Do I need an accountant for my limited company?

By Catherine Pope

January 28, 2020

Do you enjoy keeping up-to-date with tax law? I thought not. Many clients tell me they need more support with their accounts, but they either can’t afford an accountant, or they’ve hired an unhelpful one. With the right relationship, it’s like having an extra person on your team and it also saves you a lot of time. Possibly money, too.

Directors of limited companies have many more responsibilities than sole traders. Unless you know what you’re doing, it’s easy to get into a pickle.

In this post, I’ll explain the services accountants typically offer limited companies, give you an idea of the costs, and also offer guidance on how to find one who’ll make your life easier.

What do accountants do?

As with any profession, not all accountants are created equal. The services and level of care vary enormously. Some charge a one-off fee just to prepare and submit your annual accounts; others offer a range of support in return for a monthly fee. When choosing an accountant, it’s vital to check exactly what you’re getting.

Here’s what might be on offer:

  • Preparation and submission of annual accounts
  • Preparation and submission of VAT returns
  • Filing of payroll runs
  • Cash flow monitoring (alerting you to any potential shortfalls, e.g. inability to pay a VAT bill)
  • Advice on tax issues (such as whether it’s beneficial to become VAT-registered, or identifying areas where you might save some tax)
  • Reminders of important deadlines
  • Conducting an annual review (spotting any problems or opportunities)
  • Dealing with HMRC correspondence (those nasty brown envelopes end up on their doormat, rather than yours)

What don’t accountants do?

Accountants don’t usually do your bookkeeping, unless you pay them extra. Bookkeeping generally involves raising invoices, recording expenses, and chasing payments. Your accountant sometimes provides or supports software for these activities, but you’re expected to perform them yourself. That means saving and photographing all those receipts.

You’ll also need to manage bank reconciliation yourself. As a limited company, you are legally required to use a business bank account and match every transaction with a corresponding entry in your bookkeeping system. Depending on the software and your bank, it’s often possible to create a link between the two.

It’s unlikely that accountants will help you change your money habits. That’s what financial coaches are for. Ahem. Accountants might offer some general business advice, but it’s not their responsibility to make you better with finances.

How much do accountants cost?

Accountants are expensive. These professionals spend a long time studying and they have to keep up to speed with all sorts of topics that most of us would rather ignore. They’re also assuming a lot of responsibility. Getting a VAT return wrong can have serious consequences. They’ll be paying a lot of money for professional indemnity insurance [link] and passing on that cost to you.

Most firms will have fixed-price packages, depending on the type of company you run. It is usually based on:

  • The complexity of your business
  • The services included
  • The location of the accountant

For VAT-registered limited companies, it’s likely to cost at least £150 + VAT per month. If you’re not VAT-registered, the cost could be a bit lower, but don’t forget that you’ll be unable to claim back the VAT. Always check whether the quoted fees include VAT. You can sometimes save some money by choosing an accountant in a smaller town or a cheaper part of the country. An accountant based in Mayfair will charge a lot more than one in Kidderminster. Unless you need to meet with them in person, the location doesn’t matter.

If an accountant quotes a fee that seems remarkably cheap, find out why! Check they are providing the services you need. Also, be sure that there aren’t any hidden extras. Some will include the cost of accounting software (such as Xero or Freeagent) in the price; others will charge it separately. Make sure you’re clear on whether it’s included, as this can bump up the price by more than £20 a month. A few accountants will upsell you a software support package, too.

How to find an accountant

Ask your contacts. Even if they can’t recommend a good one, they might make you aware of some you want to avoid. You can also use Vouchedfor, an independent site that shows ratings and reviews from other clients.

When choosing, you should consider:

Location – is it important for you to meet face-to-face? There’s no reason why you need to, but it might feel more comfortable. Also, some people think accountants will do a better job if there’s a chance you might suddenly appear at their elbow. If you live in a big city, an out-of-town accountant might be considerably cheaper.

Size – smaller firms often earn a reputation for being friendlier and more responsive than larger outfits. However, a tiny accountancy practice could become overstretched, especially at busy times. What happens if your corporation tax return is due and your contact is having his hernia repaired? Large companies potentially offer more continuity, but will you get one named contact, or are they going to bounce you around to whoever’s available?

Specialism – depending on your business, you could benefit from a specialist accountant. Some firms focus on the creative industries, while others know a lot more about property. If you’re selling digital products internationally, you’ll need a firm with VAT expertise.

Accountants should offer a free, no-obligation chat. If they don’t, they’re not for you! Here are some questions you can ask during the conversation:

  • What are the fees and what’s included?
  • Are there any additional one-off setup costs?
  • What software would I need to use? Is this included in the fee?
  • Who will be my main point of contact? An accountant or a customer service representative?
  • Is there any limit on phone/email support?
  • Who’ll be doing the work? Qualified accountants or administrators? (some firms just use accountants at the final stages, which can lead to errors)
  • Will you send automatic reminders for tax returns and payments?

Key Point

Think carefully about the sort of support you need and check that it’s available through your chosen accountant.


Finding the right accountant takes time and it’s also an expensive exercise. This is why many people either struggle alone or persevere with the wrong firm. There’s an old adage that a good accountant should pay for themselves. Maybe that’s not true for tiny companies, but you should see the benefits as your business grows. And also you’ll have a lot more headspace. Although you always remain responsible for your company accounts, you can rest easier if an expert is on hand to guide you.

Make sure the cost of accountancy is factored into your prices. When you hire a painter and decorator, you’re paying her accountant, too. If you want to build a sustainable business, you need to invest in the right support.

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