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Do I Need an Accountant for My Limited Company? What You Actually Get for the Fee

A limited company does not usually have a legal requirement to appoint an accountant. A director can deal with company accounts, tax returns, bookkeeping and filings themselves if they have the time, knowledge and systems to do it properly.

But that does not mean doing everything yourself is always sensible.

The key point is this: even if you use an accountant, the director remains legally responsible for the company’s records, accounts and tax compliance.

GOV.UK states that limited company directors must keep company records, prepare annual accounts, complete a Company Tax Return, file accounts and tax returns, and pay Corporation Tax. It also says directors can hire others, such as an accountant, to manage some of these tasks day to day, but remain legally responsible for the company’s records, accounts and performance.

For limited company accounting support, see Merranti’s Limited Company Accounting page.

Is an accountant legally required for a limited company?

In most small limited company cases, no. A company is not automatically required to appoint an accountant just because it is limited.

However, the company still has legal and tax responsibilities.

A private limited company usually needs to:

  • keep company and accounting records
  • prepare annual accounts
  • file accounts with Companies House
  • prepare a Company Tax Return
  • calculate and pay Corporation Tax
  • keep records to support tax returns
  • manage VAT if registered
  • run payroll if paying employees or directors through PAYE
  • keep dividend and director’s loan account records where relevant

GOV.UK confirms that after the end of its financial year, a private limited company must prepare statutory annual accounts and a Company Tax Return. It also sets out key deadlines, including annual accounts usually due at Companies House 9 months after the company year-end, Corporation Tax usually payable 9 months and 1 day after the Corporation Tax accounting period, and the Company Tax Return due 12 months after the accounting period. Useful outgoing link: GOV.UK: Accounts and tax returns for private limited companies.

For year-end accounts support, see Merranti’s Annual Accounts page.

What does an accountant do for a limited company?

A limited company accountant can help with more than filing accounts.

Typical support may include:

  • annual accounts
  • Corporation Tax calculations
  • Company Tax Return preparation
  • bookkeeping support
  • VAT registration and VAT returns
  • payroll
  • director salary planning
  • dividend planning
  • director’s loan account review
  • Self Assessment for directors
  • accounting software setup
  • management accounts
  • cash-flow forecasting
  • Companies House deadline support
  • HMRC correspondence
  • business advice

The exact support depends on the accountant and the service package. Some accountants provide compliance-only support. Others provide regular bookkeeping, forecasting, tax planning and advisory work.

The important point is to understand what is included in the fee before assuming everything is covered.

Accounts and Corporation Tax

Annual accounts and Corporation Tax are core areas where many directors use an accountant.

The accounts need to reflect the company’s financial position accurately. The Corporation Tax return then uses accounting information with tax adjustments to calculate the company’s tax position.

An accountant can help review:

  • income
  • expenses
  • capital allowances
  • director’s loan accounts
  • dividends
  • payroll
  • VAT balances
  • assets
  • liabilities
  • retained profit
  • Corporation Tax due
  • Companies House filing requirements
  • HMRC filing requirements

This can reduce the risk of filing errors, missed claims, incorrect dividends or misunderstood tax deadlines.

Bookkeeping support

Bookkeeping is the base of the company’s accounts.

If bookkeeping is poor, the annual accounts and tax calculations may also be unreliable.

A limited company should keep accounting records showing money received and spent, assets owned, debts owed or owing, stock held, stocktaking records and goods bought and sold where relevant. GOV.UK also says companies must keep other financial records needed to prepare and file annual accounts and the Company Tax Return, including records such as receipts, invoices, contracts, bank statements and correspondence. Useful outgoing link: GOV.UK: Company and accounting records.

An accountant can help make sure bookkeeping is set up properly, reviewed regularly and ready for year-end.

For software setup, see Merranti’s Accounting Software and Cloud Accounting pages.

VAT support

VAT can become relevant as turnover grows or if the company chooses voluntary VAT registration.

A VAT-registered company needs accurate VAT records, correct VAT codes, valid VAT invoices and timely VAT returns. If the company works in construction, VAT domestic reverse charge may also need to be considered.

An accountant can help with:

  • VAT registration
  • VAT return preparation
  • VAT scheme review
  • VAT rate checks
  • VAT on purchases
  • VAT on sales
  • reverse charge
  • VAT cash-flow planning
  • Making Tax Digital for VAT

For VAT support, see Merranti’s VAT Services page.

Useful outgoing link: GOV.UK: Register for VAT.

Payroll and director salary

If the company pays directors or employees through payroll, it may need PAYE reporting.

Payroll can involve:

  • payslips
  • PAYE
  • employee National Insurance
  • employer National Insurance
  • pension contributions
  • director payroll
  • starters and leavers
  • payroll year-end records
  • benefits and expenses

Director salary should also be reviewed alongside dividends, Corporation Tax and personal tax.

For payroll support, see Merranti’s Payroll page.

Useful outgoing link: GOV.UK: PAYE and payroll for employers.

Dividends and retained profit

Many limited company directors take dividends as part of their income.

An accountant can help check whether dividends are supported by available profit and whether the paperwork is in place.

Before paying dividends, a director should consider:

  • current profit
  • retained profit
  • Corporation Tax estimate
  • previous losses
  • dividends already paid
  • shareholder structure
  • dividend vouchers
  • board minutes
  • cash available after tax and bills

Dividends are not the same as salary. They are paid to shareholders from company profits after Corporation Tax. Poor dividend planning can lead to director’s loan account issues.

Director’s loan accounts

Director’s loan accounts are a common source of problems in owner-managed companies.

They record money moving between the director and the company where the transaction is not salary, dividend, expense repayment or repayment of money previously lent.

