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Do you need an accountant for a limited company?

Managing the company accounts is rarely at the top of a business owner’s “love to do” list. It can be frustrating and rob you of valuable time that could be spent improving and developing your business.
Does your limited company need an accountant?
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    The services of an external accountant are a lifeline for around 91% of small businesses in the UK (source ICAEW), but does your limited company need to have one?

    There is no legal requirement for limited companies to use an accountant, but it is very beneficial. They can perform valuable services like filing annual accounts and corporation tax returns. They can also offer business advice and devise efficient strategies to save your company money.

    If you are not sure you need an accountant for your small business, please read on to find out how Smooth Accounting can take hours of number crunching, form filling and box ticking off of your hands, and let you get back to running the business you love.

    What can an accountant do for my limited company?

    If you’ve ever wished for more hours in the day, hiring a professional accountant to take care of your finances is like letting a genie out of a bottle. Even better, there is scope for more than just three wishes. Here’s an example of just a few of the valuable services accountants can offer your limited company.

    Setting up a new company

    Your accountant can register your business with Companies House if you wish to save time and hassle in those important formative days. They’ll also give you the lowdown on your new tax liability and liaise with the fine folk at HMRC regarding tax registration.


    In large companies, payroll tends to be managed in-house, but for smaller businesses, it is wise to outsource it to an accountant. Alternatively, you could wave goodbye to hours of your life each month spent drowning in income tax calculations and HMRC paperwork. Fortunately, good accountants are also payroll specialists who enjoy that kind of thing (each to their own).


    VAT – if these three letters fill you with dread, you are not alone. VAT is notoriously confusing, and the regulations are forever changing. An accountant can help you navigate your company’s VAT obligations and choose the right payment scheme so that you don’t pay over the odds. They will also make light work of your quarterly VAT returns and ensure that you don’t get hit with unexpected fines.


    Day-to-day bookkeeping is the cornerstone of good financial management… and is time-consuming, dull and repetitive, let’s face it. Logging every receipt and invoice can feel like a drudge, but come year-end (or if HMRC comes knocking), nobody wants to be hunting around for missing transactions or receipts. Fortunately, we accountants are meticulous beings and can handle your bookkeeping with the utmost efficiency, to free up your time and headspace.

    Cloud accounting software

    Today’s accountants are big advocates of cloud accounting software. You’ll often hear us banging on about the benefits of software like Xero, but for good reason. It can transform the way you manage your accounts by speeding things up and eliminating errors. As it’s all going on in the cloud, you can always be sure you are looking at up-to-date information, which can seriously help with cash flow. It also makes year-end accounting a cinch and will eventually become mandatory for submitting corporation tax returns.

    If you’ve yet to get on board, your accountant can talk you through the benefits and help you get the best out of the software to suit the needs of your company.

    Annual accounts

    Limited companies have a responsibility to file annual accounts with HMRC and Companies House each year. Failure to do so can result in hefty fines and legal action. You can even get your company struck off for persistent non-compliance.

    A professional accountant will not let this happen. They can produce the necessary paperwork in the right format and make sure it’s submitted on the dot (if not before). Depending on the size of your business, this will include a profit and loss statement, a balance sheet, a report from the company director (that’s you) and any other salient notes.

    Tax returns

    Along with submitting your annual accounts, your limited company must submit a company tax return at financial year end to declare its taxable profit and calculate your corporation tax liability.

    Amongst the information required is a profit/loss account, but to make things a bit more fun, a different version to the one included in your annual accounts. Starting with the profit and loss statement, the figure must be adjusted to show the taxable profit. This is done by adding back disallowable expenditure and accounting for capital allowances from capital purchases, among other things.

    The paperwork can be daunting, but an accountant can prepare your corporation tax return for you and calculate how much you owe. They should also provide timely reminders as to when the payment is due.

    Pros of hiring an accountant

    If you are still weighing up the pros and cons of hiring an accountant for your limited company, it is worth calculating the hours you will save to work on your business rather than spreadsheet surfing and fiddling around with paperwork.

    Also, factor in the peace of mind you will gain. The comfort of avoiding tax investigations and penalties is enough to help any company director get a better night’s sleep!

    Finally, offset the reduced costs in potential tax savings and efficient cash flow forecasting. Consider the cost of hiring a skilled accountant in-house, and that’s another cost to cross off the list.

