Do you need an accountant for a limited company?

PHS Team

25 Feb, 2025

Managing an accountant for limited companies is not legally required, but it is very helpful. Managing the finance is a major responsibility of running a limited company. 

Limited companies have specific accounting and reporting responsibilities to fulfil with HMRC and Companies House. It can be complicated and time-consuming, but some business owners may be tempted to do it themselves.

This blog helps you to find out whether an accountant is the right move for your limited company. 

What is a Limited Company?

A limited company is a type of business structure that's legally separate from its owners. If the company runs into debt, the owners (shareholders) are generally only liable up to the amount they invested in the company. 

Limited companies can be either "limited by shares" or "limited by guarantee." The most common type is limited by shares, where the owners' liability is limited to the value of their shares. 

What Can an Accountant Do for My Limited Company?

Hiring an accountant for your limited company can save time, ensure compliance, and help you maximise tax efficiency. Here’s how an accountant can support your business:

1. Company Formation 

An accountant can guide you through setting up your limited company, ensuring it meets all legal and financial requirements. They can help with:

• Registering the company with Companies House
• Setting up a business bank account
• Advising on share structures and directors' responsibilities

2. Bookkeeping 

Accurate bookkeeping is necessary for tracking your company’s financial health. An accountant can Maintain detailed records of income, expenses, assets, and liabilities. Reconcile bank transactions to ensure accuracy. Use accounting software to smooth financial management.

3. Tax Compliance 

Limited companies must pay Corporation Tax on their profits. An accountant can Calculate tax liabilities and ensure accurate filing with HMRC. Claim allowable expenses and deductions to reduce tax bills. Ensure compliance with tax deadlines to avoid penalties.

4. VAT Registration 

If your business turnover exceeds £90,000, VAT registration is mandatory. An accountant can Determine whether VAT registration is beneficial for your company. Register your company for VAT and file returns. Advise on VAT schemes like the Flat Rate Scheme for cost savings.

5. Payroll and PAYE Compliance

If you have employees, payroll management is important. An accountant can Register your company for PAYE (Pay As You Earn). Process salaries, National Insurance, and pension contributions. Ensure compliance with HMRC payroll regulations.

6. Annual Accounts 

Limited companies must submit annual accounts to Companies House. An accountant can Prepare and file annual accounts, including the balance sheet and profit & loss statement. Submit the Confirmation Statement, keeping company records up to date. Ensure compliance with financial reporting standards (FRS 102 or FRS 105).

7. Financial Advice 

A good accountant helps you plan to improve profitability and reduce tax liabilities by, Advising on director salaries vs. dividends for tax efficiency. Identifying tax reliefs and allowances your company can claim. Helping with business growth strategies and financial forecasting.

8. Business Support 

Running a limited company comes with ongoing responsibilities. An accountant provides, Guidance on changes in tax laws and regulations. Assistance with HMRC audits or investigations. Advice on managing cash flow and financial risks.

How to Choose the Right Accountant for Your Limited Company

Selecting the right accountant is necessary for managing your limited company’s finances efficiently. Here’s what to consider when making your choice:

• Qualifications and Experience: Ensure your accountant is qualified and registered with a professional body such as ACCA (The Association of Chartered Certified Accountants), ICAEW (Institute of Chartered Accounts in England and Wales), or CIMA (Chartered Institute of Management Accountants). 

Experience in handling limited companies is essential, as they will be familiar with Corporation Tax, VAT, and compliance requirements. 

• Range of Services: Different accountants offer different services. Some only handle basic bookkeeping, while others provide tax planning, payroll, VAT returns, and financial help. 

Choose an accountant who offers the services your business needs now and in the future as it grows.

• Personality and Communication: A good accountant should be approachable, clear in their explanations, and responsive to your queries. 

You need someone who can simplify complex financial matters and offer proactive advice. 

• Size of the Firm: Larger firms may offer a broad range of services and specialists, but they may not provide the same level of personal attention as a smaller firm. 

A smaller accountant may be more accessible and offer a more customised approach. 

• Location: While many accountants work remotely, you may prefer someone local for face-to-face meetings. 

If in-person consultations are important to you, choose an accountant nearby. Otherwise, online accountants can provide cost-effective services with digital convenience.

• Cost and Payment Structure: Accountants charge differently, some offer fixed fees, while others charge hourly or based on the services required. 

Understand their pricing structure and ensure it aligns with your budget. A transparent fee structure helps avoid unexpected costs.

Benefits of Hiring an Accountant for Your Limited Company

Hiring an accountant can make running a limited company more efficient and financially secure. Here are several benefits:

1. Managing company accounts, tax filings, and bookkeeping can be time-consuming. 
2. An accountant takes care of these tasks, allowing you to focus on growing your business. 
3. An accountant ensures your business complies with HMRC and Companies House regulations, avoiding penalties for late filings or incorrect tax submissions.
4. An accountant helps you minimise tax liability by identifying allowable expenses, deductions, and reliefs. 
5. They advise on tax-efficient salary and dividend structures, ensuring you pay the right amount of tax while maximising profits.
6. A good accountant offers financial insights to improve cash flow, profitability, and long-term growth. 
7. They help with budgeting, helping, and financial planning, giving you a clearer picture of your company’s financial health.

When Is the Best Time to Get a Limited Company Accountant?

The best time to hire an accountant is as early as possible, ideally before setting up your limited company. If your business is already running, hiring an accountant becomes important when managing VAT, payroll, and Corporation Tax filings. 

As your company grows, an accountant helps with financial planning, compliance, and reducing tax liabilities. Delaying can lead to errors, missed deadlines, and potential penalties, so it's best to get professional support from the start.

If you're looking to set up a limited company, PHS Associates can help guide you through the entire process. From registering your company with Companies House to providing advice on share structures and director responsibilities, we ensure everything is set up correctly and efficiently. 

Our team will assist you in choosing the right structure for tax benefits and help with opening a business bank account to keep your finances separate. Contact us at 0208 8611685 and email at info@phs-uk.co.uk.