Do you need an accountant for a limited company?

If you run a limited company, you might be wondering whether you actually need an accountant or whether you can handle it yourself. Legally, you don't have to appoint one. But a limited company carries real obligations, and the penalties for getting them wrong land on you as a director. Here's what's involved, what an accountant takes off your plate, and when it's genuinely worth it.

Is an accountant a legal requirement?

No. There's no law that says a limited company must have an accountant. As a director, though, you are legally responsible for filing accurate accounts and returns on time, and for keeping proper records. If you're confident you can meet those duties yourself, you can. Most directors decide the time, risk and missed savings aren't worth it.

What a limited company has to do

Even a small company has more to handle than a sole trader. Each year you'll typically need to:

• File annual accounts with Companies House
• File a corporation tax return and pay any tax due
• Submit a confirmation statement
• Run payroll and report to HMRC if you take a salary or employ anyone
• Register for and file VAT if you're over the threshold
• Complete your own self-assessment as a director

Miss a deadline and the penalties start automatically, so the admin adds up quickly.

What an accountant handles for you

A good accountant takes the compliance off your plate and, just as importantly, helps you keep more of what you earn. Typically they'll handle your year-end accounts, corporation tax and VAT, payroll, and your directors' self-assessment, and advise on things like the most efficient salary and dividend split.

When you might manage without one

If your company is dormant, or genuinely tiny with a single director, no employees and very simple affairs, you may be able to file yourself using the HMRC and Companies House tools. Be honest about your time and confidence, though: the rules change, and mistakes are costly.

When it's worth getting one

• You're trading actively, with income, expenses and maybe staff
• You're VAT registered, or close to the threshold
• You want to take money out of the company tax-efficiently
• You've had a penalty, or an HMRC letter you didn't fully understand
• You simply don't have the time, or the stress isn't worth it

For most trading companies, a good accountant pays for themselves in time saved and tax done right. Already have one and just moving? Here's what's different when switching accountants for a limited company. If you're a sole trader instead, see do you need an accountant for self assessment.

Switch Books is a free service that matches limited company directors with the right local accounting firm. Tell us about your company and we'll connect you with a firm that fits, at no cost and no obligation.