As a small or growing business in London, one of the recurring debates is whether to hire an in-house accountant or continue working with an external, affordable accountancy practice. Both routes can work well, but they suit different stages of a company's life and different budgets. This comparison looks honestly at the true costs, the depth of expertise you can access, and the practical flexibility of each option, so you can make a decision based on your actual circumstances rather than assumptions about what "proper" businesses are supposed to do. It is a decision worth revisiting periodically, since what makes sense at ten employees rarely still makes sense at fifty, and vice versa.
The Real Cost of an In-House Hire
A salaried accountant in London, even a relatively junior one, typically costs considerably more than the headline salary once you factor in employer's National Insurance, pension contributions, holiday pay, sick leave, recruitment fees, software licences and ongoing training. For many small businesses, this total package can run well into the tens of thousands of pounds annually, and that is before accounting for the cost of a desk, equipment and management time spent supervising the role. An external affordable accountant, by contrast, is usually engaged on a fixed monthly fee that covers a defined scope of work, with no employment overheads attached at all.
There is also the question of ramp-up time. A new in-house hire typically needs weeks, sometimes months, to become fully productive within your specific business, whereas an established external practice generally begins delivering value from the first engagement, since onboarding a new client is a routine, well-practised process for them rather than a novel undertaking.
Breadth of Expertise You Can Draw On
One in-house accountant, however capable, is still one person with one set of specialisms. An external accountancy practice typically has access to a wider pool of knowledge across VAT, Corporation Tax, payroll, R&D relief and sector-specific issues, because different team members handle different specialisms across many clients. This matters more than people expect: a single in-house hire may confidently manage routine bookkeeping and basic returns but lack the depth needed for a complex VAT query or an HMRC enquiry, whereas a well-established external firm has usually seen the same issue many times before.
This breadth also matters when your business faces an unusual, one-off situation, such as a restructuring, an acquisition, or an unexpected HMRC enquiry. An external practice can typically draw on colleagues with relevant experience of that specific scenario, while a single in-house accountant may be navigating it for the very first time, with all the added risk that entails.
Flexibility as Your Business Changes Shape
Business needs rarely stay constant. An external affordable accountant can typically scale their support up during busy periods, such as year-end or a funding round, and back down when things are quieter, without you carrying the cost of an underused salaried role in slow months. An in-house employee, however loyal and hardworking, represents a fixed cost regardless of workload, and reducing that cost later means going through redundancy processes that are both emotionally and administratively difficult for a small employer.
This flexibility becomes particularly valuable for seasonal businesses, where financial admin genuinely spikes at certain times of year and sits quietly the rest of the time. Paying a fixed salary year-round for a workload that is only heavy for a few months rarely represents good value, whereas an external arrangement can flex with the actual pattern of demand.
Continuity, Cover and Reduced Key-Person Risk
If your sole in-house accountant goes on maternity leave, falls ill, or leaves for another job, you can be left with a serious gap in critical financial oversight, often at the worst possible moment. Established external practices generally have cover built in as standard, with more than one qualified person familiar with your accounts, so continuity does not depend on a single individual staying in post. This is a genuinely underrated advantage of the external model for small businesses that cannot afford to be without financial oversight even for a few weeks.
Recruitment itself carries risk too. Finding, interviewing and correctly vetting a replacement in-house accountant can take months in a competitive London job market, during which time your financial oversight may be thin or entirely absent, a gap that a well-staffed external practice simply does not expose you to.
When an In-House Role Starts to Make Sense
There is a point at which bringing accounting in-house becomes genuinely sensible, usually once a business has grown large enough that daily, hands-on financial management is needed rather than periodic reporting and advice. If you are processing high transaction volumes every day, managing a large team's payroll internally, or need someone embedded in daily operational decisions, an in-house hire may outperform an external arrangement on pure responsiveness, even though it costs more.
Even at this stage, many businesses find that retaining an external affordable accountant alongside an in-house hire, for annual accounts review or a second opinion on complex decisions, provides useful additional assurance without duplicating the day-to-day workload the in-house role is there to cover.
Signs an In-House Role May Be Worth Considering
- Your finance workload has grown beyond a few hours a week
- You need someone physically present for daily operational decisions
- Your transaction volume has become too high for periodic external review
- You are managing complex, in-house payroll for a sizeable team
A Hybrid Approach Worth Considering
Many London businesses find real value in a hybrid model: a part-time internal finance administrator handling day-to-day tasks, supported by an external affordable accountant for statutory compliance, tax strategy and higher-level advice. This structure often delivers most of the responsiveness of an in-house hire at a fraction of the full employment cost, while still giving you access to specialist knowledge when it matters. It is worth exploring this option with an experienced adviser on business planning and financial structuring before committing to a full-time salaried role you may not yet need. Many practices are happy to design this kind of blended arrangement around your specific working pattern rather than offering only a rigid, one-size-fits-all package.
Making the Decision With Confidence
Before choosing either path, map out your actual workload honestly rather than what feels prestigious. Many founders hire in-house too early because it feels like a milestone, only to find the role is underused for the first year or two. Speaking with a firm that offers practical financial advice for growing businesses can help you model both scenarios properly, comparing true annual cost against actual expected workload, so the decision is grounded in numbers rather than instinct.
It can also help to write down, in plain terms, what "too slow" or "not enough oversight" would actually look like for your business. Having concrete triggers in mind, rather than a vague sense of unease, makes it much easier to judge objectively when the balance has genuinely shifted towards needing an in-house hire.
The Bottom Line
For the vast majority of small and medium London businesses, an external affordable accountant delivers more expertise, more flexibility and lower total cost than an in-house hire, particularly in the early growth years. In-house accounting earns its keep once transaction volume and operational complexity genuinely demand daily, embedded oversight. The smartest move is to revisit this decision periodically as your business changes, rather than treating it as a one-off choice made at incorporation and never questioned again. A short annual review of workload against cost is usually all it takes to keep the arrangement genuinely fit for purpose.
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Fred Michael & Co Ltd provides business planning and financial advice to help London businesses choose the right accounting service for them.