Do You Really Need an Accountant for a Small Limited Company?

I’m Brett and Accountancy Services Online is one of the many websites I’ve started. I’ve worked as a website designer and software developer since 1999. After the dot com crash I got made redundant in early 2002. While I looked for a new job, I wrote a range of software documentation tools. The tools sold really well and like many other people I found myself starting a small business completely by accident.

At first I was confused about the whole business thing, but working in IT I knew a lot of people who worked as IT contractors through their own limited companies. I therefore liked the idea of starting my own limited company. A limited company would give credibility in the eyes of my customers. It also affords an extra level of legal protection in case of problems. I thought this was well worth having for extra peace of mind.

To save costs I called the company Winnersh Triangle Web Solutions Limited so it could use an existing website domain I had bought as a joke. With hindsight I think I should have chosen an name that was easier to remember, but at the time I had no idea how popular my website or business would become!

My business has been running since 2002. I have managed the entire business on my own. The only things I have outsourced have been web hosting, credit card and order processing. As I have done all my accounts myself, I have to ask…

If you are running a small business do you need an accountant or other financial services?

Happily I can report that you don’t need an accountant or one of the many accounting companies to run your own limited company. Some times I have had a few close shaves with the HRMC and Companies House, but on the whole they have been pretty sensible about the fact that a small fledgling business needs a bit of support sometimes.

Is an accountant really necessary for a small business?

Is an accountant really necessary for a small business?

If you’re a company director then you need to file a self assessment form. I’ve found this very straightforward as it can just be filed on the HMRC website.

Because my business is small and I have a full time job I just take income from the company in the form of dividends. These are easy to declare on your self assessment form. Because the company has no employees HRMC agreed to close the payroll associated with the business. Business payroll rules and regulations are very complex so you’d find it hard to do this yourself. If your company doesn’t have employees and you draw no salary then consider getting HMRC to close your payroll for you.

A limited company has to file an annual return. Again this can be done entirely online, this time on the Companies House website. The whole process takes 10 minutes if there are no changes involved (but you still have to pay a fee!).

Submitting the company’s annual accounts is the most time consuming activity. I’m not entirely sure if my accounts are in the correct format, but Company House have accepted them as have HMRC. Soon all accounts have to be submitted electronically to Companies House, so this process will be streamlined. Fortunately small businesses only have to submit limited details of their accounts.

Company accounts also have to be submitted to HMRC. Formerly the Inland Revenue had a horribly complicated form you had to fill out, which was further complicated if (like me) your accounting year spanned multiple financial years. This form is now web based and it’s very easy to fill in. In fact it will even calculate the amount of tax you have to fill in, so often the most complicated part of the process is trying to figure out where to send the corporation tax your company owes.

However, I think if my business was earning more than £20,000 then I would definitely look for a tax accountant. I am aware that there are many more expenses I could be offsetting against profits. I am also sure there are other ways I could draw an income from the company. Although the company income dropped substantially after Lehman Brothers collapsed, income is now recovering so I hope to be in a position to require a tax accountant in the next or subsequent financial years.

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