Last updated Dec 23, 2024 and written by Aditi Mohan

Do Limited Companies Need an Accountant?

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@companiesmadesimple Wondering if your new business needs an accountant? We’re here to help! #smallbusiness #entrepreneur #businesstips ♬ Pieces (Solo Piano Version) - Danilo Stankovic

Accurate bookkeeping is vital to the success of a small business. Every owner should have a clear understanding of their company’s finances and filing obligations. For this reason, a lot of small business owners opt to use an accountant to help them manage their finances and file their company accounts.

Legally, you do not need an accountant to run a limited company (LTD), but there are a few reasons why using an accountant can be beneficial, and a few reasons why you may choose to do your own bookkeeping.

Our blog will take you through the benefits and drawbacks of using an accountant for your Ltd.

Does the Law Require Me To Have an Accountant?

As mentioned above, legally you don’t need to appoint an accountant. However, an account can help you with your legal obligations such as your annual filings.

Your company accounts are due every year, regardless of whether your company is active or dormant. You have a legal obligation to file them with Companies House. These filings, the Annual Accounts and the Confirmation Statements are due every 12 months and 14 days from your last filing day, even if there are no changes to report.

An accountant can ensure you file on time, with the correct information to keep your business compliant with UK company law.

So, whilst it's not a legal requirement to have an accountant, an accountant can keep you compliant.

Benefits of Using an Accountant

There are a lot of benefits to hiring a dedicated accountant for your business. Running a business involves a lot more than balancing your books. For this reason, an experienced accountant can provide support and expertise to business owners. Particularly, if you’re a first-time business owner.

Here are a few ways using an accountant can help you:

Time Efficiency 

Over a year you’ll have a large number of financial tasks to complete. For example, your corporation tax, year-end accounts, personal tax return, payroll and income tax. Even if you are fully capable of completing these tasks by yourself. It may not be the best use of your time.

As a business owner, your focus will be on building your business, finding clients, delivering a good customer experience and future planning. You may find yourself neglecting your accounting tasks which can result in delays and errors. With an accountant, you can rest assured knowing that someone else is managing your accounts and ensuring your company is compliant. 

Fewer Errors

With an accountant, you can ensure that your accounts will be handled correctly without errors. If you take on the responsibility of managing your accounts, you may make errors, whether from a lack of attention or experience. With an accountant, you can save a lot of time and money through fewer errors. 

Paying for Expertise 

An accountant can help you find tax savings, and advise you on scaling up or hiring employees and shares in your Ltd.

A good accountant will be aware of changes in tax legislation and can help your company become more tax-efficient, which saves you money. This kind of expertise can only be found through an accountant. 

Less involvement with HMRC   

Finally, with an accountant, you don’t have to deal with HMRC. If HMRC enquires into your company’s tax, your accountant will deal with them on your behalf. This saves even more time for you, and a huge headache!

Disadvantages of Using an Accountant

Of course, there are a few disadvantages to using an accountant, which we will list below:

Can be Costly 

Running a company is not cheap and you may find yourself stretching every penny when setting up a new company. An accountant, whilst useful is an additional cost to your company. If you or anyone you employ has financial skills, you may choose not to use an accountant to save some costs.

Many business owners choose to hire an accountant when it's absolutely necessary rather than straight from the get-go. This is a tried and tested method which helps your budget stretch a bit further in the beginning. However, make sure you keep clear records of your accounts, so when you do hire an accountant they can pick up where you left off.

Involving External Firms 

An accountant will work externally from your organisation, they may also have multiple clients and obligations. If you’re someone who likes to keep your work within sight, you may choose to hire an accountant internally rather than outsource. 

Alternatives to an Accountant

You may need an accountant but might not be ready to hire one straight away. There are a few ways you can still keep on top of your accounts without having an accountant.

Use a Bookkeeping Software 

A bookkeeping service like FreeAgent, Xero or Sage can do the work of an accountant without the premium cost of one. Of course, you’d still have to dedicate some time to entering data into the software.

Additionally, you’ll still be responsible for your company filings, finding ways to be tax efficient and dealing with HMRC but if Maths is your concern then a bookkeeping service is a cost-effective way to manage your accounts without an accountant.

Hootsuite has a good rundown of bookkeeping services made for small businesses which is a great place to start!

Use a Company Formation Agent for Filing

If you need an accountant to keep on top of your filing, a company formation agent is a good way to do so.

Whilst you won’t receive any help with managing your accounts a formation agent can help you with any company services you need, which an accountant might do. A formation agent can help you file your confirmation statement, accounts for a dormant company, transfer shares and more.

If you’re the kind of person who misses deadlines often, you may opt to use a company formation agent to help you file on time and keep compliant.

Alternatives to an Accountant

You may need an accountant but might not be ready to hire one straight away. There are a few ways you can still keep on top of your accounts without having an accountant.

Use a Bookkeeping Software 

A bookkeeping service like FreeAgent, Xero or Sage can do the work of an accountant without the premium cost of one. Of course, you’d still have to dedicate some time to entering data into the software.

Additionally, you’ll still be responsible for your company filings, finding ways to be tax efficient and dealing with HMRC but if Maths is your concern then a bookkeeping service is a cost-effective way to manage your accounts without an accountant.

Hootsuite has a good rundown of bookkeeping services made for small businesses which is a great place to start!

Use a Company Formation Agent for Filing

If you need an accountant to keep on top of your filing, a company formation agent is a good way to do so.

Whilst you won’t receive any help with managing your accounts a formation agent can help you with any company services you need, which an accountant might do. A formation agent can help you file your confirmation statement, accounts for a dormant company, transfer shares and more.

If you’re the kind of person who misses deadlines often, you may opt to use a company formation agent to help you file on time and keep compliant.

How We Can Help

We’ve been a company formation agent since 2002, small businesses are our single priority. You can work with our team to keep your company compliant or work with our trusted accountants who can manage your books. 

Compliance and Company Services

We can help you with any filings from confirmation statements to company dissolution. With us, you can trust there will be no errors and your accounts will be filed in a timely manner. We also offer a company secretarial service which allows you to make multiple changes throughout the year, easing the cost and your administrative burden.

With our services, you can save time and money whilst still benefitting from a professional service which will look after your filings. 

What We Can Help With:

Use Our Trusted Accountancy Partner

We work with Mazuma, an accountancy firm made for small businesses. Mazuma is an affordable option for small and micro businesses due to its subscription model. With Mazuma you will work directly with a real, friendly expert who can provide you with bookkeeping, tax returns and professional advice.

You can book a free consultation through us, where Mazuma’s accountants can guide you through the process of using an accountant. A consultation can help you make an informed choice about whether to opt for an accountant or not.