Business owners are by nature busy. That means that they spend the majority of their days running their business, taking care of their staff, and often: forgetting to do the books.
It’s not a crime – but it can cause problems with HMRC down the road.
Thankfully, there’s help available in the form of accountants. However, sometimes the word accountant goes hand in hand with the word “cost”.
In this post, we’ll aim to break down some of the variables and outline the true cost of an accountant for a limited company. We’ll also answer some common questions about accountancy fees because we know this is not a decision to take lightly – choosing your accountant is an important decision that can impact your company’s success or failure.
How much do accountants charge for limited companies in the UK?
This question is frequently asked and unfortunately, always comes with an unsatisfactory answer because the answer is: it varies.
Depending on the services that you require from your online accountant (more on those below), and factors that affect your business, like your annual turnover and VAT registration, determines the accounting fees you’ll end up paying.
As a ballpark figure, if you are simply looking for an accountant to file basic annual business accounts, you’re most likely looking at an accountant cost of around £750 per year.
Do you have to pay an accountant for a limited company?
This is an easier question to answer. Currently in the United Kingdom there is no legal requirement that means a limited company must use the services of an accountant. Some small business owners are capable of doing the annual accounts and bookkeeping themselves in the early days of their new business with the help of accounting software.
However: it is advised, and we’re not just saying that because we’re limited company accountants.
Accountants can help business owners with all types of accounting tasks, taking some of the complexity and difficulty away from a business owner’s workload. We’ve listed some of their specialist services below.
Exactly what services are included in accountancy fees?
In their fixed monthly fee, accounting firms can help limited company directors with a plethora of different financial and legal obligations.
A good accountant can help a limited company with the following services:
1. Completing self assessment tax returns
Directors of a limited company must submit an annual Self Assessment Tax Return to HMRC. A self assessment tax return states the personal income and allowances of a business owner.
The return is due to be submitted by the 31st of January each year, and can be muddling to new business owners. Accountants can help break down the jargon and help save tax while keeping the business owner in line with tax avoidance legislation.
2. Completing VAT returns
VAT (value added tax) is a three letter word bound to strike dread into even the hardened business owner. VAT is infamous for being confusing, and ever-changing.
Accountants for limited companies shine here as they’re able to assist with filing quarterly VAT returns, setting up a fair payment scheme so businesses avoid paying over the odds, and offering sound advice that helps businesses reduce their VAT bill while adhering to the very latest in tax regulation.
3. Paying Corporation Tax
As well as filing a self assessment tax return, and annual company accounts, HMRC will also request a corporation tax return at the close of each financial year.
The sole purpose of corporation tax returns are to declare taxable profit a limited company has made, but companies must still submit the return even if they’ve made a loss, or are below the threshold to pay.
A corporation tax return can be as confusing as the aforementioned VAT return because it also requires a copy of a profit/loss account. Only, it will be a different version to the one already filed with the annual limited company accounts as it should show tax adjusted profits. These adjustments take account of specific tax laws to include tax-only add backs and deductions.
As this paperwork can be as daunting as it sounds, an accountant can help to prepare your business tax on behalf of the owner and calculate how much corporation tax the limited company can expect to pay.
4. Assisting with payroll services
For bigger firms, payroll is often handled in-house, but for smaller companies, outsourcing it to an accountant is often beneficial.
Why? Because payroll services can take a significant amount of time. First there’s making sure there’s the right amount of money in the business bank account, and secondly there’s income tax and HMRC paperwork to endure.
This is another area where an accountant can provide specialist help. They’ll ensure payroll is filed on time, income tax returns are sent, and will keep a business on the right side of necessary payroll regulations and legislation which avoids incurring payroll fees.
5. Registering tax and other legal financial requirements with HMRC and Companies House
In the early, chaotic days of a new business, an accountant can register the small business with Companies House and HMRC to save time and confusion.
In those same early days an accountant can assist with things like tax planning, processing payroll and national insurance contributions, and checking if the business should be VAT registered.
For any new company director this type of assistance, tax efficiency and strategic advice can be invaluable in the early days of getting a business off of the ground.
6. Bookkeeping
Bookkeeping is a time-consuming, monotonous, but critical function for small businesses. Keeping track of every receipt and invoice may be a drag, but nobody wants to go through their records at the end of the year (or if HMRC spring a surprise and knock on your door).
Fortunately, accountants are incredibly detail-oriented and can efficiently handle your bookkeeping which allows business owners to focus on other business critical things.
You can read more about our services here.
Can I do my accounting without an accountant?
If you’re a small business owner who wants to take care of your own accounts you can, but there are things to be aware of.
Firstly, you’ll need reliable accounting software. Accounting software allows you to maintain track of your accounts in an organised manner while avoiding the need for much time and effort.
Secondly, you’ll need to ensure that you at least learn the basics of accounting. Remember that you’ll need to file a self assessment tax return, a corporation tax return, vat returns, and you’ll need to undertake some tax planning to keep ahead of regulation changes. You’ll also need to set up payroll.
Lastly, you’ll also need to keep ahead of deadlines. Tax returns that are late or incorrect may result in a slew of problems. Remember to double-check your accounts once you’ve mastered bookkeeping and how to use your accounting software.
To conclude: how much should a limited company accountant cost?
The cost of an accountant for a limited company can vary depending on the size and complexity of your business. However, it is important to remember that hiring an accountant will not only save you time, but also money in the long run by keeping track of all expenses and investments so you are able to file accurate paperwork with HMRC or Companies House.
If this post has given you some insight into how much accountancy fees cost, and how an accountant can help your limited company, please feel free to get in touch with our team.
Our team would be happy to help answer any questions or concerns about getting started as well as provide guidance if you want to work alongside an accountant to take care of bookkeeping and accountancy for your small business.
