How to find the best accountant for your limited company

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

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

What’s in this guide?

• Why hire an accountant for your company?
• What will a limited company accountant do?
• What do you have to do for your accountant?
• How much do limited company accountants cost?
• How to choose the best accountant
• FAQs

Why hire an accountant?

Although there is no legal obligation to hire an accountant, there are some strong 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 accounting firms have emerged, driven by significant advances in web-based accounting.

Software such as the excellent Xero (80% off for 6 months) and FreeAgent (30-day free trial + 10% off) has made life easier for small business owners and their 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 with Companies House (if you haven’t already).
• Register your company for Corporation Tax, Value Added Tax, and as an Employer (for payroll purposes).
• Set up and run a payroll system to process payments to directors and employees.
• Prepare and 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 and Companies House correspondence on an ongoing basis.
• Submit a Confirmation Statement each year (charges may apply).
• 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, not your accountant, are ultimately responsible for the accuracy and timeliness of all tax returns.

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

• Keep your accountant updated on any changes in company personnel, salary levels, and related details.
• 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, personal returns, and other types of paperwork.

How much do limited company accountants cost?

Costs vary between firms, depending on the expertise they provide you and the 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 (including insurance, bookkeeping, etc.), the more you can expect to pay.

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

Accountant	Monthly Cost	Notes
Aardvark Accounting	£89	Full service, free accounting software, payroll, tax advice.
Clever Accounts	£104.50	First three months half-price for new clients. Full package.
SG Accounting	£119	Full package, contractor specialists. Half price offer currently available.
Bright Ideas Accountancy	From £119	5/5 Google Rating. Free accounting software. Full accounting package.

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, so you may not know who to contact on a day-to-day basis if you have a query. Before you sign up, confirm whether 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.

Costs

Although cost should not be the primary factor, no company owner wants to pay more than necessary for professional services. 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 beyond annual or monthly fees will usually incur an additional charge.

When choosing an accountant, compare like with like. This is easier with contractor-type packages, but for general accountancy services, ask two or three firms for quotes.

Find out more in our guide to typical accountancy costs.

Firm profile

Do you want to hire a small, local firm or a larger firm that may offer less personal service? How long has the accounting firm been established, and what other services does it provide?

Specialists?

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

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

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

If you work as a contractor, the firm must also be familiar with the MSC legislation.

Modern or traditional?

What type of service does your accountant provide?

Most small companies value the time-saving benefits of cutting-edge technology over tolerating frustrating ‘old school’ methods of communication.

There are several excellent online accounting systems, such as Xero, that sit between the client and the accountant, significantly simplifying the accounting process.

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

Qualifications

Is your accountant’s firm a member of 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 acquire over 50% of their new clients through word-of-mouth referrals.

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

Unfortunately, in our experience, it is difficult to rely on web-based ratings or popularity indicators to assess a firm’s quality, as these metrics are easy to manipulate.

For this reason, recommendations from real people are essential.

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

Conclusion

Choosing the right accountant is one of the most important decisions for your limited company.

Compare services carefully; don’t focus solely on cost, and ensure your accountant understands your sector and preferred way of working.

The right choice can save you time, stress, and money.

Read our 10 questions to ask an accountant before you sign up.