.

When to outsource accounting services for your UK-based business?

Now that you know why you should assign your accounting to a third-party, let us tell you when you should seek an accounting company in the UK.

Running a business without a finance expert is impossible – because you need someone who can make sense of the financial information to help you make the right economic decisions.

Unless you do accounting for a living, there’s no point in doing it yourself. As a business owner, you would rather love to talk about your product or service than managing books and accounts.

If you are in any of the following situations, it’s time to outsource your books and accounts burden.

Need to Focus on Core Business

Accounting is not a core competency for most businesses and organisations. A business should only emphasise on activities that impact profitability. 

Business accounting is a supporting activity for owners, mostly to ensure compliance with legal/regulatory authorities and to keep the record of the financials. 

A company striving for growth shouldn’t handle the administrative burden itself. Any activity that is not core part of business or its employees must be outsourced to third-parties. 

Hence, it’s a wise choice to outsource your support activities such as accounting to a third-party.

Want to Get Rid of In-House Department

An in-house finance department comes with huge time and money constraints. In the UK, businesses invest a lot for recruiting, training, and facilitating the in-house finance team. 

But it’s not a smart decision in today’s world! 

Careful CEOs or business owners realise they don’t have to bear these costs. They can just outsource accounting services to a reputable accounting firm in the UK. 

This way, brilliant entrepreneurs save themselves from the burden of managing an in-house finance department. 

Also Read: 8 Benefits of Outsourcing Accounting & Bookkeeping

Decision Ready Finance Reports

In depth financial insights help you make novel strategies. Entrepreneurs with on-hand financial intelligence are well prepared to answer arising strategic questions.

Outsourced accountants help find answers to questions like: 

  • Am I charging the right price for my service/product?
  • Do I need more employees? Can I afford to pay them?
  • How much should I spend on marketing?
  • Is there enough cash to make the payroll?
  • What clients are most profitable for the company?


The answers to such questions are much harder to find for service and non-profit organisations. So, it’s better for such companies to outsource their accounting burden to a reputable outsourcing partner.

Business Has to Go Through An Audit

Each industry has its own legal and regulatory requirements. In the United Kingdom, businesses and startups have to go through legal/regulatory audits to ensure they comply with the applicable UK business laws. 

Independent auditors analyse financial statements and accounts to verify if your business is in compliance. And if the business fails to satisfy the auditor’s criteria, the company is penalised. In some cases, a business has to even shut down the operations.

This is the reason why even established businesses now prefer to hire external accountants along with their in-house team to save their business operations from penalties

If you have an audit coming up, get an experienced accountant to evaluate your financial statements first.

Accounting Firm VS Freelance Accountants

Accounting Firm VS Freelance Accountants

Startups and SMEs in the United Kingdom have two options. Either go with a UK accounting firm or hire freelance accountants. 

Here, it is vital to understand the pros and cons of both options. Let’s dig into the controversial Accounting Firm VS Freelance Accountants comparison.

Pros & Cons of Working With an Accounting Firm


  • Works as your virtual finance department at a much lower cost
  • Offers more flexible services; suited to your industry requirements
  • Can provide more relevant finance management services such as auditing & company registration
  • Are equipped with the latest accounting software and tools
  • Have connections with investors which can help you raise funding


  • Accounting firms are more expensive in comparison to freelance accountants
  • The business has less control over accounting operations (but you don’t have to worry as the accounting company has more experience with dealing with accounting aspects)

Pros & Cons of Working With Freelance Accountants

Registering your business can provide financial advantages such as lower corporation tax rates and the ability to deduct certain expenses. It can both save you money and improve your profits. In the United Kingdom, the current rate of company tax is 19%, which is considerably lower than the top rate of personal income tax.

Also Read: How to register for VAT in the UK?


  • Freelance accountants are more cost-effective compared to in-house finance departments & accounting companies
  • The business has more control over the accounting operations 
  • You can hire the freelancer full-time in the future


  • Communication issues may arise if a freelancer is not responsible
  • You may have to buy the accounting software & tools by yourself
  • There’s no guarantee that your confidential information is safe

What is the cost to outsource accounting services in the United Kingdom?

