Running a small business in the UK comes with one unavoidable reality: you can’t escape the numbers. Invoices, payroll, VAT returns, Corporation Tax, cash flow… sooner or later, every entrepreneur realises that financial management is the backbone of sustainable growth.
But here’s the dilemma: should you hire finance staff in-house, or outsource to a professional firm? On paper, hiring might seem straightforward — you get someone on your team, at your desk, working just for you. In reality, the true cost is far higher than most owners expect. Outsourcing, on the other hand, offers flexibility and expertise, but some worry about losing control.
In this guide, we’ll break down the real costs behind both options, highlight the risks and rewards, and show you how working with an accountant in Dagenham could be the most cost-effective way to strengthen your finance function.
Why This Question Matters for UK SMEs
When your business is small, it’s tempting to “make do” — maybe you keep the books yourself, or hand things to a junior admin. But as you grow, so do the stakes:
- HMRC penalties for late or incorrect submissions.
- Staff dissatisfaction if payroll slips up.
- Missed opportunities from poor tax planning.
This is when most business owners start thinking: “Do I need to hire finance staff?” or “Should I outsource instead?”
The Real Cost of Hiring Finance Staff
Let’s start with in-house. On the surface, you’re thinking:
- A bookkeeper on £25,000.
- Maybe a payroll officer or accountant on £35,000–£45,000.
That seems manageable, right? But once you dig deeper, the numbers tell another story.
1. Salaries Are Just the Beginning
In the UK, you don’t just pay gross salary. You add:
- Employer’s National Insurance contributions.
- Pension contributions under auto-enrolment.
- Holiday, sick pay, and potential maternity/paternity leave.
That £30,000 hire? Realistically, it’s costing closer to £36,000–£38,000 once you factor everything in.
2. Recruitment and Training
Hiring isn’t free. Recruitment agencies often charge 15–20% of annual salary. Even if you go direct, there’s advertising, time lost interviewing, and onboarding costs. And then, training: keeping finance staff updated on tax law, software, and compliance isn’t optional.
3. Hidden Overheads
Don’t forget:
- A desk, chair, laptop.
- Accounting software licences.
- Office space, heating, lighting.
Even in hybrid setups, these overheads add up.
4. Turnover Risk
Finance staff are in demand. If your trained employee leaves after a year, you’re back at square one, with more recruitment costs and knowledge gaps in your books.
Ballpark cost of a small in-house finance team (bookkeeper + accountant): £90K–£100K per year.
The Outsourcing Alternative
Outsourcing often feels less tangible, but when you break it down, it’s easier to budget and far more scalable.
1. Pay for What You Need
Instead of fixed salaries, you pay for services:
- Bookkeeping packages can start from £200–£500 per month.
- Payroll for 10 staff might cost £70 per month.
- Year-end accounts and tax returns might be £1,000–£2,500 annually.
- Strategic support (like cash flow forecasting or a “virtual CFO”) might be an extra monthly fee.
Suddenly, you’re looking at a complete finance function for around £25K–£35K per year — less than half of the in-house cost.
2. Built-in Expertise
When you outsource, you’re not relying on one person’s knowledge. You get a team: bookkeepers, payroll specialists, tax planners, and advisors, all for the cost of one hire.
3. Technology and Compliance Included
Good outsourcing firms include cloud accounting software (Xero, QuickBooks, FreeAgent), HMRC-compliant payroll systems, and keep up-to-date with tax changes at no extra cost.
4. Scalability
Need more support during year-end or an HMRC audit? Your outsourced team scales with you. With staff, you’d be scrambling to hire temps or overloading your existing employee.
Ballpark outsourcing cost for SMEs: £30K per year for full coverage.
Head-to-Head: Hiring vs Outsourcing
| Factor | Hiring Finance Staff | Outsourcing Finance Functions |
| Upfront Cost | High (recruitment, training, equipment) | Low (monthly or annual fees) |
| Flexibility | Fixed (salary regardless of workload) | Scalable (pay for services you need) |
| Expertise | Limited to staff knowledge | Access to team of specialists |
| Risk | Staff turnover, compliance errors | Reliant on third-party provider |
| Technology | You pay for licences/software | Usually included |
| Annual Cost | £90K–£100K+ for two staff | £25K–£35K for complete service |
Case Example: A Dagenham Construction Firm
Imagine a growing construction firm in Dagenham with 12 staff and t/o £1.5 Million Per annum
Option 1: Hire
- Bookkeeper: £28K-£32K + benefits.
- Accountant cost for annual filing: £3K
- Software licences, office costs: £600.
Total: ~£31.6K annually.
Option 2: Outsource to an accountant in Dagenham
- Bookkeeping: £10K-£15K/annum.
- Payroll for 12 staff: £1K.
- Annual accounts and tax return: £2K.
- Cash flow support: £2.5K.
Total: ~£15.5K avg annually.
That’s a savings of more than £15K — money that could go into new kitchen equipment, staff training, or expanding to a second location.
But Is Outsourcing Always the Best Choice?
Not necessarily. Outsourcing isn’t a magic bullet.
- If you’re a large company with complex operations, in-house staff may make sense.
- If you value having someone physically in the office, outsourcing might feel distant.
- Some owners prefer face-to-face discussions rather than digital communication.
The trick is to weigh cost against control. Many SMEs actually adopt a hybrid approach: keep admin invoicing in-house, but outsource accounts, payroll, and tax.
FAQs
1. Is hiring finance staff worth it for a small UK business?
For most SMEs, no. The cost of salaries, benefits, and overhead is rarely justified unless you’re large enough to keep staff fully occupied.
2. What’s the average cost of outsourcing accounting in the UK?
Outsourcing packages vary, but small businesses typically spend £200–£500/month for bookkeeping and £1,000–£2,500/year for accounts.
3. Is outsourcing safe?
Yes, if you choose a reputable firm. Look for ICAEW/ACCA membership, GDPR compliance, and clear service agreements.
4. Can outsourcing really save money?
Yes. A typical small business can save £40K–£60K per year compared to hiring staff.
5. Why work with an accountant in Dagenham instead of anywhere else?
A local accountant understands your market, offers face-to-face support when needed, and still provides the same technical expertise as larger city firms.
Final Thoughts
Hiring finance staff gives you control, but at a high cost. Outsourcing offers flexibility, expertise, and huge savings. For most UK SMEs, outsourcing is not just cheaper — it’s smarter.
If you’re in East London, working with a trusted accountant in Dagenham means you can access a full finance function — bookkeeping, payroll, tax, and strategic advice — for a fraction of the cost of in-house staff.
The true cost isn’t just about money. It’s about peace of mind. And outsourcing could be the decision that frees you to focus on what really matters: growing your business.
Sources:
