Managing company finances is rarely at the top of a business owner’s “favorite things to do” list. It can be annoying and consume important time that might be spent on business development and improvement.
Around 91% of small businesses in the UK rely on external chartered accountants as a vital resource. But does your limited company actually need one?
Limited corporations have no legal obligation to hire an accountant, but it is extremely useful. An accountant can provide useful services such as maintaining annual reports and corporate tax filings. They may also offer business advice and develop effective tactics to save your organisation money.
If you are unsure whether your small business needs an accountant, please learn how these professionals can relieve you of hours of figure crunching, form filing, and box-ticking, allowing you to focus on your business operations.
Why Your Limited Company Needs an Accountant: Key Benefits
If you have ever desired more time in the day, hiring a professional accountant to manage your accounts is like releasing a genie from its lamp. And the best part? You can make more than three wishes. Here are some valuable services accountants may provide for your limited company.
- Set up your new limited company:
Your accountant may register your firm with Companies House to save time and effort during the early stages. They will also inform you of your new tax liabilities and communicate with the HMRC about your tax registration.
- Payroll management:
While big organisations often manage payroll in-house, smaller enterprises might consider outsourcing to an accountant. Alternatively, you can bid farewell to the hours spent each month in income tax calculations and HMRC paperwork. Luckily, skilled accountants are often payroll experts who can do this task efficiently.
- Submit your VAT returns:
VAT (Value-Added Tax) – if these three letters make you fearful, you are not alone. VAT is highly complicated, and the rules are constantly changing. An accountant can assist you in managing your company’s VAT duties and selecting the best payment plan to avoid paying too much. They will also quickly complete your quarterly VAT returns and guarantee you will not receive any unexpected fines.
- Save time with bookkeeping:
Effective financial management requires regular bookkeeping. Let us be honest: it is time-consuming, uninteresting, and repetitive. Logging every receipt and invoice might be boring, but no one wants to be searching for missing transactions or receipts at the end of the year (or when HMRC arrives). Fortunately, accountants are diligent people who can manage your bookkeeping efficiently, freeing up your time and efforts.
- Offer cloud accounting software, such as Xero:
You will often hear accountants talk about accounting software like Xero because it’s truly life-saving. It can alter how you handle your accounts by increasing efficiency and reducing mistakes. Because everything is happening on the cloud, you can always be confident that you are viewing up-to-date data, which may significantly improve cash flow. It also simplifies year-end accounting and will ultimately be required for submitting corporate tax returns.
If you have not already signed up, your accountant can walk you through the benefits and show you how to get the most out of the program for your company’s needs.
- File your annual accounts:
Limited corporations must produce yearly accounts with HMRC and Corporations House every year. Failure to do so may result in significant penalties and legal action. Your organisation may be barred from doing business if you consistently fail to comply.
A good accountant will not allow this to happen. They can prepare the essential papers in the proper format and ensure they are filed on time (if not before). Depending on the size of your firm, this will comprise a profit & loss statement, a balance sheet, a report from the company director (you), and any other relevant comments.
- Submit your tax returns.
In addition to producing yearly accounts, your limited business must file a company tax return at the end of the fiscal year to declare its taxable earnings and calculate its corporation tax due.
A profit/loss account is one of the pieces of information necessary, but it is a different version from the one provided in your yearly reports. Change the amount to reflect the taxable profit, starting with the profit and loss statement. This is accomplished, among other things, by recouping disallowable spending and accounting for capital allowances on capital acquisitions.
The paperwork might be overwhelming, but an accountant can complete your corporate tax return and assess how much you owe. They should also send timely notifications about when the payment is due.
Still Confused About Hiring an Accountant for Your Limited Company? Consider These Factors
If you’re contemplating whether to hire an accountant for your limited company, think about how many hours you’ll free up to focus on your business instead of getting lost in spreadsheets and handling paperwork.
Also, consider the peace of mind you’ll experience. Knowing that you can avoid tax inquiries and penalties is enough to help any company director relax and feel secure!
