How to find the best limited company accountant

Unless you have prior experience and spare time, taking control of your company’s accounting and tax affairs can be tedious and stressful. 

This is why hiring an accountant may be the best thing you do during the early days of running your limited company.

In this guide, we consider all of these frequently asked questions:

  • Why hire an accountant in the first place?
  • What will an accountant do for your company?
  • What do you have to do for your accountant?
  • How much do limited company accountants cost?
  • How to choose an accountant – key factors.

Why hire an accountant?

Although there is no legal obligation to hire an accountant, there are some compelling reasons to do so.

Most limited companies hire a specialist accountant to:

  • Help with the initial company set-up process.
  • Look after the company’s ongoing tax and accounting affairs.
  • Deal with HMRC and Companies House.

Over the past decade, scores of dedicated small company accountancy firms have emerged. Facilitated, no doubt, by the huge advances in web-based accounting.

Software like the excellent FreeAgent has made life easier for both clients and accountants.

It’s never been easier (or more cost-effective) to outsource your firm’s tax work to an accountant.

What will a limited company accountant do?

A typical small business accountant will:

  • Set up your limited company via Companies House (assuming you haven’t already done so).
  • Register your company for Corporation Tax, Value Added Tax, and as an Employer (for payroll purposes).
  • Set up and run a payroll system to pay directors and employees.
  • Prepare your submit your company’s quarterly VAT returns.
  • Bookkeeping (this may or may not be included).
  • Complete HMRC payroll-related forms (such as the end-of-year P60).
  • Complete the company’s Annual Accounts.
  • Complete the Company Tax Return (CT600).
  • Complete your personal tax return (for an additional fee).
  • Provide mortgage, or tenancy references (possibly chargeable).
  • Deal with HMRC correspondence, on an ongoing basis.
  • Submit a Confirmation Statement each year (possibly chargeable).
  • Set up a limited company bank account on your behalf.
  • Conduct or facilitate IR35 contract reviews, if you provide professional services (for an additional fee).

What do you have to do for your accountant?

Your accountant will take care of your company’s tax and accounts, but their records will only ever be as accurate as the information you provide them.

It is worth noting that the directors are ultimately responsible for the accuracy and timeliness of all tax returns, not your accountant.

Here are some of the tasks you need to take care of as a company director:

  • Keep your accountant updated with any changes to the company’s personnel, salary levels, etc.
  • Regularly upload records of all income and expenditure (usually via online accounting software).
  • Respond to your accountant if they ask you to provide bank statements or other records.
  • Check draft VAT, Corporation Tax, or personal returns, and other types of paperwork.

How much do limited company accountants cost?

Costs vary between firms, depending on the amount of expertise they provide you, and the amount of work you expect them to do.

If your company’s affairs are relatively straightforward (for example if you’ve set up in business as a professional contractor), you can choose from a large selection of specialist accountants.

They charge anything from £70 to £180 per month for core support.

The more ‘add ons’ you require (such as inclusive insurance, bookkeeping, etc.), the more you can expect to pay.

Here are some of the small company specialist accountants we work with at LCH.

 

AccountantMonthly CostNotes
Aardvark Accounting£76Full service, including FreeAgent software, payroll, IR35 advice.
Clever Accounts£99.50Package for sole traders starts from £37.50 per month.
SG Accounting£109Full package, contractor specialists. Half price offer currently available.
Vantage Accounting£79Price based on up to £85k turnover. Small company specialists.Half price offer available.

For a comprehensive list of firms, here is a useful cost comparison table of 30+ specialist accountancy firms.

How to choose the best accountant

From our experience, one of the best ways to choose an accountant is via recommendations from people you know and trust.

Don’t necessarily look at price in isolation.

Good customer service is arguably more important – as there’s nothing worse than an unreliable accountant.

Some firms operate a kind of ‘conveyor belt’ system where you may not know from day-to-day who to contact if you have a query.

So before you sign up, find out if you will have a dedicated point of contact. 

A good accountant will not only save your company money, but will also provide reassurance that your financial affairs are being looked after, tax deadlines are being met, and potential problems are spotted in advance.

So, if you’re starting up a new business, what should you look out for when choosing a limited company accountant?

Read this guide – 10 questions to ask a prospective accountant.

Costs

Although cost should not be the most important factor to consider, inevitably no company owner wants to pay more than necessary to secure a professional service. There are several ways accountants charge their clients:

  • Annual fee – to cover all fundamental accounting tasks, including compiling your Annual Accounts, processing your payroll, VAT reconciliation, dealing with official paperwork, etc.
  • Monthly fee – most contractor accountants charge for a full accounting service on this basis, in a very competitive market.
  • Time basis – you may prefer to pay your accountant for the time they spend on your account. Additional services provided on top of annual/monthly fees will also usually be chargeable.

Make sure you compare like with like when choosing an accountant. This is easier with contractor-type packages, but for general accountancy services, ask two or three firms to provide a quote.

Find out more in our guide to typical accountancy costs.

Firm Profile

Do you want to hire a small, local firm, or would you prefer a larger, perhaps less personal service? How long has the accountant been established, and what other services do they provide?

Specialists?

Do they specialise in particular types of clients, such as contractors, engineers, or dentists?

For certain professions, it makes a lot of sense to hire a specialist, as they will know specific tax legislation or regulations which affect your sector.

If you provide personal services (i.e. as an IT contractor, consultant, interim, etc.), the biggest single threat to your prosperity is in the form of the Intermediaries Legislation (IR35), so only hire an IR35-savvy accountant.

Modern or traditional?

What type of service does your accountant provide?

Most small companies value the time-saving benefits of cutting-edge technology, rather than putting up with frustrating ‘old school’ methods of communication.

There are now several excellent online accounting systems, such as Xero and FreeAgent, which sit between client and accountant – massively simplifying the accounting process.

Unless your accountant has a robust bespoke online system, they really should be familiar with one of these third-party tools. Your life will be massively simplified as a result.

Qualifications

Is your accountant qualified with a professional body, such as the ICAEW or ACCA?

Although day-to-day accounting tasks can be completed by non-qualified staff (this is not unusual), you should expect tax planning advice to be provided by a qualified person.

Get recommendations

Several of the leading small business accountancy firms we work with at LCH take on over 50% of their new clients via word-of-mouth recommendations.

If you have any trusted friends and colleagues who have had a good experience with their accountants, their views could prove to be invaluable.

Unfortunately, from our experience, it is hard to use ratings or popularity indicators from the web to determine how good a firm is – as such measurements are so easy to manipulate.

For this reason, recommendations from real people are essential.

Try our directory of limited company accountants as a starting point.




Tax-efficient protection for directors

  • limited company life cover