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Does My Limited Company Need An Accountant?

There are two ways to look at this as a company owner: there’s no legal requirement to have an accountant; however, do you have the knowledge to submit your accounts correctly?

To help you understand whether you need an accountant for your company, this post will explain what accounts are, the risks of handling your own accounts, and where bookkeeping software, such as QuickFile, fits into it.

What are limited company accounts?

Limited company accounts are essential as they give an overview of the company’s financial health. Without this overview, it can be difficult for company owners to make decisions on behalf of the company.

There are also statutory accounts that must be prepared and filed with Companies House.

What are statutory accounts?

A company’s statutory accounts must be filed annually with Companies House and must adhere to either International Financial Reporting Standards or UK Generally Accepted Accounting Practices.

In other words, you probably need an accountant for this bit to ensure they’re correct and will be accepted by Companies House.

As part of the statutory accounts, you must include:

  • A balance sheet
  • A profit and loss account
  • Notes pertaining to the accounts
  • The director’s report
  • An auditor’s report (unless your company qualifies for audit exemption)

Because these accounts must be submitted in a set format, it’s best to leave this to an accountant with the necessary expertise, although this is not a legal requirement.

What do I need to know to go it alone?

If you choose not to hire an accountant, there are a few basics you need to keep on top of to ensure your accounting is effective.

1. Choose an accounting method

There are two main accounting methods used by businesses: cash-basis and accrual-basis.

Cash-basis accounting means you record income and expenses when the cash changes hands, allowing tax to be paid only on the money actually received.

Accrual-basis accounting means you record income and expenses when they are incurred, e.g. through invoices or receipts, rather than when the cash actually changes hands.

Both of these methods have their own advantages and drawbacks, so carefully consider which one to use before you commit.

2. Set up a bookkeeping system

Your bookkeeping system is your record of financial transactions. There are various bookkeeping software packages available, including our sister company, QuickFile.

Most platforms these days use automations to make your life easier, allowing you to spend more time running your company.

3. Create a chart of accounts

Your financial transactions happen within accounts, whether you’re aware of these or your chosen bookkeeping software handles them for you. For example, you could have an account for travel expenses, another one for software costs, and one for workplace costs, as well as any income-related accounts.

These accounts help you to organise your transactions into set categories, making it easier to prepare your financial statements.

4. Keep track of income and expenses

All income and expenses within your company must be recorded. To help with this, it’s best to set up a dedicated bank account for your company.

5. Prepare financial statements

This is the tricky bit; you need to be able to prepare everything listed in the statutory accounts. Your financial statements must be prepared correctly, present a “fair representation of your company” at the time they were prepared, and be submitted on time.

While some company owners have the knowledge of how to do this, it can be time-consuming, taking you away from running the company, which is why it may be best to hire an accountant.

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