Do I need an accountant?
Following on from our post last week “Sole trader or limited company?” we thought it would be a good idea to look at what an accountant might bring to your business – and whether you need one at all…
So, if you’ve set up a limited company, must you have an accountant? By law, no, you don’t require one. It’s not a statutory obligation. But you must prepare an annual set of accounts which need to be filed with Companies House and you must have a full set of corporate tax accounts to show HMRC.
For financial years beginning on or after 1 January 2016, companies are also exempt from being audited, if they have at least two of the following:
- an annual turnover of no more than £10.2 million
- assets worth no more than £5.1 million
- 50 or fewer employees on average
The only exception is if one of the shareholders who owns at least 10% of the shares demands an audit.
What will an accountant do for you?
It’s often thought that accountants just compile your accounts at year-end and submit your VAT returns. A good accountant, however, will help with a wide range of other duties, such as:
- Registering the company with the relevant tax departments – VAT, Corporation Tax, PAYE
- Setting up and running the company payroll, in line with the Real Time Information (RTI) rules
- Monthly bookkeeping (with online accounting – you may prefer to do this yourself and save extra fees)
- Dealing with the authorities on an ongoing basis (HMRC, Companies House)
- Providing tax planning advice
- Offering dividend advice
- Providing professional references for mortgages, lettings, other services
Services will differ from accountant to accountant so make sure you know what is included.
An accountant’s role is to provide you with advice. You may have a query about what expenses you can offset against Corporation Tax or be unsure as to whether you have enough retained profit to declare a dividend legally. Whatever the issue, it’s good to have an experienced professional on hand.
One major advantage is that a professional accountant will be experienced in dealing with the tax authorities should an enquiry arise. They will know the correct format to submit any information and will understand the various subtleties of different regulations.
If someone does decide to look after their own affairs, they need to be aware that they must maintain their accounts in line with the Generally Accepted Accounting Practice in the UK. It’s their responsibility to submit their information in a timely and accurate manner so as to meet statutory legislation.
On balance, most people decide that once they’ve calculated how long it takes to prepare the accounts, do the bookkeeping and liaise with HMRC, a small business accountant would save them both time and money, while enabling them to get on with running their business.