Running an accounting business can be a costly affair. As a practice owner, you are constantly making decisions about how to spend your money, and taking on new employees is one of the biggest decisions you will make.
But talented people are the backbone of any business, so getting professional and skilled accountants on board is essential. However, it is not just about the salary of the person you hire. There are other costs to consider, such as training and equipment, pension and sick pay.
So, if you are a small accounting business owner, keeping all types of costs in mind while recruiting is vital.
So, what is the true cost of recruiting an accountant in the UK?
The cost of recruiting accountants in the UK can vary greatly depending on the type of services you require and the qualifications and experience you want the person to have. You also need to consider upon what employment basis you wish them to work, for example, do you want someone full time or part time, as an employee or as a freelancer, from an agency or direct.
Each will have pros and cons and its own respective costs, employment legislation and so on associated with it. If you decide to use a freelancer, you will find some may charge an hourly rate, while others may charge a flat fee for specific services.
The cost may also depend on the size and complexity of your business and even where you are located – you will pay a premium in London for example. It is always a good idea to get quotes from a few different accountants and compare their services and fees before deciding.
Now, let us look at the hidden costs of recruiting and why getting a new employee onboard surpasses the cost of outsourcing accounting services.
1. Recruitment
Most small accountancy practices do not need an HR team. With just a handful of people, you can run a business efficiently and manage the HR requirements in-house. However, every new recruit is crucial when you have a small team.
From a time perspective, many practices turn to outside recruiters when recruiting someone new. It means they don’t waste their time trawling through CVs and first interviews, only seeing the candidates most appropriate for the role.
However, there is of course, a charge for this work which tends to be between 15% and 20% of a candidate’s first annual salary, and can be as high as 30% for hard to fill roles.
2. Background checks
When you bring someone new to the team, it is essential to do some digging first. A background check can be a real lifesaver in the long run as it will give you an idea of who you are recruiting.
It is also a legal requirement to check that a person has a right to work in the UK and you can incur a hefty fine if you are not able to demonstrate that this has been undertaken.
It is recommended you gain a reference from past employers and check their education including professional qualifications. Depending on your business type, you might need to obtain security clearance/get a DBS check but there is a cost associated with this.
3. Onboarding and training
When you think about the cost of recruiting a new employee, it is easy to forget about all the expenses that come with onboarding and training. But these costs can add up.
Depending upon the size of your company, a period of induction should be planned and training set up for any specific software or equipment they will be required to use. And do not forget the time and support other staff members will need to give the recruit while the latter settles in.
4. Office space and equipment
When you are bringing someone new on board, there are a lot of essentials you need to provide for them. They will need a desk, desktop and/or laptop, and phone to do their job. This obviously does not count if you have a remote working setup.
You should also factor in the purchase of additional software licences. Then there is the cost of any certifications the new employee might need. These things can add up unless you are replacing someone and already have everything required.
5. Employee salary
The salary of a recruit is the first thing that comes to mind. And it is no surprise that it is a significant expense. But, the amount you will pay for a salary can vary dramatically depending on things like how much experience you are looking for, the details of the contract, and other factors such as shortage of appropriate candidates.
6. Bonus and insurance
Not all accountancy practices offer bonuses, but more and more are starting to see the benefits of doing so. It is a great way to acknowledge good employee performance and keep your staff around for longer. In addition to bonuses, you are also required to contribute to your staff’s National Insurance (NI).
The amount employers pay is called Employer Class 1 NI, and it is calculated at a rate of 13.8% of the employee’s gross salary. This will be paid against any overtime or bonuses they might be earning as well so it is worth bearing in mind.
7. Pensions
You must remember anyone you hire will automatically be enrolled in a basic corporate pension plan as part of the auto-enrolment programme. As an employer, you must contribute at least 3% of each employee’s monthly salary towards their pension. So, it is another cost your accountancy practice must consider.
8. Miscellaneous costs
These include the HR costs for new hires – from holiday cover and maternity leave insurance to sick days and software licensing – there are a variety of other expenditures to take into account.
Can outsourcing help reduce these recruiting costs?
Taking someone on in your business is a big decision, especially when you are looking for qualified staff where there are shortages. The cost of not recruiting can be even higher though with your team taking on extra work or an inability to grow your business in the way you want. What is the alternative?
Outsourcing accounting services can be a way for your accountancy practice to reduce costs associated with recruiting in-house accountants whilst fulfilling your requirements. When you outsource, you typically pay a third-party service provider like Stellaripe for the support you need rather than recruiting an employee and paying a salary, benefits, and other expenses.
You will invariably be offered different service levels depending upon the work you need to have completed, its frequency and so on. For example, you may just want someone on an ad hoc basis to undertake the overflow work your team is struggling with.
Alternatively, you may be looking at a specific growth plan and want to take on a full time equivalent (FTE) service where you have an appointed person looking after a set level of work for you – like an extension of your team.
Specialised outsourced accounting firms can provide you access to a broader range of expertise and experience than recruiting in-house accountants, which could lead to more efficient and accurate client management.
In addition to cost savings, outsourcing can free up internal staff to focus on offering high-end services, such as cash flow budgeting and forecasting.
Over to you
Recruiting a new employee for your accountancy practice can be a real headache – it is expensive and takes up a lot of your time. And, once you have hired someone, their efficiency and productivity can significantly impact your practice.
On the other hand, outsourcing accounting services can be more cost-efficient and provide access to specialised expertise. At Stellaripe, we offer a wide range of accounting services specifically tailored for UK accountancy practices, and our rates are lower than the average accounting services costs for small businesses.
With our expertise and experience, we can ensure that your job is done accurately and on time. So, if you want to save tens of thousands of pounds a year, do not hesitate to contact us and learn more about how we can help.
