Do You Need An Accountant For A Limited Company?

Operating a limited company brings with it a wide range of financial obligations, which is why expert advice is a key element in navigating the extensive regulations and ensuring compliance. Hiring an accountant can really help with this, obtaining vital help in areas such as tax planning, financial reporting, and strategic advice. 

In this article, we’re going to look at eight essential reasons you really do need an accountant for your limited company business and the risks involved in going it alone on the financial front. We’ll also answer frequently asked questions about accounting to help you understand your business’s financial needs a little better.

What does an accountant do for a limited company?

An accountant for a limited company is crucial in managing and monitoring financial affairs and ensuring best practices tax compliance, with an overview of financial performance, and to be compliant with several regulations. They perform bookkeeping using their accounting packages, generate management and year-end accounts, issue VAT return fillings, settle corporation tax, etc.

Additionally, accountants offer strategic advice on cost management, cash flow optimisation, and profitability maximisation, allowing the business to be evidence-based in its decision-making. Accountants ensure the complexity of their finances is managed, mistakes that can be very costly are avoided, and business owners can spend their time concentrating on growth and operations.

8 reasons why you need an accountant for your limited company

1. Tax compliance and planning

Accountants ensure that your limited company is adhering to any tax laws and regulations including VAT, corporation tax, and individual earnings tax. They keep pace with changing tax laws so you don’t make costly errors or incur penalties on your filings.

Accountants also assist you with overall tax strategy to help uncover tax savings and ensure that you take maximum advantage of all available deductions and credits. They possess in-depth knowledge and expertise on your financial affairs, such as your accounting and taxes, so that you are not subjected to potential audits or legal issues down the road to help safeguard your enterprise.

2. Accurate financial reporting

Accountants prepare accurate financial statements, including balance sheets, profit and loss accounts, and cash flow statements. These reports give you an overview of your company’s financial health so you can make data-driven decisions and easily track expenses, revenues, and profits.

Accurate accounting also helps with measurable success, applying for a loan, or attracting investors. You may bring a level of risk into your business when you own a business and have no accountants preparing your reports, as it can lead your reports to be filled with inaccurate data, which may put your reputation on the line or could result in confusion during financing or audit.

3. Save time and reduce stress

Funding a company can be an arduous and time-consuming process when you already have your plate full. Having an accountant frees you to spend more time on your business, which saves you a lot of time. Instead of bogging yourself down with tax filings, bookkeeping, or financial management, you can allow an expert to efficiently take care of these matters for you.

It is a big relief if someone is filing your taxes on your behalf, taking the pressure of deadlines and complex regulations away and, most importantly, keeping you calm, knowing that your finances are in the best hands.

4. Expert advice on financial strategy

Accountants have an insight into your company’s finances and will offer strategic advice. Their expertise can help you in budget, forecast, and plan financial activities to ensure that your business is on the right path for growth.

Accountants look for trends and tell you how to reduce costs, maximise profits, and where to invest – so you know what decisions to make. They are key to advising you on the most effective ways to help you pursue your goal when planning to grow, merge, and finance your firm.

5. Cash flow management

One of the primary responsibilities an accountant maintains is control of cash flow, so you can rest assured your business will be able to meet its obligations and have no cash flow issues. They monitor incoming and outgoing payments, making sure you’re not paying late and that you have the cash flow to carry out day-to-day operations.

Accountants also help identify potential cash flow problems in your business before they occur and suggest solutions on ways to financially stabilise your company. 

6. Legal and regulatory compliance

One of the most important tasks for all limited companies is to ensure that they comply with laws and regulations, and an accountant plays a vital part in this area. They help businesses comply with all legal requirements, such as annual accounts, compliance with statutory obligations, and industry-specific regulations. 

Failing to comply can result in fines, legal problems, or damage to your business’s reputation. The last thing you want is to worry about the legal issues in running a company; with an accountant, you are sure that the company meets all requirements of the law, which reduces the risk of expensive mistakes that could put your business behind bars.

