Whether you have recently set up a limited company or you have been managing your finances independently until now, hiring an accountant may be the best thing you do during the early days of running your business.
Trying to oversee your company’s accounting and tax affairs can tedious and stressful unless you have prior experience, and can also take valuable time away from the day-to-day running of the business.
Why hire an accountant?
For this reason, the majority of limited companies hire specialist accountants to a) help with the initial set-up process, and b) to oversee the company’s ongoing tax and accounting affairs.
Over the past decade, scores of dedicated small company accountancy firms have emerged – facilitated, no doubt, by the huge advances in web-based accounting systems, which makes life easier for clients and the accountants themselves. In fact, it’s never been easier (or cost effective) to outsource your firm’s tax work to an accountant.
Here are some of the main tasks you can expect an accountancy firm to provide on an ongoing basis – as part of their monthly / annual fee.
What will your limited company accountant do for you?
- Setting up your limited company via Companies House (assuming you haven’t already done so).
- Take care of the initial tax registration forms for your company, including Corporation Tax, Value Added Tax, and registering your business as an ’employer’ (so you can run a payroll for the director and employees).
- Setting up and running a payroll system to process your salaries.
- Preparing your company’s quarterly VAT returns.
- Bookkeeping (this may or may not be included).
- Completing HMRC payroll-related forms (such as the P60).
- Complete your Annual Accounts.
- Complete your Company Tax Return.
- Complete your personal tax return (for an additional fee).
- Provide mortgage, or tenancy references (possibly chargeable).
- Dealing with HMRC correspondence, on an ongoing basis.
- Submitting your Confirmation Statement each year (possible chargeable).
- Setting up a limited company bank account on your behalf.
- Conducting or facilitating IR35 contract reviews, if you provide professional services (for an additional fee).
Although your accountant will take care of your company’s tax and accountancy needs, their records will only ever be as accurate as the information you provide them.
What do you have to do for your accountant?
- Keep your accountant updated with any changes to the company’s personnel, salary levels, etc.
- Make sure you upload records of all income and expenditure on a regular basis (via third party software or otherwise). This is an essential task, and shouldn’t take long, especially if you dedicate a few hours to your accounts each month.
- Make sure you respond to your accountant if they ask you to provide bank statement, or other records. Or to check draft VAT, Corporation Tax, or personal returns, and other types of paperwork.
- You, as the director, are ultimately responsible for the accuracy and timeliness of all tax returns. Not your accountant.
How much will a limited company accountant cost?
Costs obviously 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 outsourced accountancy firms who will charge anything from £60 to £200 per month for core support.
The more ‘add ons’ you require (such as inclusive insurance, bookkeeping, etc.), the more you can expect to pay.
How to choose an accountant
We’ve been providing guides to small companies for almost 20 years, and from our experience, one of the best ways to choose an accountant is via recommendations from people you know and trust.
Don’t necessarily only consider price. Service is arguably more important – as there’s nothing worse than an unreliable accountant.
Before signing up, find out if you will have a dedicated point of contact. Some firms operate a kind of ‘conveyor belt’ system where you may not know from day-to-day who to contact if you have an query.