Costs and pricing
Part of Accounting services costs: how to budget fees, VAT and extras
Accounting services hidden costs: ten questions to ask
Ten questions to put to an accountant before you accept a quote, so each hidden cost is marked included, excluded or dependent on facts, in writing.
A quotation tells you what the base fee buys. It rarely tells you what has been left out. Put the ten questions below to any provider before you accept, and ask for each answer in writing. The aim is to see every cost marked as included, excluded or dependent on facts.
What to take away
- Ask the provider to mark every cost as included, excluded or dependent on facts.
- Base quotes often exclude opening clean-up, client time, software limits, extra entities and advisory work.
- Client preparation time can make a cheaper service more expensive overall.
- Build a comparison sheet with recurring cost, one-off work, client time, VAT cash and exit.
- Reconcile early invoices against assumptions before misunderstandings reach year end.
Put the ten questions in one table
Start with one request: mark every cost as included, excluded or dependent on facts. A quote that cannot be marked this way is not yet a price. The table lists the questions that follow and the answer worth having on paper.
| # | Ask the provider | Get in writing |
|---|---|---|
| 1 | What condition must the books be in at the start? | The opening condition and who pays if it is worse |
| 2 | How much of our time does the service assume? | The tasks the client must do |
| 3 | Which software plan and connected services sit behind the fee? | Who holds each licence, and what is included |
| 4 | Which entities and registrations does the quote cover? | Every entity and obligation, listed |
| 5 | What happens above the allowance? | Bands, and how duplicates and reversals count |
| 6 | Where does routine work end and advice begin? | Role rates and the authorisation point |
| 7 | Who pays for corrections and late records? | Who decides the category |
| 8 | Is the quote net of VAT? | The invoice treatment and the recoverable VAT |
| 9 | What does switching cost? | Charges of both the outgoing and incoming provider |
| 10 | What does leaving cost? | Notice, final billing, handover and data export |
Ask about the starting position
Question 1 is about the opening condition. Unreconciled banks, duplicate entries, missing documents and inconsistent tax codes can require work before routine service begins. Define the opening condition and who pays if the sample understates it. Settle this before the first invoice arrives.
Opening clean-up checks
- Unreconciled banks
- Duplicate entries
- Missing documents
- Inconsistent tax codes
- Define opening condition
- Who pays if sample understates
Question 2 is about your own time. Owners and staff gather records, explain transactions, approve returns and attend meetings. Estimate that time even when no supplier invoices for it. A cheaper service with heavier client administration may cost the organisation more overall.
Client preparation time tasks
- Gather records
- Explain transactions
- Approve returns
- Attend meetings
- Estimate time even if not invoiced
- Compare cheaper service with heavier admin
Ask what the fee covers
Question 3 is about software. Accounting software usually sits on its own subscription, paid to the provider rather than to the practice. Xero, QuickBooks and Sage are common in the UK, and each sells several tiers, so the plan behind the quote matters.
Connected services add their own line: payroll modules, bank feeds, invoicing and receipt-capture apps, stock or point-of-sale add-ons and VAT filing tools. Check whether the fee covers a licence bought through the practice, a subscription paid direct, or no software at all.
Software and connected services
- Ledger access
- Payroll
- Document capture
- Bank connections
- Storage and signature tools
- Specialist modules
- User, entity, document and transaction limits
- Price after promotion
Question 4 is about entities. A company, director, partnership, property activity or payroll scheme may be charged separately. List all entities and obligations in the quote rather than assuming that "year-end accounts" covers the group and its people.
Name the registrations too. A limited company brings a Companies House number, annual accounts and a confirmation statement; employees bring an HMRC PAYE scheme. A VAT registration, a partnership return or a property business each add their own filing, so treat each as a separate line.
Question 5 is about volume. Recurring packages can rely on bands for transactions, employees, payslips, invoices or support. Ask how duplicates, reversals and inactive records count, and model a busy month against the band.
Question 6 is about advice. Routine compliance may exclude planning, forecasts, finance applications, investigations, restructuring, valuations, succession and international questions. Obtain the role rates and authorisation point for work outside scope.
HMRC's standard for agents expects covered agents to make payment terms clear and agree engagement terms before acting. It is still the client's job to understand where the routine boundary ends.
Check who supervises the practice. ICAEW and ACCA are the best-known professional bodies for UK accountants, and each keeps a register of its firms. Work that is reserved by law, such as a statutory audit or an insolvency appointment, belongs with a practice authorised for it.
Ask about corrections and tax
Question 7 is about rework. The contract may charge for reworking approved figures, revising submissions or accelerating a deadline after information arrives late. Separate provider error from client change and third-party failure, and state who decides which category applies.
Question 8 is about VAT. Quotes may be shown net of VAT. GOV.UK's rate page states that the standard rate is currently 20% for most goods and services.
Verify the actual invoice treatment and whether the customer can recover any VAT; those are fact-specific questions. Do not automatically reduce cost by an assumed corporation or income tax effect. The taxpayer, purpose and expense control the treatment.
Other regimes carry their own cost. Making Tax Digital for VAT requires digital records kept in compatible software, payroll runs through HMRC's PAYE scheme with Real Time Information submissions, and a company's corporation tax return is filed separately from its accounts. Where a quote calls these routine, confirm which filings it actually covers.
Ask about switching and leaving
Question 9 is about transition. Migration can include exports, mapping, data correction, opening reconciliations, training and a period when old and new processes overlap. Ask both the outgoing and incoming provider about their charges and availability.
Question 10 is about the exit. Final billing, notice periods, record preparation, software access, data export and answering successor questions may create cost. The Small Business Commissioner's contract guide says a contract should at the very least include how it ends and what happens if it ends early.
That is general UK business guidance, not tailored legal advice. For the records themselves, see who controls the data in an engagement before you ask for an export.
Compare the answers and log every extra
Put the written answers into one costs and budget comparison with annual recurring cost, one-off work, client time, VAT cash, likely extras and exit. Require written approval before material out-of-scope work where practicable.
Then reconcile early invoices against the assumptions, while misunderstandings can still be corrected rather than carried to year end.
Keep a change log beside that sheet. For each extra, record who requested it, why the original scope did not cover it, the estimated amount, affected deadline and approval. This exposes repeated "exceptional" work that should move into the next recurring package.
Before you act
- Ask the provider to mark every cost included, excluded or dependent on facts.
- Define the opening condition and who pays if the sample understates it.
- List all entities and obligations in the quote.
- Obtain role rates and authorisation point for work outside scope.
- Verify the actual invoice treatment and whether the customer can recover VAT.
- Require written approval before material out-of-scope work where practicable.
Common questions
What does it mean for a cost to be dependent on facts?
The amount turns on facts such as the state of the records, the number of entities or the volume of work. Ask the provider to say which facts decide it and to mark the cost accordingly.
Why estimate client time when nobody invoices for it?
Owners and staff still spend it gathering records, explaining transactions and approving returns. A cheaper service with heavier client administration may cost the organisation more overall.
When should early invoices be checked?
Reconcile them against the quote's assumptions early. Misunderstandings can then be corrected rather than carried to year end.
