Do you need to hire an accountant for your limited company?
Setting up a limited company is a brave and exciting time – whether you’re starting a career as a contractor, or starting your own business.
But amid the excitement, there’s one question that crops up for almost every new company director I’ve met: Do I really need to pay for an accountant? Can’t I do it myself?
While it’s technically possible to run a limited company without an accountant, let’s be realistic: for most, managing company accounts solo is a risky and very time-consuming.
In this article, industry veteran James Leckie, founder of ITContracting.com, looks at how realistic it is to do all of your company accounts on your own and uncovers all the things an accountant can do for you.
DIY Accounting – can you really do it on your own?
Theoretically, yes – you can manage your company’s accounts yourself.
Companies House and HMRC don’t require you to use an accountant.
If you’re confident with numbers, comfortable interpreting tax laws, and willing to dedicate time to ongoing admin, you might be able to master the DIY approach – and some contractors do.
But let’s not sugar-coat it: for most contractors and small company owners, this approach is more trouble than it’s worth.
A limited company comes with more complex responsibilities than being a sole trader.
You’ll need to:
- Prepare and file annual accounts
- Submit a Corporation Tax return each year
- Register for PAYE if you pay yourself a salary
- Process the monthly payroll
- Keep detailed and accurate accounting records
- Register for VAT – if applicable – and submit quarterly returns to HMRC
- File confirmation statements with Companies House
- Pay the correct amount of tax – and make your payments on time
That’s before you even consider changes to legislation, tax planning, and staying on top of your statutory deadlines (failure to do so can lead to fines and penalties).
Of course, it’s possible to do it yourself, but this is often a false economy. You risk making mistakes, missing out on potential tax savings, and spending too much time on paperwork, time which you’d rather devote to your business.
What will an accountant actually do for your company?
An accountant’s job goes far beyond number-crunching at year-end. A good accountant can be a trusted partner in your business, saving you time, money, and stress in ways that aren’t always immediately obvious to an outsider.
If you have a good accountant, it feels like there is someone who knows what they’re doing, looking after your numbers from behind the scenes. From my experience, having hired bad accountants in the past, when you find a good one, your stress levels automatically go down.
Here’s what a contractor accountant typically offers:
1. Key Financial Duties
These are the key services you’d expect from any specialist accountant:
- Bookkeeping: Maintaining accurate records of your income and expenses (although this is usually handled via accounting software these days, particularly the excellent FreeAgent or Xero).
- Annual Accounts: Preparing your statutory financial statements
- Corporation Tax Return: Ensuring your CT600 is submitted to HMRC correctly and on time
- Payroll: Running the payroll each month and filing RTI submissions
- VAT Returns: Checking that input and output VAT amounts are correct, and advising on the most suitable VAT schemes to join (e.g. Flat Rate)
- Self Assessment: If you’re a director, you’ll also need to file a personal tax return (this is an ‘additional task’).
All of these functions have to meet strict formats and deadlines set by HMRC and Companies House – get them wrong, and you could face penalties.
2. Dealing with HMRC and Companies House
Let’s be honest – no one enjoys calling HMRC. Especially when trying to resolve an issue after receiving a dreaded brown envelope from the postman.
A big plus of having an accountant is that they can act as your official agent. That means they’re allowed to speak to HMRC and Companies House for you.
They’ll usually handle queries, deal with tax questions, update your company details with the registrar, and make sure your accounts are filed correctly and on time.
For me, this is one of the key benefits of working with an accountant.
3. Tax Planning and Advice
Rather than just looking at what you owe, a good accountant looks at the bigger picture. They can advise on:
- How to pay yourself in a tax efficient way(salary vs. dividends)
- Whether to register for VAT, and under which scheme
- What business expenses can you claim
- How to structure your company to reduce tax liabilities
- Retirement planning and investment options for directors
These insights can more than cover the cost of their fees by helping you retain more of your hard-earned profits.
It is worth bearing in mind that your accountant can’t be too involved in advising your company, due to the Managed Service Company rules, so directors need to be well-informed about their own roles and responsibilities.
For example, your accountant can advise you on the most tax-efficient split between salary and dividends, but it’s up to you, as a director, to choose the specific levels yourself.
4. Peace of Mind
One of the biggest benefits is peace of mind. You’ll know your accounts are in order, deadlines are being met, and you’re paying the right amount of tax.
That means less stress and more time to focus on your contracting work.
If anything unexpected crops up, you’ve always got someone to call/email. After a while, a good accountant will get to know your business and proactively offer advice.
Do You Need an Accountant?
Strictly speaking, no. But in reality, for most limited company owners, the answer is yes.
A good accountant doesn’t just help you avoid mistakes – they add value, give you peace of mind, and free up your time to focus on work.
If you’re starting out and worried about costs, most contractor accountants offer affordable monthly packages. Competition in the market has kept prices very competitive.
The right accountant will more than cover their fees, not just in tax savings, but in reduced stress too.
