DG Accountancy LTD

When calculating the cost of an in-house finance team, there are several factors to consider beyond just salaries. These include benefits, office space, software, equipment, and recruitment costs. Below, we’ll explore these expenses in more detail:

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1. Salaries

The salary of in-house finance staff is one of the most significant costs. In the UK, the average salaries for finance roles are as follows:

• Bookkeeper: £22,000 – £30,000 per year
• Accountant: £30,000 – £50,000 per year
• Financial Controller: £50,000 – £75,000 per year
• CFO: £80,000 – £150,000+ per year

A small business might only need one or two finance professionals, but as the business grows, so does the need for more comprehensive financial support. For companies requiring a complete finance department, the total salary costs can easily exceed £200,000 per year.

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2. Benefits and Other Employment Costs

In addition to salaries, businesses must provide benefits such as pensions, healthcare, paid leave, and bonuses. According to UK employment regulations, these benefits can add up to an additional 20%–30% of an employee’s base salary.

For example, if your accountant’s salary is £40,000, you might be spending an additional £8,000–£12,000 on benefits alone. National insurance contributions and potential overtime payments also need to be factored in.

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3. Office Space and Equipment

Each employee will require office space, desks, computers, software licenses, and other equipment to perform their job. Depending on your location, the cost of office space can be substantial. If your team works remotely, you may still need to provide them with laptops, monitors, and other technology.

On average, it costs around £3,000–£5,000 per employee to set them up with the necessary equipment and software tools. Additionally, software subscriptions for accounting programs like Xero, QuickBooks, or Sage can cost anywhere from £20 to £100 per month per user.

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4. Training and Professional Development

Finance professionals must stay up to date with changing tax laws, accounting standards, and regulatory requirements. This means that your in-house team will need ongoing training and professional development, which can cost a few thousand pounds per employee each year.

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5. Recruitment and Onboarding Costs

Hiring finance staff can be an expensive and time-consuming process. Recruitment agencies typically charge 15%–20% of the employee’s annual salary as a fee. For example, if you’re hiring a financial controller with a £60,000 salary, you might pay £9,000–£12,000 in recruitment fees alone.

Onboarding costs, including time spent training new hires and getting them acclimated to your business’s processes, can also add up.

Cost Comparison: In-House vs. Virtual Finance Department

Let’s compare the costs of an in-house finance team and a virtual finance department for a typical small business:

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In-House Finance Team (2 Employees) excluding a senior finance member

• Bookkeeper salary: £25,000
• Accountant salary: £40,000
• Benefits (20%): £13,000
• Office space and equipment: £8,000
• Software and technology: £3,000
• Recruitment fees: £9,000
• Total Annual Cost: £98,000

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Virtual Finance Department

• Bookkeeping: £400 per month (£4,800 per year)
• Payroll: £100 per month (£1,200 per year)
• Tax planning: £1,000 per year
• Virtual CFO services: £2,000 per month (£24,000 per year)
• Total Annual Cost: £31,000

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