The Financial Reality of Running a Care Home

Care homes operate under a unique financial model. You deal with:

• High payroll costs (often 55–70% of turnover)
• Rotas, overtime, sleep-ins, night shifts and agency staff
• Funding from multiple sources (private fees, local authorities, NHS)
• Delayed payments and cashflow strain
• VAT confusion (exempt vs standard-rated income)
• Regular CQC inspections and compliance pressure
• Low margin tolerance for errors

Between all this, finance cannot be reactive or “once a year”.

It must be accurate, timely, compliant and proactive.

What Is an Accountant for Care Homes?

A Care Home Accountant is an accountant who specialises in the care sector and understands:

• Care home income models and funding structures
• Payroll complexities unique to care providers
• VAT treatment of care services and mixed supplies
• Staffing ratios, agency costs and margin pressure
• CQC expectations and financial governance
• Group structures for multi-site operators
• Director remuneration planning in care businesses

Instead of just filing accounts, a specialist Care Home Accountant:

• Protects your cashflow
• Keeps payroll compliant and controlled
• Helps improve margins without cutting care quality
• Reduces tax legally and safely
• Spots financial risks before they become regulatory issues

Why Care Homes Need a Specialist Accountant (Not a Generalist)

Care is unlike any other sector.

A general accountant may:

• Treat care income incorrectly for VAT
• Miss payroll compliance risks (NMW, holiday pay, sleep-ins)
• Ignore cashflow gaps caused by local authority delays
• Fail to benchmark staffing costs properly
• Lack understanding of CQC-linked financial governance

This can lead to:

• HMRC penalties
• Payroll underpayments or disputes
• Cashflow crises
• Weak profitability
• Stress during inspections
• Business instability

A specialist Accountant for Care Homes builds your finance function around how care businesses really operate.

Common Problems We See in Care Home Finances

1. Payroll Taking Over the Business

Payroll is often out of control, overtime, agency staff, incorrect holiday pay, and rota inefficiencies.

We help clean this up and regain control without harming care delivery.

2. Cashflow Pressure from Funding Delays

Local authority and NHS payments are slow, but wages must be paid on time.

We build cashflow forecasts so you’re never caught off-guard.

3. VAT Confusion

Care income is usually VAT-exempt — but many care homes also have taxable income streams (e.g. private extras, training, rent, consultancy).

Incorrect VAT treatment can create serious backdated liabilities.

4. Poor Management Information

Many operators don’t know:

• True cost per resident
• Profitability by home
• Staffing cost percentage
• Break-even occupancy

We give you clear, decision-ready numbers.

5. No Strategic Tax Planning

Care businesses often overpay tax simply because no one plans properly.

We structure remuneration, groups and profits efficiently and compliantly.

Our Care Home Accounting Services

1. Cloud Accounting & Monthly Management Accounts

We build a finance system designed specifically for care providers.

What we do:

• Set up and optimise Xero (or your chosen system)
• Integrate payroll and rota data
• Track income by funding source
• Control staffing costs and overheads
• Produce monthly management accounts on time

Key metrics we track:

• Occupancy rates
• Revenue per resident
• Payroll as a % of turnover
• Gross and net margins
• Cashflow position

Outcome: You know exactly how the business is performing — every month.

2. Payroll, PAYE & Workforce Compliance

Payroll is the heartbeat of a care business.

We manage:

• Complex shift-based payroll
• Sleep-ins, overtime and enhancements
• Holiday pay compliance
• PAYE and pension auto-enrolment
• Director payroll and remuneration

Outcome: Staff are paid correctly, on time, and compliantly, without payroll chaos.

3. Year-End Accounts & Corporation Tax for Care Homes

We prepare statutory accounts and CT600s with a care-sector lens, including:

• Correct income classification
• Payroll cost analysis
• Capital allowances on property and equipment
• Group structures (where applicable)
• Reliefs and deductions specific to care businesses

Outcome: Accurate, defensible accounts that stand up to HMRC scrutiny.

4. VAT for Care Homes & Care Providers

We provide specialist VAT support, including:

• VAT exemption reviews
• Mixed-use income analysis
• Partial exemption where relevant
• Reviewing historic VAT treatment
• Correcting errors before HMRC finds them

Outcome: VAT done correctly, without nasty surprises later.

5. Cashflow Forecasting & Financial Control

We help you stay solvent and stable.

This includes:

• Rolling cashflow forecasts
• Scenario planning (occupancy changes, cost increases)
• Funding gap analysis
• Support with bank or lender conversations

Outcome: Financial clarity, even in uncertain conditions.

6. Virtual Finance Office (VFO) & Advisory Support

If you don’t have an internal finance team, we can act as your:

• Virtual Finance Office – bookkeeping, processing, reconciliations
• Strategic finance partner – insights, planning and guidance

Outcome: A strong finance function without the cost of a full in-house team.

7. Group Structures, Expansion & Exit Planning

For growing care operators, we help with:

• Multi-site group structures
• Property vs trading company separation
• Expansion planning
• Sale or succession preparation

Outcome: A structure that supports growth and long-term value.

Our Process – How We Work with Care Providers

Step 1 – Discovery Call
We understand your care model, size, funding mix and challenges.

Step 2 – Diagnostic Review
We review accounts, payroll, VAT and cashflow for risks and quick wins.

Step 3 – Fixed-Fee Proposal
Clear scope, clear pricing, no surprises.

Step 4 – Onboarding & Clean-Up
We fix historic issues and stabilise your finance systems.

Step 5 – Ongoing Support
Monthly reporting, compliance, and proactive advice.ear reporting – not just once-a-year accounts.

Indicative Packages (Guide Only) – for Tech Businesses

Every care provider is different, but as a guide:

Single-Site Care Home

• Bookkeeping
• Payroll & PAYE
• VAT support
• Annual accounts

Growing Operator / Multi-Site

• Monthly management accounts
• Payroll management
• Cashflow forecasting
• VAT & compliance reviews

Care Groups & Scale-Ups

• Full Virtual Finance Office
• Group accounts
• Strategic advisory
• Expansion or exit planning

Packages are tailored, no one-size-fits-all.

Speak to a Specialist Care Home Accountant

If you want to:

• Get control of payroll and cashflow
• Reduce tax and compliance risk
• Improve margins without compromising care
• Build a financially stable care business

…let’s talk.

Book Your Free Care Business Strategy Call

Call: 020 3740 7074
Email: info@accountaxzone.com
Website: accountaxzone.com

Join Hundreds of Happy SMEs getting services from our expert Accountant in London

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