Limited Companies Accountants
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Online Accountancy Services for Limited Companies
Affordable fixed-price online accountancy services for limited companies.
We offer a fresh approach to handling limited company accounts, tax returns, VAT returns, online bookkeeping, payroll services, and self-assessments, with a focus on high service levels and proactive advice.
At The Accountant Point, we provide comprehensive services including company accounts, tax returns, VAT returns, bookkeeping, self-assessments, payroll, and more to limited companies. Our all-inclusive unlimited service plan is highly regarded, offering all the accounting services a UK business needs for a fixed monthly fee.
Let's Talk
- contact@theaccountantpoint.co.uk
- +44 7840 100 078
Limited Companies Accountants Services We Offer
We deliver company accounts, tax returns, VAT returns, bookkeeping, self-assessments, payroll, and more to sole traders, limited companies, partnerships, LLPs, contractors, and individuals throughout the UK. Our reputation is built on our all-inclusive unlimited service plan, providing all necessary accounting services for UK businesses and more, all for a fixed monthly fee.
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Limited Companies Accountants FAQs
While it's not legally required to hire an accountant when forming a limited company, there are numerous advantages to doing so.
Is it a Legal Obligation to Hire an Accountant?
Contrary to popular belief, there is no legal obligation for small businesses to hire an accountant. Additionally, companies that meet the following conditions are exempt from auditing:
- The company qualifies as "small" by meeting two of these criteria: a turnover of less than £6.5 million, an average staff count of fewer than 50, and a balance sheet total of less than £3.26 million.
- An audit is only necessary if a member requests it, provided they hold 10 percent of the share capital or 10 percent of all members for a company limited by guarantee.
Most companies fit this criteria.
Why Hire an Accountant?
Although not required, most limited company owners hire accountants instead of handling their accounts for several reasons.
An accountant’s role goes beyond just assembling your books at the end of the year and filing VAT reports. They also:
- Register the business with relevant tax departments such as VAT, Corporation Tax, PAYE, etc.
- Set up and maintain company payroll, ensuring compliance with RTI regulations.
- Handle bookkeeping.
- Manage business correspondence with Companies House and HMRC.
- Assist with tax planning.
- Advise on dividend distribution.
- Provide professional references.
Experienced accountants are familiar with the subtleties of dealing with tax authorities, the proper format for submitting information to HMRC, and are better equipped to handle tax inquiries if they arise. They can help with everything from identifying deductible expenses for Corporation Tax to determining if there are enough retained earnings to declare a dividend.
Additional Considerations
If you decide to manage your accounts independently, ensure they are kept in accordance with Generally Accepted Accounting Practices, submit information accurately and on time, and meet all statutory and financial obligations.
Compare the time required to prepare your accounts, bookkeeping, and dealing with HMRC to the cost of hiring an accountant for a small business or freelancer. If saving money is your primary concern, an accountant may save you both time and money, allowing you to focus on running your business rather than managing the numbers.
Operating a limited company can be tax-efficient, but it’s important to understand your tax obligations and their implications.
Understanding Your Tax Obligations
The first step is to distinguish between the taxes your company will incur and the taxes you’ll pay on your salary and personal income.
Corporation Tax
Corporation Tax is applied to all profits made by limited companies. You should deduct your own salary from the profits before calculating this tax. For example, if you invoiced £150,000 + VAT in a year and paid yourself a salary (plus any other expenses) of £25,000, Corporation Tax would be due on £125,000.
The rate is 20% for companies earning less than £300,000 in profit per year, which is considered a small profit. This became the main rate of Corporation Tax on April 1, 2015.
Employer’s National Insurance Contributions (NICs)
As an employer, you are required to pay National Insurance contributions for all employees who earn above the current threshold.
HMRC provides details on the current criteria and rates that businesses must pay.
Value Added Tax (VAT)
If your firm’s annual revenue exceeds the VAT registration threshold, you must register for VAT. This means collecting VAT from your customers and remitting it to HMRC quarterly (output tax). You can also reclaim the VAT you owe to other companies (input tax). However, the amount reclaimed cannot exceed the VAT you charge on your goods and services.
If you're a small business, you might benefit from the flat rate VAT scheme, which simplifies accounting. This scheme applies if your VAT taxable turnover is less than £150,000 and allows you to calculate VAT payments as a percentage of your total inclusive turnover.
PAYE (Pay As You Earn)
Any salary you receive from your company that exceeds the tax-free personal allowance is subject to PAYE tax, just like if you were working for another employer.
Personal Dividend Tax
The tax rate on dividends from your business is lower than the rate on your salary.
Employees’ National Insurance Contributions (NICs) - Personal
In addition to the NICs you pay as a business for each employee, you must also pay NICs personally.
NICs are payable on your salary but not on dividend income.
Most accountants can establish a limited company on your behalf either for free or for a fixed fee. At The Accountant Point, we offer this service at no charge.
How Much Should You Budget for This Initial Service?
There are three main methods to form a limited company:
- DIY through Companies House: This costs £12 for the electronic service and £40 for the print service. If you opt for the paper version, you'll need to complete the application form and submit any additional documents.
- Hire a Formations Agent: Prices range from £30 for a basic electronic service to £100 or more for a comprehensive service.
Accountant Services: Your accountant can register the company for you, either for a fee or for free if you sign up for their accountancy service.
Limited Liability Protection
As a limited company, your liability is restricted to a certain amount, shielding you from the full financial risks. Unlike sole traders, who can face unlimited personal liability, the law treats a limited company as a separate legal entity. This distinction means third parties, like clients and suppliers, contract with the company rather than individual directors and shareholders. Consequently, if the company faces financial trouble or bankruptcy, your personal liability is capped to the amount you’ve invested in shares plus any unsecured loans. However, you may be personally liable for any fraudulent activities as a director.
Tax and National Insurance Efficiency
Operating as a limited company can be more tax-efficient. Directors who receive a small salary and the rest of their income as dividends can still qualify for State Benefits without paying employer or employee National Insurance Contributions (NICs). Dividends incur lower taxes and are exempt from NICs, whereas sole traders’ full income is subject to NICs. Despite recent changes to dividend taxation increasing taxes for limited company shareholders, operating as a limited company can still offer tax benefits.
Enhanced Credibility and Reputation
A limited company often appears more professional and can instill greater confidence in clients. Some clients, especially larger corporations and those in the financial sector, prefer or even exclusively work with limited companies. This credibility can open doors to business opportunities that might not be available to sole traders.
Ease of Formation
Contrary to popular belief, forming a limited company is not expensive or complicated. You can incorporate online in under ten minutes for a minimal cost. This dispels the myth that setting up a company is a long and costly process.
Better Access to Financing
A limited company's separate legal entity can make it easier to secure financing compared to a sole trader, who must rely on personal funds for capital. Limited companies might find it simpler to obtain loans or investments to grow their business.
Business Name Protection
Once you register a company name with Companies House, it is legally protected, ensuring no other UK company can use the same or a similar name. As a sole trader, you lack this control, risking potential damage to your reputation if another business with a similar name engages in questionable practices.
Future-Proofing Business Ideas
If you have a great business idea but lack the time or funds to pursue it immediately, you can create a dormant company. This allows you to secure the business name and put your idea on hold while protecting your future interests. A dormant company does not trade or conduct significant transactions, but you must inform HMRC and Companies House and file certain documents annually.
Ease of Selling or Transferring Ownership
Transferring ownership of a limited company is simpler than with an unincorporated structure. Shares, clients, equipment, and other assets can be packaged and sold as a whole. For sole traders, this process is more challenging since the business is often closely tied to personal assets and identity.