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Reasons why you need an accountant for your limited company

You may think that being a small company means you have limited things to worry about when it comes to accounting, so you may choose to do it yourself. There’s nothing wrong with this as long as you don’t make mistakes and have a rough idea about what you’re doing. However, you could be missing out on some of the added benefits you get with an accountant. So let’s look at the reasons to hire an accountant over doing it yourself.

You save yourself time

As well as carrying out your day-to-day bookkeeping, you also need to file your annual accounts and prepare your tax returns.

This can be time consuming, tedious work. You may find that your time is better spent on generating profit for your company or working on other areas of the business. Because accountants are used to this kind of work, you’ll find that they can work more efficiently, which can save both time and money.

Tax efficiency

Many companies use accountants to reduce their overall tax burdens. Accountants have more of a knowledge about which deductions you can use and how to manage your profits to minimise taxation. This can help the overall financial health of the company.

It’s probably best to use an accountant when dealing with tax entitlements because you have the peace of mind that you’re still complying with your full legal obligations.

Filing accounts and tax returns

All limited companies need to submit annual statutory accounts, which must include the following:

  • Profit and Loss (P&L) statement
  • Balance sheet
  • Any additional notes about the accounts

There are specific deadlines and methods for filing these.

In addition to filing your annual accounts, you also have to file an annual tax return. This includes a calculation of profit and loss for purposes of corporation tax (this is different from the P&L statement prepared for the accounts).

There are different deadlines for the filing and payment of corporation tax. Your accountant can help you keep on top of these differences.

As well as both of these, you also have to file your Confirmation Statement.This confirms the registered details of your company so that Companies House has the most up-to-date information on the register.

Also, as a director of a company, you will have to carry out your own self-assessment tax return once a year. This contains information on any salary taken as well as dividends. This can be tricky to carry out on your own.

Accountants can help you stay on top of all of these filings and the deadlines they have to be done by.

Avoiding tax investigations

Every year there’s a chance that HMRC could conduct a Tax Compliance Check on your company. Many of these are carried out on randomly selected companies, however the majority of them are done because of a red flag. These red flags can include a significant discrepancy or obviously incorrect figures, or even just filing a late return.

Pay your tax here now written on a window

By having an accountant, it’s likely that your company’s figures are accurate and your filings are being kept on top of. This can reduce the likelihood of HMRC conducting a compliance check on you.

Not only does it reduce the likelihood of spot checks being carried out, but it can also give you peace of mind if a full enquiry is carried out.

Avoiding penalties and fines

If your tax return, or other company filings, are delayed or inaccurate, this can lead to a multitude of fines and penalties. These can include your company being struck off, directors being disqualified, or in some cases, criminal sanctions being imposed.

This can be avoided if you have an accountant as one of their key roles is to make sure your company is complying with regulations.

Business planning

It is often hard for company owners to take stock of their financial situation and consider any future business strategy. This is because they can be so preoccupied with the day-to-day running of the company.

Calculating taxes using a pencil and paper

If you hire a skilled accountant, they can help you to assess your current position, analyse seasonal trends, and help plan how best to capitalise on any opportunities. Also, they should also be able to help with cash flow forecasting, enabling directors to make the right decision at the right time.

Best practice

Accountants are able to help and advise company owners of the best practice for dealing with their company accounts. Even if the company owner wants to do the majority of the work themselves, they may find they benefit from having the resources of a professional accountant.

Your accountant can step in and provide advice if their specialist skills are required, while also helping to devise efficient strategies for staying on top of the accounting work.

Access to finance

Companies looking for access to finance can have multiple options to choose from, including equity finance and conventional loans, as well as external investment and crowdfunding, to name but a few.

An accountant can help you to assess the pros and cons of the various funding options based on your current financial situation. They can also help you to pull together all the necessary paperwork for an application or a pitch. This can ensure you have the best possible outcome for your company.

Summing up

As you can see, there are several arguments in favour of having an accountant (and these were just the tip of the iceberg), but as a company owner, you have to think of what’s best for your situation.

Whether you like having the peace of mind of having it all taken care of professionally, or whether you like having the control over every aspect of your company you can find a solution to suit you.

If you feel as though you want to undertake the bulk of the work yourself, check out our sister company QuickFile, or if you feel that you want to have an accountant there for peace of mind, check out Find an Accountant.

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