An accountant can help review:

  • personal costs paid by the company
  • business expenses paid personally
  • money introduced by the director
  • repayments to the director
  • informal withdrawals
  • dividend entries
  • salary entries
  • overdrawn balances
  • tax consequences

This matters because an overdrawn director’s loan account can create tax and cash-flow issues.

Self Assessment for directors

A limited company files a Company Tax Return, but directors may also need personal Self Assessment tax returns depending on their income and circumstances.

A director may need Self Assessment if they receive dividends, benefits, property income, self-employment income, capital gains or other taxable income that is not fully dealt with through PAYE.

An accountant can help align company records with the director’s personal tax return, especially where dividends and director’s loan accounts are involved.

For personal tax return support, see Merranti’s Self Assessments page.

Useful outgoing link: GOV.UK: Self Assessment tax returns.

Management accounts and advice

Some limited companies need more than annual accounts.

As the business grows, directors may need regular management accounts to understand profit, cash flow, margins, customer debt, supplier commitments and tax building up during the year.

Management accounts can help answer:

  • Are we profitable this month?
  • Is cash flow getting tight?
  • Can we afford dividends?
  • Can we hire someone?
  • Are customers paying slowly?
  • Are costs rising?
  • What Corporation Tax is building up?
  • Which jobs or services are profitable?
  • Do we need funding?

For management accounts and forecasting, see Merranti’s Financial & Management Accounts page.

Can you do limited company accounts yourself?

Yes, some directors can manage limited company accounts themselves, especially where the company is simple, records are clean and the director understands the rules.

But DIY accounting becomes riskier where the company has:

  • VAT
  • payroll
  • employees
  • CIS
  • director’s loan accounts
  • dividends
  • multiple shareholders
  • stock
  • asset finance
  • loans
  • vehicles
  • overseas income
  • high transaction volume
  • cash-flow pressure
  • late filings
  • unclear bookkeeping
  • growth plans

The question is not only whether you can do it. It is whether doing it yourself is the best use of your time and whether the risk is acceptable.

When an accountant is probably worth considering

An accountant may be especially useful if:

  • you are setting up a limited company for the first time
  • you are unsure what records to keep
  • the company is approaching VAT registration
  • you need payroll
  • you take dividends
  • the director’s loan account is unclear
  • tax bills keep surprising you
  • cash flow is tight
  • accounts are being prepared late
  • bookkeeping is messy
  • the business is growing
  • you need management accounts
  • you are applying for finance
  • you are switching from sole trader to limited company
  • you work in construction and need CIS or reverse charge support

A good accountant should reduce uncertainty, improve records and help directors make better decisions.

What should you expect from the fee?

Accountancy fees vary depending on the work included.

A limited company package might include only annual accounts and Corporation Tax, or it might include bookkeeping, VAT, payroll, Self Assessment, software, advice and management accounts.

Before agreeing a fee, check whether it includes:

  • annual accounts
  • Corporation Tax return
  • Companies House filing
  • bookkeeping
  • VAT returns
  • payroll
  • director Self Assessment
  • dividend advice
  • director’s loan account review
  • software subscription
  • management accounts
  • tax planning calls
  • HMRC correspondence
  • Companies House confirmation statement
  • CIS support
  • year-end meeting

A lower fee may be suitable for a simple company. A growing company may need a wider service.

Questions to ask before choosing an accountant

Before appointing an accountant, ask:

  1. Do you work with companies like mine?
  2. What services are included in the fee?
  3. What is charged separately?
  4. Will you review bookkeeping during the year?
  5. Do you support VAT and payroll?
  6. Can you help with director salary and dividends?
  7. Will you review director’s loan accounts?
  8. Do you provide management accounts?
  9. Which accounting software do you recommend?
  10. How do you handle deadlines?
  11. How often will we communicate?
  12. Who will be my main contact?
  13. Can you explain my accounts clearly?
  14. Can you help me plan tax before the deadline?
  15. How do you support business growth?

The right accountant should fit the company’s size, complexity and future plans.

Useful further reading and links

Useful outgoing GOV.UK links:

Suggested Merranti service links:

How Merranti can help

A limited company accountant should help directors stay compliant, understand tax, improve records and make better decisions during the year.

Merranti Accounting can support limited companies with annual accounts, Corporation Tax, bookkeeping, VAT, payroll, Self Assessment, accounting software, management accounts and cash-flow forecasting.

If you want support with limited company accounts and director responsibilities, visit Merranti’s Limited Company Accounting page or contact Merranti to discuss your company.

FAQ

Does a limited company legally need an accountant?

A limited company does not usually have to appoint an accountant by law. However, directors are still responsible for accounts, records, tax returns, filings and Corporation Tax.

Can I file limited company accounts myself?

Yes, you can file accounts yourself if you understand the rules and have accurate records. However, mistakes can create tax, filing and compliance problems.

What does an accountant do for a limited company?

An accountant can help with annual accounts, Corporation Tax, bookkeeping, VAT, payroll, dividends, director’s loan accounts, Self Assessment, software and management reports.

Is an accountant worth it for a small limited company?

It depends on the company’s complexity. An accountant is often useful where the company has VAT, payroll, dividends, director’s loans, growth plans or limited accounting knowledge.

Will an accountant reduce my tax bill?

An accountant may help identify allowable expenses, reliefs and planning opportunities, but they should not promise a guaranteed tax reduction. Good advice helps you plan and avoid errors.

Can Merranti help with limited company accounts?

Yes. Merranti can help with annual accounts, Corporation Tax, VAT, payroll, bookkeeping, Self Assessment, management accounts and limited company advice.

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