7. Risk mitigation

Accountants are going to assess your financial health and address any questions you have regarding how to safeguard your business against economic downturns, market cycles, or bad investment decisions.

An accountant will work with you to identify your financial shortcomings so you can take measures to reduce the risk. They also ensure your business has an adequate amount of insurance that can cover injuries you did not expect and save your business from incurring any huge losses.

8. Improved decision making

One of the key benefits of having an accountant is access to accurate financial data and up-to-date information, both of which are essential for making informed business decisions. An accountant adds financial wisdom to these decisions, from business growth to a hiring process to launching a new product. 

With professional analysis and advice, you can assess the potential return on investment, gauge affordability, and forecast future performance, ensuring that you make sound, data-driven choices that benefit the long-term success of your limited company.

Potential risks of not hiring an accountant

1. Non-compliance with tax regulations

Without an accountant, you run the risk of not meeting tax deadlines or incorrectly calculating VAT, corporation tax, or income tax. Failing to meet deadlines or file correctly can lead to considerable fines, penalties, and potentially legal action. From tax regulations, which can be complex and constantly changing, an accountant can help you keep your company compliant with all legal obligations and avoid costly mistakes.

2. Inaccurate financial reporting

Without professional help, managing financial records can result in mistakes in your financial statements. If this information is incorrect, it could misrepresent the performance of the business and lead to bad decision-making. It also raises red flags with investors, lenders, or tax authorities, damaging your reputation and making it tougher to get financing or business partners.

3. Cash flow issues

Without an accountant to keep an eye on the inflow and outflow of cash, your business will struggle to manage inflowing and outgoing payments. Miscalculating cash flow can lead to missing supplier payments, growth opportunities, and inability to pay bills. An accountant aids in sustaining a steady inflow of cash, which means your business runs smoothly and never sees a slack in finances.

4. Missed tax savings and deductions

An accountant can help identify tax-saving opportunities, deductions, and credits your business is eligible for. This can lead to the loss of important tax reductions, resulting in an increased tax burden, if it is done without professional expertise. 

Why you should choose Braant Accountants for your limited company

Braant Accountants provides professional financial services designed for limited companies, devaluing compliance, accuracy, and strategic guidance. The team possesses comprehensive knowledge of tax laws, regulations, and industry-specific requirements, making sure your business stays fully compliant and avoids costly mistakes.

Braant provides you with financial advice that is tailored to your needs to help you optimally manage cash, pay less tax, and grow your business by making the right decisions. They take a proactive approach, emphasising their efforts on the long-term financial health of your accounts, allowing you peace of mind when worrying about your business instead. From trusted business support to professional accountants, you can count on Braant Accountants to help your business thrive.

Limited company accounting FAQs

What is the VAT threshold for a limited company?

For a limited company, the VAT registration threshold is £85,000 taxable turnover in a 12-month period. If your company’s taxable turnover is higher than this figure, you must register with HMRC for VAT. After registration, you must charge VAT on eligible sales, file VAT returns, and comply with VAT regulations. If your turnover is not above the threshold, you can still choose to register (voluntarily) for VAT registration, which might allow you to reclaim VAT on items relating to your business.

When does a limited company pay corporation tax?

If the company is limited, it is subject to corporation tax on profits made, due nine months and one day after its accounting period. For instance, suppose your company’s year-end is on December 31st – you must pay the tax by October 1st of the next financial year. HMRC requires corporation tax payments to be calculated and reported, but late payment may incur interest and penalties.

What is the difference between company accounts and management accounts?

Company accounts, also known as statutory accounts or financial statements, are financial statements that corporations and other organisations are required by law to prepare, including a balance sheet, income statement, and cash flow statement. These get sent to HMRC and Companies House. 

Management accounts, or internal reports, help business owners track performance and plan for the future. They are less formal and can be prepared monthly, quarterly, or at any frequency that suits best.