Do I need an Accountant for a Limited Company?

by | Mar 1, 2022 | Business Accounts, Business Tax

If you have a set up a Limited Company, then you might be interested to hear that you are not legally required to appoint an accountant.

However, if you don’t appoint an accountant, be prepared to get stuck into your tax and accounts and don’t underestimate the time required to meet your accounting and filing obligations. You will need to feel confident that you fully understand the regulations and legislation and that you can provide the correct information for HMRC and Companies House.

So, while there is no legal requirement to use an accountant, there may be numerous benefits to doing so, and we have explored this in further detail below.

Keeping Accounts for a Limited Company

As mentioned, there will be various formalities, paperwork and calculations involved when it comes to keeping accounts for your Limited Company. From the initial stages of business formation to the filing of annual accounts and tax returns, an accountant can provide a range of services to support you.

Setting up your Limited Company

An accountant can offer expertise and reassurance during the early stages of your business. They can register the business with Companies House, as well as advising you on your tax liabilities and dealing with HMRC to register the company for VAT, Corporation Tax, and payroll (if you have employees).

Payroll Responsibilities

Small companies are often caught by the trap of assuming that they should be able to manage the payroll of a handful of employees, when in reality they are committing to countless hours spent calculating income tax and the completion of HMRC paperwork.

Outsourcing to an accountant could be money well spent to ensure the calculations made are correct and the complexities of changing regulations and legislation are adhered to. You might also want to consider the savings you could make on training and payroll software, by handing the task to an expert.  In the meantime, you are free to explore the more exciting aspects of running your business.

VAT for Limited Companies

VAT is notorious for its changing regulations and confusing nature, which is why you’ll want to be sure that you select the correct payment scheme so that you don’t pay more than you need to. This is where an accountant can take control and navigate these challenges on your behalf as well ensuring that your quarterly VAT returns are accurately completed to avoid any unwanted penalties.

Bookkeeping for Limited Companies

A more manageable beginners’ task, but no less resource intensive, is the process of bookkeeping for your Limited Company. If you don’t stay on top of the essential task of recording every receipt and invoice, you’ll likely face more work down the line if you find yourself missing records when year end approaches, let alone the prospect of an HMRC investigation.

So, while you could manage your day-to-day bookkeeping with a little commitment, an accountant could almost certainly provide greater efficiency and accuracy, not to mention, derive more enjoyment from the task!

Limited Company Annual Accounts

Annual Accounts (also known as Statutory Accounts) must legally be filed with HMRC and Companies House, on a (not surprisingly!) annual basis. If your business fails to file on time, you will face significant financial penalties, or in the worst case, legal action resulting in being struck off the register. Annual Accounts usually include a balance sheet, profit & loss account, company director’s report and supporting notes, but the exact requirements vary dependent on the size of your business. Your statutory accounts will also need to be sent to your shareholders.

With an accountant on hand, they will compile the necessary information and accounts and ensure they are filed in good time. And if you need tighter control over your profit & loss, an accountant should be able to provide support on a monthly basis in addition to the annual filing of your accounts.

Corporate Tax Returns

As a Limited Company you are also required to submit a corporate tax return at the end of the financial year. These returns allow you to declare your taxable profit, and even if you don’t meet the taxable threshold or have made a loss, you are still required to file a return.

Just like annual accounts, corporate tax returns must include a profit & loss account. Unfortunately, the version needed is not the same for both purposes and in the case of your tax return, you need to demonstrate your adjusted profits (gross profit less expenses and investments).

The calculations and accompanying paperwork may be intimidating if you do not have prior experience in this area, at which point the services of an accountant could be the answer. They will not only complete the paperwork and calculations on your behalf, but they will remind you when the payment is due.

Benefits of using an Accountant for Limited Companies

We’ve looked at the most significant areas in which an accountant can support you, but it might be worth making a rough estimate of how much time (and resource) you could save by passing these tasks to an expert.

If you consider the time potentially lost to paperwork and spreadsheets, let alone staying on top of the ever-changing regulations and legislation, and equate this to the financial cost of your time, you will soon see the value you could be missing.

Don’t forget either, the peace of mind factor, knowing that an expert is taking care of your business finances with your best interests at heart. A good accountant will not only make sure you meet you filing deadlines and submit accurate information, but they will consider how tax efficiently your business is operating and that you are benefitting from all the tax reliefs and allowances you are eligible for.

Summarised – The key benefits of using an accountant for a Limited Company

  • Time Saved – more efficient and profitable use of your time for other areas of your business
  • Meeting Filing Deadlines –ensuring you meet the various deadlines for annual accounts and tax returns
  • Tax Efficiencies – maximising capital allowances, tax reliefs and expenses to reduce the tax burden and maximise profits
  • Accurate Tax Deductions – ensuring correct deductions for reliefs and allowances are made to avoid financial penalties or a tax investigation
  • Cost Saving on Accounting Software – accounting software costs can be significant for a small company, but using an accountant removes the need for software

Further advice on Tax and Accounting for Limited Companies

At Kingston Burrowes, we have been supporting Limited Companies with their tax and accounting requirements for years, and our services are designed to fit individual business needs.

If you are still uncertain about your accounting or tax responsibilities as Limited Company or would like to explore how Kingston Burrowes could support you, please get in touch with the team today.

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