If you pay a small business accountant a monthly fee, you probably know they handle your year-end and your tax return. But what exactly are they doing the other eleven months of the year?

The honest answer is that a good accountant does a lot more than just filing your annual accounts. The problem is that many firms sell cheap monthly packages without ever explaining what the work actually involves. So you end up paying £150 a month and wondering whether you are getting value.

This post sets out exactly what your accountant should be doing month to month. If they are not doing these things, you are overpaying. If you are handling them yourself, you may be spending time you could bill to clients instead.

The Monthly Bookkeeping Review

Bookkeeping is the foundation of everything. Without accurate, up-to-date records, your accountant cannot file a correct VAT return, calculate your tax liability, or give you reliable advice.

Most accountants do not enter every transaction themselves. That would be expensive and inefficient. Instead, they review the data you or your bookkeeper has entered into software like Xero, FreeAgent, QuickBooks, or Sage 50. They check for common errors: misclassified expenses, missing receipts, personal spending coded to the business, and transactions that need a VAT code.

A thorough monthly bookkeeping review should include:

  • Reconciling all bank accounts, credit cards, and PayPal or Stripe accounts against the software
  • Checking that sales invoices match bank deposits
  • Verifying that purchase invoices are coded to the correct nominal account
  • Reviewing the director's loan account (for limited companies) to catch overdrawn balances early
  • Flagging any transactions that look unusual or potentially non-compliant

If your accountant only looks at your books once a year before the year-end, you are not getting a monthly service. You are paying for a year-end service spread across twelve instalments.

VAT Returns (If You Are Registered)

If you are VAT registered, your accountant should prepare and submit your VAT return every quarter (or monthly if you have opted for monthly returns). This is not just a data entry exercise.

The accountant checks that your VAT codes are correct, that you are claiming the right input tax, and that your flat rate percentage (if you use the Flat Rate Scheme) is still correct for your business. They also check whether you are a limited cost trader, because that changes the flat rate percentage from whatever your sector rate is to 16.5%.

For businesses on the Standard VAT Scheme, the accountant reviews the VAT control account in your software to make sure the figures match the return. If there are discrepancies, they investigate before submitting, not after.

The submission itself is done through HMRC's MTD-compatible software. Your accountant should confirm the amount due or repayable and advise you on the payment deadline. For quarterly returns, that is one month and seven days after the quarter end.

If you are not VAT registered but your rolling 12-month turnover is approaching £90,000, your accountant should tell you. They should model whether voluntary registration makes sense before you hit the threshold. Waiting until you are legally required to register can mean a sudden, unbudgeted VAT bill on invoices you have already issued.

Payroll Runs and RTI Submissions

If you employ staff or pay yourself a salary through a limited company, your accountant should run your payroll each month. That means processing the payroll through software like BrightPay, Iris, or FreeAgent's payroll module, and submitting the Full Payment Submission (FPS) to HMRC on or before payday.

Each monthly payroll run should include:

  • Calculating gross pay, deductions, and net pay for each employee
  • Applying the correct tax code (HMRC issues new codes throughout the year)
  • Calculating employer National Insurance at 13.8% above the secondary threshold (£9,100 for 2025/26)
  • Calculating pension contributions under auto-enrolment (Workplace Pension)
  • Issuing payslips (these can be digital)
  • Submitting the FPS to HMRC

For directors taking a salary, the most efficient structure is usually £12,570 per year. That matches the personal allowance and the primary NI threshold, so no income tax or employee NI is due. The company gets a corporation tax deduction for the salary. Employer NI is payable above £9,100, but if your company claims the Employment Allowance (up to £10,500), that NI cost is covered.

Your accountant should also handle the year-end payroll tasks: issuing P60s to employees by 31 May, submitting the P11D(b) for Class 1A NIC on benefits by 6 July, and filing the P11D forms for any benefits in kind.

CIS Returns (If You Work in Construction)

If you are a contractor or subcontractor in the construction industry, your accountant should handle your CIS (Construction Industry Scheme) returns each month. The CIS300 return is due by the 14th of the month following the tax month (which runs from the 6th to the 5th).

The accountant checks that subcontractors have been verified with HMRC, that the correct deduction rate has been applied (20% for registered subcontractors, 30% for unregistered), and that the return is submitted on time. Late CIS returns incur penalties.

