The Reality of Monthly Accountancy Work
If you run a limited company, work as a sole trader, or operate through a partnership, you have probably seen the adverts. "Monthly accounting from £X per month." But what do you actually get for that monthly fee?
Many accountants sell the package without ever explaining the specific tasks they complete each month. That leaves business owners guessing whether they are getting value or just paying for a bookkeeping service with a tax return thrown in at year end.
Here is the direct answer. A good small business accountant should be doing real work every month, not just filing a VAT return once a quarter and disappearing. The monthly work breaks down into five core areas: bookkeeping, VAT, payroll, management reporting, and tax planning.
Monthly Bookkeeping: What Gets Done and Why
Bookkeeping is the foundation. Without accurate, timely bookkeeping, your VAT returns are wrong, your payroll data is unreliable, and your year end accounts become a firefight.
A competent small business accountant will process your transactions each month. That means reconciling your bank accounts, matching invoices and receipts, coding expenses to the right nominal codes, and checking that director loan account entries are correct. They should also review your credit card statements and any other payment platforms you use, like Stripe, PayPal, or GoCardless.
The key question is how they do it. Some accountants expect you to upload receipts and invoices to software like Dext or AutoEntry. Others will log into your bank feed directly and reconcile everything themselves. Both approaches work, but you need to know which one you are paying for.
If you run a limited company with multiple transactions, expect your accountant to flag any unusual items each month. That includes personal expenses paid from the business account, missing receipts for large purchases, or transactions that look like dividends but have not been properly documented.
Bank Reconciliation Is Non-Negotiable
Bank reconciliation means matching every transaction in your accounting software to a corresponding bank statement line. If your accountant is not doing this each month, your accounts are not accurate. Simple as that.
A properly reconciled set of books means your accountant can spot errors early. A duplicate supplier payment, a missing customer invoice, a direct debit that should have been cancelled. These are the kinds of issues that cost real money if left unchecked for months.
VAT Returns: More Than Just Clicking Submit
If you are VAT registered, your accountant should be preparing and filing your VAT return each quarter (or monthly, if you choose that). But the work goes deeper than just submitting the numbers.
Your accountant should review the VAT return before submission. They should check that your flat rate percentage is correct (if you use the Flat Rate Scheme), that you have not missed any input VAT on eligible purchases, and that any partial exemption calculations are right. For businesses using the Flat Rate Scheme with limited cost trader status, that check is especially important because the wrong rate means a penalty.
They should also flag any VAT risks. For example, if you have purchased a company car, the VAT treatment depends on whether it is used solely for business or has private use. A good accountant will check this before submitting the return, not six months later when HMRC asks questions.
If you use MTD (Making Tax Digital) for VAT, which is mandatory for all VAT-registered businesses, your accountant should ensure your software is MTD-compatible and that submissions go through the correct API gateway. That sounds technical, but it matters because HMRC will fine you for non-compliant submissions.
Payroll: Monthly and RTI Reporting
If you employ anyone, including yourself as a director, payroll is a monthly task. Your accountant should process your payroll each month, calculate PAYE, employee NI, and employer NI, and submit the Full Payment Submission (FPS) to HMRC on or before your pay date.
For limited company directors, the optimal salary strategy is usually to pay yourself the personal allowance threshold of £12,570 per year. But the monthly payroll work still needs to happen. Your accountant should run the payroll, check that your payroll software (BrightPay, Xero Payroll, FreeAgent, or similar) is calculating correctly, and ensure any student loan deductions or pension auto-enrolment contributions are handled.
They should also issue your P60 at year end and file your P11D(b) for any benefits in kind. If you provide a company car, private medical insurance, or other benefits, the P11D work is a separate monthly tracking task, not something you can leave to year end.
Auto-Enrolment Pension Duties
Pension auto-enrolment is a legal requirement for most employers. Your accountant should manage the monthly contributions, submit the data to your pension provider, and ensure you meet your staging date obligations. If you are a director-only company, you can opt out, but your accountant should confirm that is the right move for your situation.
Management Accounts and Reporting
This is where many monthly accounting packages fall short. Management accounts are not just a profit and loss statement. They are a forward-looking tool that helps you run your business.
A good small business accountant will provide you with a monthly or quarterly management report. That report should include your actual income and expenditure against budget or forecast, your gross margin percentage, your overheads as a percentage of turnover, and your cash position. It should also highlight any trends, like a rising cost of goods sold or a drop in repeat customer revenue.
For limited companies, the report should include the director loan account balance. That is a common area where directors accidentally overdraw and trigger a tax charge. If your accountant is not telling you the loan account balance each month, you are flying blind.
For sole traders and partnerships, the management report should show your drawings against your projected tax liability. Many sole traders get caught out at year end because they have drawn too much and have no cash left for the tax bill. Monthly reporting prevents that.
Tax Planning: The Ongoing Work
Tax planning is not a once-a-year conversation. It should happen throughout the year as your business evolves.
Each month, your accountant should consider whether your current structure is still optimal. If you are a sole trader approaching the VAT threshold of £90,000, your accountant should flag that before you cross it, not after. If your limited company profits are approaching the £50,000 or £250,000 corporation tax thresholds, your accountant should discuss marginal relief and whether you should accelerate or defer expenditure.
Dividend planning is another monthly consideration. For limited company directors, the optimal dividend strategy depends on your total income, your spouse's income, and the company's retained profits. Your accountant should review this each quarter and recommend a dividend amount that keeps you within the basic rate band while avoiding unnecessary tax.
If you have an R&D claim in progress, your accountant should track qualifying expenditure each month, not reconstruct it at year end from bank statements. That is the difference between a clean claim and one that HMRC challenges.
Compliance Deadlines: The Calendar Work
Your accountant should maintain a compliance calendar for your business. That includes corporation tax payment dates (9 months and 1 day after your year end), filing deadlines for the CT600, confirmation statement dates, VAT return deadlines, payroll RTI deadlines, and self assessment payment dates.
They should also remind you of key dates that affect you personally, like the 31 January self assessment deadline or the 31 July payment on account. Missing these dates means penalties and interest, so a good accountant will never let a deadline slip without warning you well in advance.
What a Monthly Accountant Does NOT Do
It is equally important to know what is not included in a standard monthly package. Most accountants do not provide legal advice, business strategy consulting, or HR support. They do not write your business plan or pitch deck. They do not negotiate with your suppliers or chase your customers for payment.
Some accountants offer these as add-on services, but they are not part of the core monthly retainer. If you need those services, ask upfront and get a separate quote.
How to Know If Your Accountant Is Doing the Work
You should receive a monthly or quarterly report that tells you three things: your current financial position, any issues that need your attention, and what you need to do before the next deadline. If you are not getting that, your accountant is not doing the job properly.
You should also have a named contact who responds to emails within 24 hours on working days. Not an automated system. Not a junior who cannot answer your questions. A real person who knows your business.
If your accountant only contacts you when the VAT return is due or when your year end accounts are late, you are paying for a compliance service, not a small business accountant who adds value.
Choosing the Right Monthly Package
When you compare monthly accounting packages, ask the accountant to list the specific tasks they will complete each month. Not "bookkeeping and VAT". A proper list. How many bank reconciliations? How often do they review the director loan account? Do they prepare management accounts? How often do they review your tax position?
If they cannot answer those questions, move on. Contact our ICAEW qualified team if you want a clear breakdown of what we do each month for your type of business.
The right monthly accounting service saves you time, reduces your tax bill, and keeps you compliant. The wrong one just costs you money and creates stress at year end.