The cost of outsourcing accounting services varies depending on the industry and business size. Also, an accounting company in London may charge you more than a company in the North West. 

Most accounting companies charge from £300 to £10,000, depending on the business size and complexity. For a better overview of accounting firm’s pricing, have a look at our accounting plans:

OCTA Accounting & Bookkeeping Pricing
Our Accounting & Bookkeeping Service Plans

Similarly, freelance accountants will charge differently depending on the service. For basic accounting, they may charge £24 to 35 £per hour. While for more advanced services like tax planning and strategic consultation, they may charge over £100.

So, it’s up to you to decide the best option based on your budget.

How to outsource accounting services in London, UK?

If you have decided to outsource accounting services, then it’s time to move on to the process. 

1) Visit an Outsourcing Partner's Website/Profile

The first step is to find an outsourcing partner. You can visit platforms like Clutch, Upwork, and GoodFirms, or just open Google to find UK-based accounting companies. 

Have a look at their written content and see if they offer the services you’re looking for. And if you can’t find what you need, ask them!

Also Read: How to hire a Virtual CFO for a UK-based business?

2) Check out their Rating & Reviews

If you’re on a freelance platform or a business listing, you can directly check the reviews and ratings from past clients. Filter out the companies with poor ratings and note down the ones with excellent reviews.

Also, if you can’t find any reviews for a preferred company, it’s best to ask them about their portfolio. Later, you can directly contact their clients for their relationship with them.

3) Look for Certifications & Accreditations

The next step is to determine their credibility. See if they have reputable certifications and accreditations for accounting services. For example, you can check if they have Xero certifications, as Xero accountants have quite diverse skill sets. 

You can visit the website to look for a company’s (or freelancer’s) certifications and accreditations; in case you can’t find them in their platform profile.

So, do they seem qualified to handle your accounting operations? If yes, then let’s move on to the next step!

4) See their Pricing/Plans

We already talked about the cost of accounting services in the above section. But here at this step, you must compare the pricing and plans of different companies to see which suits your needs. 

Some companies may offer extra features along with accounting. So, here you need to see if you need something else other than basic accounting.

Choose the one that offers the most required features at a reasonable price.

5) Initiate the Meeting & Discuss the Requirements

When you decide on your accounting company, it’s time to initiate contact with them. Some may charge you a small cost for the meeting, while others may offer the meeting for free.

Your job is to ask as many questions as you can regarding their services, e.g., how would they manage the accounting? Do they have automated accounting systems? And what service plan is the best for your business?

Other than asking questions, tell them your problems and requirements. The accounting company will understand your needs and present the relevant service plan according to your requirements.

The milestones/expectations are set during this stage. Keep in mind; sometimes, it may take more than one meeting to finalise the contract. 

6) Sign the NDA Contract

Once the expectations are clear, you will sign an NDA (Non-Disclosure Agreement) with the outsourcing partner to ensure the information you provide is kept confidential.

In most cases, the outsourcing firm may deliver the NDA contract themselves, but you can also ask them to sign the contract.

7) Hire the Accounting Firm

Now that you have signed the NDA contract, you have successfully hired the accounting firm for your accounting needs!

Finally, you will share your business information with the company, and they will assign dedicated accountants to manage your books and accounts.

So, it’s time to let go of the accounting burden and focus on growing your business.

The process is the same with freelance accountants, but in many cases, people do not sign an NDA contract, so financial information might not be secure with them. 

But, with an accounting firm, your financial data is safe, and operations run smoothly. We suggest you go with an accounting company if you have a decent budget.

Choose Octa Accountants as your outsourcing partner!

There are countless benefits of outsourcing accounting services for all businesses. You save up time and money, and experts do the same job at much lower costs. 

Furthermore, if you’re not satisfied with the performance of an accounting company, you can move on to another one easily. But that’s not the same if you have an in-house staff.

You can hire Octa Accountants as your accounting partner because we are a UK-based accounting firm as well. 

We have helped over 150 businesses in the UK with our outsourced bookkeeping & accounting services.

Schedule a FREE MEETING with us right now to hire accountants in London, South East, or in any part of the United Kingdom!

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