Do I need an accountant for a limited company?
Accountants are often underrated by many business owners across the globe. All they see is them recording a few transactions and sending off their returns to regulatory bodies, when in fact, they could be the lifeline your business was looking for.
Although there is no legal obligation for your limited company to hire an accountant, they can help your business do far more than just stay compliant. Their vast range of specialist services can support your business through its growth and development. Taking advantage of opportunities and helping you navigate the difficult financial decisions you’re often faced with as a business owner.
Nonetheless, you’re here because you’re unsure of whether your limited company needs an accountant, right? So read on and find out about the benefits a limited company accountant could have on your business.
What can an accountant do for my limited company?
Setting up your limited company
Setting up a limited company is far more daunting than registering as a sole trader. The intricacies of registration with Companies House and HMRC can often be confusing, especially to those without a background in accounting and finance.
An accountant can help your business set up online with the appropriate bodies and assist with the necessary paperwork. Most will even take care of the whole process for you!
Aside from setting up your company, you may also need to register for additional services such as VAT, payroll, or Corporation Tax, depending on how you’re going to operate your new business.
VAT; also known as Value Added Tax, is a form of tax that is placed on goods, services, and other taxable supplies. Unfortunately, it’s not as easy as applying VAT to all of your transactions and submitting it to HMRC.
VAT is notoriously tricky to comprehend. VAT rules and regulations are constantly changing, sometimes even throughout a tax year. This can make it incredibly difficult for a business owner with no prior knowledge to navigate their VAT returns.
Here, a limited company accountant will be able to produce your returns with ease. They can help maximise your cash flow, reduce your liability, and ensure your business is compliant with these ever-changing regulations.
Running a limited company’s payroll is another tedious and confusing task that a lot of business owners will struggle with. Firstly, payroll needs to be run digitally, meaning that you will need access to the latest accounting software to be able to produce your payroll reports; such as payslips, and submit necessary deductions to HMRC.
The more employees you take on, or the larger the company gets, the more complicated it will become to run your payroll scheme, not to mention significantly time-consuming!
An accountant will be able to help you set your payroll scheme up and make sure it is registered correctly with necessary bodies and continuously run your payroll on a periodic basis to make sure your limited company is complying with its employer duties.
Bookkeeping can be an extremely time-consuming process; even for small companies. It essentially involves recording all of your transactions and records such as receipts and invoices. If you want to keep track of your debtors or creditors, you’ll also need to make sure each receipt is entered with the appropriate customer or supplier name; amongst other details.
Not only does it let you keep track of your invoices, but it is also an essential part of a limited company’s year-end accounts. With a neat audit trail recorded throughout the financial year, it makes your end-of-year much easier. Meaning an accountant will be able to save you an enormous amount of time to let you focus on what really matters.
When running your business as a company director you will need to prepare a personal Tax Return each year. This will notify HMRC of any profit you have received, thus, how much tax is due. Even if you are below the tax threshold, you will still need to complete a return.
In addition to a personal Tax Return, your limited company is also required to submit its own version; a Company Tax Return (Form CT600). This will again, show the profit, or loss, that your company has made and calculate any corporation tax you may owe.
This is something a good accountant does on a regular basis, and so, will have a good grip on best practices and how to file your return as efficiently as possible. They will also make sure it is filed on time to avoid any fines or penalties.
Another responsibility of running a limited company is having to submit annual accounts each year. These annual accounts usually carry the largest fines and penalties of all the ltd company obligations. The penalties can even accrue to the point of having your company struck off.
In regards to your limited company’s annual accounts, an accountant will not only ensure that your paperwork is submitted on time and efficiently, but will also prepare additional reports so that you can track the financial position of your business.
Typically, they will produce a profit and loss account, company directors’ reports, balance sheets, and provide copies of your submitted accounts.
Each financial year as a limited company you are required to submit a document known as a confirmation statement (CS01). This is a document that is submitted to Companies House to keep them updated on the details of your business. For example, if you were to change address, this would need to be submitted on your annual confirmation statement.
This is a simple document in comparison to other returns you have to file, however, an accountant will again be able to take this off your hand and relieve you of the burden.
Limited Company Accounts Cost
The cost of a limited company accountant is largely dependent on both the nature of the business and the work involved in producing the required documents, such as your annual accounts or Company Tax Return.
Each business can vary widely and what is a ‘normal’ cost for one, may not be for another. The best way to get an accurate quote and idea of the costs involved you will need to sit down with an expert to discuss various aspects of your limited company.
Once they know more about how you operate and what services you require, they will be able to give you a better understanding of the costs.
Can I do my own accounts for a limited company?
Of course, there is nothing legally stopping you from producing your own set of accounts for your limited company. However, the difference between doing them yourself and hiring an expert can actually be quite costly.
A ltd company accountant will be able to produce all of your returns, record your transactions, and submit the necessary paperwork to governing bodies such as HMRC and Companies House. In addition to this, the quality of work will be largely different. Your returns won’t just get filed on time but produced far more efficiently. An expert will be able to determine what expenses you can claim, any allowances you are entitled to, and even if they are any grants available; a typical advantage of operating as a limited company. This often results in much lower tax liability than if you were to produce a set of accounts yourself.
When do I need an accountant for my limited company?
To make the most out of your finances, it’s always a good idea to hire an accountant right from the start. They will be able to open to door to new opportunities, help improve your cash flow, and relieve you of the regulatory burden so you can focus on growing your small business.
If you don’t hire an expert from the get-go, you will need to produce your own financial returns such as a CT600 or annual set of accounts. Whilst this is possible with a little bit of accounting knowledge and technological skills, the quality of work will be far different from that of an expert.
You may struggle with what expenses you can claim or what allowances you are entitled to, and unfortunately, getting this wrong could result in penalties.
Do I need an accountant to file company accounts?
To file a set of limited company accounts, you don’t need an accountant, all you need is an online account with appropriate bodies, in this case, HMRC and Companies House. These online credentials will let you produce or upload your set of accounts and inform them of any liability due.
Do I need an accountant to register a company?
Registering a limited company can be quite confusing, especially to those without any accounting or business experience. Whilst there is no legal requirement for an accountant to register your limited company, it is far more efficient to do so.
Most accountants charge very little for the setup and registration of a new company. There is no doubt that this small fee is worth the cost to ensure your business is correctly registered correctly with regulatory bodies. It will save you both time and the headache of navigating its confusing terminology and endless questions.
Although you are not legally required to appoint an accountant, it can be extremely beneficial to do so. Not only will one be able to prepare and produce necessary returns, but they will also help your small business grow through their professional advice and tax-saving wizardry.
Business owners have every opportunity to be their own accountant, file their own returns, and produce their own set of annual accounts, but it’s often not worth the effort. You can even cost your business money if you’re not careful.
The expertise that a professional will bring to the table can help improve the cash flow of your business and reduce liabilities such as Corporation Tax; not to mention avoid any penalties and interest that may occur if certain responsibilities haven’t been met.