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How much does a limited company accountant cost?

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How much does a limited company accountant cost?

Most limited companies will use an accountant to help with their mandatory filings, and for ongoing support with making financial decisions. Accountants offer multiple services to support limited companies, and typically cost around £50-£150 per month for the average UK firm.

Do Limited Companies Have to Use an Accountant?

You do not need to use an accountant, and some businesses may have an in-house finance team to manage their finances for them. However, there are multiple benefits to using a professional accountant.

Often a small business can be effectively managed in-house. Still, when trading grows, and tax considerations become more complex, an accountant can take over and guide the development of the business.

Services Available from a Limited Company Accountant

Accountants provide several services - you might hire an accountant to help with filing your limited company accounts at the end of the year, or for ongoing support with your bookkeeping.

Examples of the services available through an accountant include:

  • Registering your business with authorities for tax, VAT and PAYE.
  • Managing and updating your company payroll.
  • Bookkeeping and regular reporting.
  • Tax planning assistance.
  • Preparing and filing mandatory filings.
  • Creating management accounts.
  • Dealing with Companies House and HMRC on your behalf.
  • Advising on structuring your payroll and owner payments efficiently.
  • Analysing options to provide a professional opinion.

The value of an accountant is not only in carrying out tasks and functions. They can also act as a tax agent on behalf of your business, and manage any queries from HMRC directly to save you time.

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Benefits of Using a Limited Company Accountant

The value you gain from using an accountant will depend on how closely you wok together, and whether you act on the advice they provide.

Filing financial year accounts and VAT returns are one aspect of the service available from limited company accountants, and using a professional for these services will save you time and ensure your filings are accurate.

Other benefits include:

  • Having access to professional advice with business-critical decision-making.
  • Ensuring your records and reporting is accurate and can be meaningfully interpreted.
  • Help to choose between different products - for example, comparing the costs of borrowing from various providers.
  • Saving the time and pressure of needing to keep up with your mandatory filings.
  • Cost savings in needing to employ in-house finance staff and purchasing the software and equipment required.
  • Cost savings in understanding the most tax-efficient way to deal with transactions such as director remuneration and transfer of assets.
  • Ensuring you are including all claimable expenses and making claims for all tax relief available to limited companies.
  • Having professional reports to be able to produce where required; for example, evidencing your management accounts.

Costs of Limited Company Accountants

The cost of your accountant will depend on the services you ask them for, and how often you work together. For the average UK business, support from your accountant will cost around £50-£150 per month.

If you use an accountant for a one-off task or commission them annually to assist with your year-end accounts, you will usually pay a fixed fee for this service. The cost is confirmed in advance, and typically you will be asked to pay a deposit upfront.

Should you regularly work with your accountant, they might:

  • Bill you per annum for services provided throughout the year.
  • Raise a monthly invoice for an agreed fee, or the annual service fee apportioned per month.
  • Charge per quarter or month.

It is essential to know what your accountancy costs will be, how they are calculated, and when they fall payable. An accountant should prepare a quotation for you in writing, explaining what is and is not included.

This agreement usually needs to be signed and returned by a company representative for your accountant to begin work for you.

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Alternatives to Limited Company Accountants

There are a growing number of options for limited companies looking for support with managing their finances. Each has pros and cons, so it is essential to consider what sort of assistance you need, and what expertise you require from your accountant.

Freelance accountants are usually self-employed and work separately from a traditional accountancy practice.

Pros:

  • Rates are usually cheaper.
  • They are typically more flexible and responsive.
  • Remote or on-site working.
  • Variable packages of support available.

Cons:

  • Less access to other experts if a query arises outside of their scope of experience.
  • The complication of remote data sharing.
  • Maintaining communications.

Virtual accountants provide the usual accountancy practises, and are usually a sizeable firm of professionals - but they do so remotely. Some virtual accountants will have an office you can visit as a new client, but others are entirely digital.

Pros:

  • Usually cheaper than a traditional accountant.
  • Work very fast and are often paperless.
  • Offer full suites of accountancy support.
  • Flexible with time and capacity.

Cons:

  • Need remote access to data, figures and systems.
  • Not always able to meet in person.
  • May offer general services rather than dedicated support.
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Frequently Asked Questions

What Qualifications Should I Look for in a Limited Company Accountant?

There are lots of different accountancy qualifications and accreditations, and it can be confusing knowing who is the right professional to support your business.

Reputable accountants will be registered with one or more of the UK professional bodies:

  • ACCA (Associated of Chartered Certified Accountants)
  • CIMA (Chartered Institute of Management Accountants)
  • CIOT (Chartered Institute of Taxation)
  • ICAEW (Institute of Chartered Accountants in England and Wales)
  • ICAS (Institute of Chartered Accountants of Scotland)
  • IFA (Institute of Financial Accountants)

An excellent accountancy practise will have no hesitation in explaining their qualifications, experiences and areas of expertise. Your accountancy firm should hold professional indemnity insurance, and it is wise to check what this is before you begin any long-term working relationship.

This means that you have the assurance that if your accountant were ever to provide incorrect advice or make a grave mistake, you would be able to claim financial damages.

While highly unlikely, knowing that this cover is in place can be an assurance particularly for limited companies working with an accountant for the first time.

How Do I Choose a Good Limited Company Accountant?

If you would like to hire an accountant, it is essential to verify that they can provide the services you require. This depends on what you would like them to do - for example; a full-service firm will offer all aspects of bookkeeping, payroll and accountancy, whereas a specialist accountant might only provide financial consulting services.

Be sure to ask as many questions as you need to - examples include:

  • Do you have experience in my industry/market sector?
  • Will you act as my tax agent with HMRC?
  • What is included in your limited company packages, and what are the costs?
  • Do you offer a discount for regular clients?
  • Are you able to provide any references from local clients?
  • What professional indemnity insurance do you have?

How Can I Ensure a Smooth Working Relationship with my Accountant?

Communication is key to working well with your accountant, so it is vital to keep them updated with any changes to your trading or activities.

Keeping accurate and up to date records helps to minimise the administrative work your accountant will need to carry out. Many accountancy practises also offer bookkeeping services, which means they will manage your day-to-day records for you.

Always respond to queries or requests for information from your accountant. They will usually be managing an HMRC query or filing a report on our behalf, so it is crucial to be responsive and maintain open lines of communication.

What is the Difference Between Limited Company Bookkeeping and Accounting?

Bookkeeping is the maintenance of your records. For example, these include your accounts payable and receivable, sales figures, expenditure, bank reconciliations, and maintaining your bookkeeping software.

Accounting covers a much broader spectrum; an accountant is a professionally qualified person who can provide expert support, advice and guidance as well as carrying out specific tasks.

Most accountants will offer some kind of bookkeeping service or will be able to recommend a reputable bookkeeper you can work with if you need help maintaining accurate and up to date company records.

However, a bookkeeper is not qualified to provide independent advice about managing your finances. Some bookkeepers will be able to prepare and submit returns and reports, whereas others will deal solely with internal records and filing systems.

Why is a Service Level Agreement Important with a Limited Company Accountant?

A Service Level Agreement, or SLA, sets out what services your accountant is proposing to provide you with, ad what the costs of those services are.

It is essential to understand precisely what you will pay, and what is and is not included within this rate. For example, an accountant filing your year-end accounts from trial balance will require you to provide records and evidence to support the figures you have provided.

An accountant supporting you throughout the year-end accountancy process will provide more in-depth support, will carry out calculations on your behalf, and will usually visit your trading premises, for example, to carry out stock checks and verify records.

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