do i need a limited company accountant
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Limited companies are one of the most popular business forms, and it’s not hard to see why.

They’re universally understood by investors and prospective business partners; they’re easy to form and run; and most importantly they limit the entrepreneur’s liability to a pre-agreed limit, preventing counter-parties from making claims on the assets of the person or people who stand behind the business.

In this blog post, we answer ‘do I need an accountant for a limited company?

What are the features of a limited company concerning accountants?

Separate legal identity

The company is an entirely different legal person to its directors or shareholders; it can enter into contracts, sue and be sued and raise funds on its own account.

Limitation

As discussed above, the liability of the shareholders of a limited company is limited to the amount left unpaid on their shares (companies limited by guarantee have a slightly different regime, but they’re much rarer and usually only appropriate for non-for-profit enterprises).

So if you own a hundred shares of £1.00 in your limited company, then regardless of how much the overall debts of the company, the debtors can only retrieve £100 from you personally.

Corporation tax

Unlike partnerships or sole traders, limited companies can take advantage of the much more efficient corporation tax regime. In the UK, almost all limited companies will only pay 19%; by contrast the individual tax rate can be as much as 50%.

For these reasons, it’s likely that a limited company is the ideal commercial form for your business and will be able to offer you the most flexibility.

But setting up a limited company can be highly complex and is often one of the more intimidating or stressful parts of running a business – technical and legal formalities aren’t something that any entrepreneur wants to get caught up in.

That’s where engaging a chartered accountant can come in handy. Accountants can help your limited company throughout the time you operate it – from formation to operation to winding down.

Here are some of the ways in which accountancy services can help your company.

Benefits of having a limited company accountant

Formation

Many accountants also act as company registration agents for company formations, meaning they have extensive experience in setting up companies from scratch.

By speaking to accountants early on, they’ll not only do the formalities for you by making the appropriate filings at Companies House, but they’ll be able to think strategically with you about how best to set up your business and the most financially efficient way to go about it.

Accountants bring a unique mix of legal understanding and financial nous, making them ideal advisors at this key moment in your business’s life.

Accountants can also draft (or, for more complex companies, engage specialist lawyers to draft) some of the technical documentation that companies need – in particular the articles of association.

Again, whilst theoretically anyone can do this, accountants can add value through their understanding of the financial underlay of your business – for example, how different share types work.

Filings

It’s not just at the outset of your business that you’ll have to file certain papers with Companies House; filings have to be made for a variety of things.

Some of these are more procedural and legal – for example filings in respect of loans and mortgages – but you’ll also have to file a range of more financially-related things.

Most obviously there’s an obligation on active companies to file accounts annually, as well as a confirmation statement in which the company states that all the publicly available information is up-to-date.

Preparing statutory accounts

As alluded to above, there is a statutory requirement to prepare and file accounts with Companies House on an annual basis.

These have to be completed in line with very strict guidelines, so as to enable third parties (like banks or investors) to get a full and fair understanding of the financial position of your company.

This is actually something which can benefit you as a business-owner; high-quality accounts can give your business a veneer of respectability, making it considerably more attractive for investors to do business with you.

A chartered accountant can prepare these so that you not only fulfil all legal obligations but communicate your financial position as effectively as possible.

Management accounts

There are two broad types of accounts; we’ve considered financial accounts but these serve a more legal role than anything else. To assist with making decisions about your business, management accounts are also crucial.

These are accounts and reports which help businesspeople monitor how their limited company takes in and spends money.

This encompasses a vast range of data:

  • Employment statistics
  • Sales
  • Cost centres
  • Competitor information

A chartered accountant can help your limited company by finding this raw data and applying rigorous financial analysis to it, so that it’s not only presented in a coherent and clear form, but logical conclusions are drawn so that this data becomes usable.

Accountants are experts at finding correlations and connections, allowing you to determine what you need to be doing to your company so that it’s running as effectively as possible.

Management accounts can be used for both day-to-day operations, as well as thinking about growth opportunities, whether that’s through investment or acquisition.

They’re one of the most helpful things for your limited company, and that makes working with an accountant from day one a very effective proposition.

FAQ’s

Your next steps

To learn more about do I need an accountant for limited company or how an accountant can help set up and develop your limited company, call WIS Accountancy on 0203 011 1898 or fill out the contact form.

We’re a family of interconnected businesses and can offer mortgage solutions and business insurance through our sister companies along with accounting services.

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