    That genie really doesn’t have anything on a reliable accountant (except perhaps for the outfit).

    When is the best time to get a limited company accountant?

    As the proverb (almost) says, the best time to hire an accountant is yesterday, and the second best time is now. A good accountant can add value right from the get-go, providing professional advice to get your company off the ground.

    Many business owners consult a professional when year end comes around, but it is often wiser to hire an accountant before then. That way, your books will be in order, and you will have a good idea of your tax liability so that there are no nasty surprises.

    Some business owners are naturally more adept at accounting than others, and more power to them. But while it’s perfectly fine to manage your own accounts, as your company grows, accounting becomes increasingly onerous, especially if you start to take on employees.

    With one eye on your day-to-day operations and the other on your cash flow, things can easily go awry. Running payroll is particularly time-consuming, and it’s all too easy to lose track of expenses and unpaid invoices. With the help of a professional, accounting can be much more effortless and accurate, not to mention more cost-effective.

    Why choose Smooth Accounting as my limited company accountant?

    You and your business deserve every chance to succeed, and the right accountant can give you the financial confidence you need to go forth and prosper.

    Smooth Accounting has won multiple awards and has vast experience in accounting for small businesses. Our team are an approachable, friendly and professional bunch, so you can expect great customer service.We understand that not everyone is as excited about accounting as we are, so we cut through the jargon and aim to relieve the headache of fulfilling your financial responsibilities.

    Not only will we look after your limited company accounts like they were our own, but we will also be proactive in finding efficiencies to save you money.

    You may be surprised at just how cost-effective professional accounting can be. Contact us for a free consultation and find out how Smooth Accounting can help your limited company.

    Frequently asked questions about limited company accountants

    Can I do my own limited company accounts, or do I need an accountant?

    Company directors can choose to do their own accounting, and there is no legal requirement to hire an accountant. However, with all the legal and regulatory obligations related to financial record-keeping, reporting, and tax compliance that limited companies must fulfil, a skilled accountant can be a lifeline and add a lot of value.

    However, at Smooth, we’re here to do much more than file company accounts. We’ll work with you to improve your company’s tax efficiency and offer general business advice to help fulfil your goals.

    When does a limited company pay corporation tax?

    Every limited company has a legal obligation to submit a company tax return to HMRC each year and pay Corporation Tax. Companies are also obliged to submit annual statutory accounts to Companies House. The deadline for these submissions is 9 months after the company’s accounting reference date (ARD).

    What taxes does a company owner pay?

    Company owners are responsible for filing their company tax return (i.e. corporation tax return) at the end of each tax year. They must also ensure the business meets its PAYE tax obligations as an employer.

    From an individual’s point of view, company directors also have their own tax affairs to deal with. They must submit a personal tax return to declare any income that isn’t taxed at source, such as dividend payments.

    What is the difference between company accounts and management accounts?

    The term ‘company accounts’ is often used to refer to statutory accounts, i.e. the yearly accounts that show the company’s financial performance over the past year. This usually includes financial statements like a profit and loss account and a balance sheet, which must be prepared within a prescribed format and submitted to Companies House. These documents are made public to shareholders, creditors, and potential investors as evidence (or not) of the businesses’ financial health.

    ‘Management accounts’ are prepared for internal use by the management team to track the company’s financial position. They can include whatever information is important to the business, e.g. a breakdown of expenses, revenue by product or service, cost analysis, budget variances, and anything else that helps to make business decisions. Management accounts can be produced as often as you like, with most businesses opting for a monthly or quarterly overview.

    What is the VAT threshold for a limited company?

    Once your company reaches a certain tax threshold, it must register for VAT. The VAT threshold as of 2023/24 is £85,000 per year. Your accountant can help you register for VAT and explain the different schemes.

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    We work with a wide range of businesses on a national level and can give you the friendly and expert accounting advice you need.

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    Smooth Accounting is very proud to be supporting the amazing work of JUST ONE Tree, a non-profit reforestation initiative. For every tax return we file, we will be planting one tree.

    Trees really are the superheroes of our planet, cleaning the air we breathe, filtering the water we drink, giving life to the world’s wildlife and providing jobs to over 1.6 billion people.

    Yet deforestation is still a major threat to global warming. JUST ONE Tree plants a tree every 46 seconds in severely affected areas, with the aim to remove CO2 from the atmosphere and reverse biodiversity loss.

    We have just one planet. Together let’s restore it.