Do limited companies need accountants?

This article will cover the pros and cons of having an accountant as a limited company to help you decide if hiring one is right for you, including:

• Saving money
• Growing your business
• Learning new skills
• Delegating trust

There is no legal requirement from HMRC to have an accountant if you have a limited company. However, there is a range of benefits of hiring one. Read on to find out what they are. 

Hiring an accountant means you now have someone who is more qualified than you to do your financial admin. This means you have more time available to focus on marketing, supply chain management, product development or other aspects of your business. 

Some business owners, particularly in the early stages, complain about working in their business rather than on their business. This means getting bogged down by tasks that prevent you from doing things that contribute more to expansion.

Even if you feel confident doing your financial admin yourself, you could still make mistakes. You could still miss something important that an accountant wouldn’t miss, costing yourself a lot of time and money. 

Having an accountant minimises this risk, as they are likely to spot things you might miss. They also have a lot more experience doing the tasks required. Despite the best preparation, things can go wrong, particularly if you attempt to do them.

Even though an accountant costs money in the short term, they could end up saving you a lot more money than you initially paid in the long term. For example, they will have far more knowledge of:

• What the most tax-efficient way is to purchase items e.g., computer equipment. 
• The best way for you to submit your Self Assessment on time, potentially saving you hundreds of pounds in fines. 
• They can lower your tax bill by ensuring you claim for everything you are eligible for.  
• They are more likely to have knowledge of upcoming changes in tax law that could affect your business. They can then help you plan ahead so that the potential negative effect on your business is minimised. 

As we mentioned before, you may miss things if you do it yourself. 

Even if you used to be an accountant, your main focus is now on your business as a whole. You may make mistakes you wouldn’t have made when you were only focused on accountancy. Doing it yourself can sometimes allow doubts to surface about whether or not you’re doing a good job. 

Hiring an accountant means you no longer have to worry about this. 

One of the most underrated benefits of having an accountant is having them improve your business processes. For example, having an accountant can help you improve your expansion. 

As your business grows you might end up putting in place different processes such as payroll and VAT. An accountant can ensure as you grow your different financial processes are enhanced over time. Things like invoicing, tracking profit and loss will become simpler over time, particularly if you use our software in addition to your accountant. 

Often what can happen if you hire an accountant is that you will learn a lot from them. You may learn about:

• VAT
• Payroll
• Tax exemptions
• Self Assessment 

Among other financial tasks and requirements, you may not have known much about. 

The better your knowledge becomes the better your relationship with your accountant is likely to be. This makes the meetings you will have more productive and efficient, as they won’t have to explain as much to you anymore. 

You will begin to be more at ease as your knowledge increases. The more you understand. the less likely you are to trust someone who knows much more than you about a key topic. 

Even after all of these convincing benefits, there are also a few obstacles to consider. 

It can be difficult to afford an accountant in the early stages of your business. It’s normal at early stages of a business to not have much –– if any revenue. Until you begin to expand your business, it is probably best to keep expenses to an absolute minimum, until your revenue begins to increase. 

As we touched on in the benefits section, it can be hard to trust an accountant, especially at first. If something goes wrong with your financial management, there can be dire consequences, such as fines, auditing, and other legal action. It’s arguably the most important part of your business. You started your own business (or want to get started) to make money. 

To overcome this hurdle, take your time to choose the right accounting firm. Do thorough research to compare different firms and only hire an accountant if you feel comfortable. 

If you already have the skillset to do the job adequately or can find ways to obtain those skills,  hiring an accountant may be a waste of money for you right now. You may benefit more from sticking to the resources you have. Perhaps you have a friend or family member who works in the finance industry to ask for advice? Or, maybe you can find a decent online course to gain the essential accounting skills you need to complete the job efficiently? 

Additionally, you may prefer to invest in something that has a bigger impact on growing the business, such as marketing or product development. 

To reiterate, if you have a limited company, there is no legal requirement for you to hire an accountant. You can do your financial admin yourself, or you can hire an accountant. However, it’s up to you to analyse your situation, consider the pros and cons, and decide whether an accountant is right for your business. 

Whether you have an accountant or not, as a limited company owner you will need to keep organised records. Countingup is the business current account and accounting software in one app. It automates time consuming bookkeeping admin, so that you can focus on running your business. With instant invoicing, automatic expense categorisation and cash flow insights, you can confidently keep on top of your business accounts every day. Find out more here.