If you are a subcontractor receiving payments after CIS deductions, your accountant should track those deductions so you can claim them back against your own tax and NI at the year-end. That is a common area where subcontractors lose money if they are not keeping proper records.

Management Accounts and Cash Flow Monitoring

This is where a good accountant separates from a basic compliance service. Management accounts are a monthly or quarterly snapshot of your business performance: revenue, gross margin, overheads, net profit, and cash position.

Your accountant should provide these in a format you can understand. Not a spreadsheet with 47 columns. A one-page summary that shows you whether you are ahead of or behind your budget, and where the cash is going.

Cash flow is the killer of small businesses. Your accountant should flag if your debtor days are increasing, if you are carrying too much stock, or if your current ratio is heading in the wrong direction. They should also model the impact of upcoming tax bills: corporation tax, VAT, and self assessment payments.

For example, if your year-end is 31 March 2026, your corporation tax is due on 1 January 2027. That is nine months and one day after the year-end. Your accountant should tell you in April 2026 how much to set aside each month so the cash is there in January. Waiting until December to think about it is how businesses end up on Time to Pay arrangements with HMRC.

Director's Loan Account Monitoring

If you are a director of a limited company, your director's loan account (DLA) is one of the most common problem areas. The DLA tracks money you have taken from the company beyond your salary and dividends, and money you have introduced into the company.

Your accountant should review the DLA every month. If the balance is overdrawn (you owe the company money) and exceeds £10,000, there are two consequences. First, you have a benefit in kind (the beneficial loan), which goes on your P11D and you pay tax on. Second, if the loan is not repaid within nine months and one day of the year-end, the company pays S455 tax at 33.75% on the outstanding amount. That tax is refundable when the loan is repaid, but it is a cash flow hit the company does not need.

Your accountant should flag overdrawn DLAs early and advise on how to clear them: either by declaring a dividend (if retained profits are available) or by repaying the company from personal funds.

Year-End Preparation (It Starts Month One)

Many business owners think year-end work happens in the two weeks after the accounting date. It does not. A good accountant prepares for the year-end from the first month of the new financial year.

That means:

  • Checking that all transactions are coded correctly so the trial balance is clean
  • Tracking fixed asset additions for capital allowances (AIA at £1,000,000, Full Expensing for limited companies)
  • Monitoring the associated companies rule for corporation tax marginal relief (if you have other companies under common control, your profit thresholds are divided by the number of associated companies)
  • Reviewing dividend vouchers to ensure they are properly documented and within retained profits
  • Preparing for any R&D tax credit claims by tracking qualifying expenditure throughout the year

If your accountant waits until after the year-end to start thinking about any of these, you are paying for a last-minute scramble, not a professional service.

Tax Planning and Ad Hoc Advice

A monthly retainer should include access to your accountant for questions that come up during the month. Not unlimited hand-holding, but the ability to send an email or make a quick call when something changes.

Common questions include:

  • "I have a one-off contract worth £30,000. Should I take it through my limited company or as a sole trader?"
  • "My client wants to pay me in shares instead of cash. What are the tax implications?"
  • "I am thinking of buying a van. Should I buy it through the company or personally?"
  • "My turnover has dropped below the VAT threshold. Should I deregister?"
  • "I am considering selling the business. How does Business Asset Disposal Relief work?"

Your accountant should answer these based on your specific numbers, not generic principles. If the answer is "it depends" without a follow-up explanation of what it depends on, push back.

What You Should Not Be Doing Yourself

If you are paying a small business accountant, you should not be preparing your own VAT returns, running your own payroll, or trying to calculate your own corporation tax. That is what you are paying them for. Your time is better spent on your business.

You should be keeping good records: uploading receipts to Dext or Hubdoc, categorising transactions in your software, and providing your accountant with clear information. But the technical work, the filing, and the advice should be on them.

How to Check Whether Your Accountant Is Doing These Things

Ask them directly. At your next review meeting, go through this list and ask which of these tasks they handle each month. If they cannot give you a clear answer, that is a red flag.

You should also check whether your accountant is registered with a recognised professional body. At Holloway Davies, we are ICAEW qualified, which means we are bound by ethical and technical standards that go beyond basic HMRC filing.

If you want to see how a proper monthly service works, our services page sets out exactly what we do for each client. No hidden packages. No vague promises. Just a clear list of the work we deliver every month.

And if you are not getting that from your current accountant, it might be time to switch. Get in touch and we can talk through what a proper monthly service looks like for your business.