One of the first questions worth asking any accountant before you sign up is simple: how do you actually charge? Some London firms still bill by the hour, tracking every phone call and email against your account. Others, and increasingly the majority serving small businesses, work on fixed monthly fees. Both models can work well, but they suit different types of business owner, and understanding the difference will help you avoid unpleasant surprises when the invoice lands at the end of the month, especially if you are juggling several other suppliers and costs at the same time.
How Hourly Billing Actually Works
Under hourly billing, you are charged for the time your accountant spends actively working on your affairs, usually in increments of six or fifteen minutes, logged carefully against your file. Rates vary considerably, but in London you might see anywhere from £40 an hour for junior bookkeeping support up to £200 or more for a senior partner's time on complex tax matters. The appeal is that you only pay for what you use, which can suit businesses with very simple, occasional needs. The downside is unpredictability. A quick question can turn into a meaningful charge, and many business owners admit to avoiding contact with their accountant simply to keep costs down, which is exactly the opposite of what a good working relationship should look like.
Over a full year, hourly billing can also make it genuinely difficult to budget, since your total spend depends on how busy, complicated, or unusual your affairs turn out to be, rather than on anything you agreed at the outset.
How Fixed Fee Packages Work Instead
Fixed fee accounting flips that logic. You agree a scope of work upfront, such as bookkeeping, VAT returns, payroll, and annual accounts, and pay a set monthly amount regardless of how many questions you ask or how many emails go back and forth. This is now the standard approach among affordable accountants serving small businesses, because it removes the anxiety around picking up the phone and makes budgeting genuinely predictable from month to month, which matters enormously when cash flow is already tight.
Why Predictability Matters More Than People Expect
Cash flow is one of the biggest challenges for any small business, and an unpredictable accountancy bill does not help. With a fixed fee, you know exactly what leaves your account each month, which makes forecasting simpler and removes one more variable from an already busy schedule. It also changes the dynamic of the relationship. When you are not worried about being charged for a five-minute call, you are far more likely to actually ask the questions that keep your business compliant and efficient, rather than quietly guessing and hoping for the best.
This matters particularly in the first year or two of trading, when business owners are still learning the ropes of VAT, payroll, and general compliance, and need to lean on their accountant more heavily without watching the clock every time they send an email.
Where Hourly Billing Can Still Make Sense
Fixed fees are not automatically right for every situation. A one-off piece of work, such as untangling several years of neglected bookkeeping, restructuring a business, or handling a specific HMRC enquiry, is sometimes better priced hourly or as a standalone project fee, because the scope is genuinely hard to predict in advance. If your accountant suggests hourly billing for a clearly defined, unusual piece of work, that is not necessarily a red flag, provided they give you an estimate and keep you updated as the work progresses, rather than letting the meter run unchecked.
The key difference is scope. Ongoing, predictable compliance work is well suited to a fixed fee, while genuinely one-off, hard-to-scope projects are sometimes fairer to both sides when priced hourly or as a capped project fee agreed in advance.
Questions to Ask Before You Commit
Whichever model a firm offers, a few questions will tell you a lot about how transparent they intend to be:
- Exactly what tasks are covered within the fixed fee, and what sits outside it
- Whether phone calls, emails, and general advice are included or charged separately
- How often the fee is reviewed, and what triggers a change
- What happens if your turnover or transaction volume grows significantly during the year
- Whether there are any setup or onboarding charges on top of the quoted fee
A firm confident in its pricing structure will answer these without hesitation, usually in writing, so you have something to refer back to later.
What Affordable Accountants Tend to Offer in Practice
Most London firms positioning themselves as affordable for small businesses lean firmly towards fixed fee packages, often tiered by turnover or complexity, because it suits both sides. The accountant can plan their workload and resourcing more efficiently, and the client gets certainty. Providers of bookkeeping and accounting services built specifically for small businesses will usually structure their entire offering this way, with clear tiers rather than a blank hourly rate card that leaves you guessing at year end.
Making the Switch if You Are Currently Billed Hourly
If you are currently on an hourly arrangement and finding your invoices unpredictable, it is entirely reasonable to ask your accountant whether a fixed fee package is available, or to get a comparison quote from a firm offering accounting services for small businesses on that basis. Most transitions are straightforward, particularly at the start of a new accounting year or tax year, and the certainty it brings is usually worth the short conversation it takes to arrange.
Before switching, ask your current accountant for a breakdown of what you have actually paid over the last twelve months. This gives you a genuine baseline to compare against any fixed fee quote, rather than relying on a rough guess of what your hourly billing has been costing you.
Mixed Models Worth Knowing About
Some firms now offer a hybrid approach: a fixed fee for core compliance work, such as annual accounts and tax returns, with genuinely optional extras charged separately and clearly, such as a one-off business plan review or support with a mortgage reference. This can work well provided the core fee still covers everything you need day to day, and the optional extras are exactly that, optional, rather than services you find yourself needing every few months regardless. Ask for a full list of what counts as an extra before you sign, so nothing catches you off guard later in the year.
The Bottom Line
Fixed fee billing has become the standard for a reason: it suits the rhythm of small business life, removes the fear of picking up the phone, and makes budgeting simple. Hourly billing still has its place for genuinely unpredictable, one-off work, but for the day-to-day running of your business, a clear, fixed monthly fee from an affordable accountant is almost always the better choice. Before you commit to either, get the scope in writing, ask what is and is not included, and choose the structure that lets you actually use your accountant rather than avoid them out of fear of the bill. Whichever model you choose, clarity upfront will save you far more stress than it costs to ask.
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