Finally, balance the reduced costs with expected tax savings and enhanced cash flow forecasts. You might even eliminate the need to hire a qualified in-house accountant.
Timing Matters: When Should You Hire a Limited Company Accountant?
The proverb states that the ideal time to engage an accountant is yesterday, and the second best time is now. A skilled accountant can provide value immediately by giving expert tax accounting advice to help your business start.
Many business owners contact a professional toward the end of the year, although it is generally better to employ an accountant earlier. That way, your records will be in order, and you will be aware of your tax due, avoiding unpleasant surprises.
Some business owners are inherently better at accounting than others; more power to them. However, while it is entirely acceptable to manage your accounts, as your business expands, accounting gets increasingly difficult, especially if you begin to hire people.
Things may quickly go wrong with one eye on daily operations and the other on cash flow. Payroll processing is incredibly time-consuming, and losing track of costs and unpaid bills is easy. Accounting may be considerably more accessible and precise when done by a professional, not to mention less expensive.
Cangaf: Reliable Bookkeeping and Accounting for Small Businesses
We at Cangaf Accountants acknowledge the importance of tangible bookkeeping as the bulwark of every thriving business. We have a hardworking team of professional accountants to provide you with the most suitable accounting and bookkeeping services for your private limited companies, sole traders, start-ups, freelancers/contractors, and landlords.
Our Services Include:
- Dedicated Bookkeeper: You will be assigned a bookkeeper who will fully handle your books and accounts with great professional precision.
- Secure Document Handling: You can access the documents you need to share with us in a convenient virtual docket, which is strongly protected from third parties.
- Complimentary Bookkeeping Software: Our free bookkeeping service features a receipt-forwarding app to make entering transactions easier.
- Invoicing Capabilities: Click here to compose professional customer invoices and boost your business productivity.
In essence, you can place your bookkeeping with us and let us handle the financial aspects of your business. Our objective is to establish a solid base for efficient tax planning and, therefore, achieve cost savings that will allow for sound financial management.
Find out how our specialised group at Cangaf Ltd. can assist in improving your company’s financial health. Contact us today for a no-obligation quote.
FAQs:
Can I prepare my limited company accounts, or do I require an accountant?
Company directors may opt to perform their accounting, and there is no legal necessity to engage an accountant. However, with all of the legal and regulatory requirements for financial record-keeping, reporting, and tax compliance that limited firms must meet, a trained accountant may be a lifeline and bring significant value.
However, Cangaf Ltd. is here to do far more than just submit firm finances. We’ll work with you to increase your company’s tax efficiency and provide general business advice to assist you in achieving your objectives.
What taxes must a business owner pay?
After each tax year, business owners are responsible for filing their company’s tax return (the corporate tax return). They must also guarantee that the firm fulfils its PAYE tax requirements as an employer.
Company directors, like individuals, must deal with their tax concerns. They must file a personal tax return to report any income not taxed at the source, such as dividend payments.
What’s the difference between corporate and management accounts?
The word ‘company accounts’ is frequently used to refer to statutory accounts, which are the annual accounts that demonstrate the firm’s financial performance during the previous year. This often comprises financial statements such as a profit and loss account & balance sheet, which must be created in a particular style and filed to Companies House. These records are made available to shareholders, creditors, and potential investors as proof (or otherwise) of the company’s financial health.
‘Management accounts’ are created for internal use by the management team to monitor the company’s financial situation. They can include any relevant information about the firm, such as a breakdown of costs, revenue by product or service, cost analysis, budget deviations, and anything else that assists in making business choices. Management accounts can be generated as frequently as desired, with most organisations opting for a monthly or quarterly summary.
What is a limited company’s VAT threshold?
Once your firm has reached a specific tax threshold, it must register for VAT. The VAT threshold for 2023/24 is £85,000. Your accountant can assist you with registering for VAT and explaining the various programs.
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Contact Details:
CANGAF Accountants
235 Tonge Moor Road, Bolton BL2 2HR
Email: info@cangafltd.com
Phone: 01204 859315
Let CANGAF Accountants manage your finances while you focus on excelling on the pitch.
