Startups pay accountants for two distinct things, and mixing them up is how new founders overspend. First there is one-off setup work: choosing a structure, forming the company or registering as self-employed, setting up registrations and systems. Then there is the ongoing fee that starts once you trade. A good firm prices these separately and lets the ongoing fee start small, growing as the business does.
The general fee drivers for any business are covered in our pillar guide to what an accountant costs a small business. This guide covers what is different when you are starting from zero.
Stage one: structure and formation
The first billable decision is whether to trade as a sole trader or form a limited company. The registration itself is administratively simple; what you are paying an accountant for is the advice around it: tax position, liability, credibility with customers, and how easy each structure is to change later. Skimping here can cost multiples of the saving if you pick the wrong structure and unwind it later.
Formation packages from accountants usually bundle the incorporation, the initial tax registrations, and a setup conversation. Ask precisely what is in the bundle, because bare formation without advice is a commodity you can buy anywhere.
Stage two: registrations and systems
Depending on your plans, early one-off work can include VAT registration where you expect to cross the threshold or benefit from registering voluntarily, employer registration if you will hire, and setting up cloud accounting software with your bank feed connected. Getting the software foundation right at the start is cheap; rebuilding a year of miscategorised data later is not. This is consistently the highest-return spend of a startup’s first year.
Stage three: the ongoing fee once you trade
From your first sale onward, the usual small business drivers take over: structure, transaction volume, VAT, payroll and record condition. Two startup-specific points matter:
- Your first-year fee should reflect first-year activity. Low volume means low workload. Be wary of packages priced for an established business.
- Your first filings arrive later than you think, but the work builds now. First accounts and returns land many months after you start, and they are only cheap to prepare if the records were kept properly from day one.
For companies, the full statutory list is set out in what an accountant costs a limited company.
Forecasts and funding work
Investors, lenders and grant bodies ask for financial projections, and building a credible forecast is skilled one-off work priced by complexity: number of revenue streams, scenarios required, and how much of the underlying model already exists. If funding is on your roadmap, ask early what a forecast would involve. It is far easier to build alongside your bookkeeping than to reverse-engineer under a deadline.
A sensible first-year buying order
- Structure advice and formation or registration
- Cloud record-keeping set up, with you trained to use it
- Only the registrations you actually need now
- A small ongoing fee for compliance and questions
- Forecasts or advisory work when a real decision or funder requires it
Deferring everything else is not corner-cutting; it is matching spend to stage. The pricing model matters too. See fixed-fee versus hourly pricing for which suits unpredictable early-stage work.
Frequently asked questions
Do I need an accountant before I have any revenue?
For the structure decision and system setup, a single paid conversation is usually worth it. A full monthly package before you trade is rarely necessary unless registrations and payroll start immediately.
Should a startup register for VAT voluntarily?
Sometimes. Reclaiming VAT on startup costs can outweigh the admin, particularly if your customers are VAT-registered businesses. The answer depends on your customers and costs, which is exactly the kind of question a setup conversation should settle.
What does an accountant need from me for an accurate startup quote?
Your intended structure, expected activity in year one, whether you will hire, whether VAT registration is likely, and what software you plan to use. Honest guesses are fine; the fee can be revisited as reality arrives.
Are formation fees and setup costs tax deductible?
Business-purpose costs are generally allowable under rules that vary by structure and expense type. See are accountancy fees tax deductible for the principles and where to check current guidance.
When should the fee be reviewed?
At any structural change: VAT registration, first hire, incorporation, or a funding round. Agree at the start that changes are quoted before they are billed.
Start with a fee that matches your stage
Our startup accountancy service is built to start small and scale with you, with setup work priced separately from the ongoing fee, the structure our fees page explains. Request a quote and tell us where you are; we will tell you what you need now and what can wait.