What does/should an accountant do for an LTD..?

[VectraMan]

The only way you're likely to get into trouble is if you forget the deadlines, but you obviously know about that sort of thing already, or do something really dumb like helping yourself to the company's money. I slightly cocked up my first ever annual accounts/CT return (for a small Plan B Co. that wasn't worth getting an accountant for), and they gave me a £100 fine, but I successfully appealed the fine and resubmitted and that was that. And that was only because I was using the paper form; the PDF won't let you submit anything until it adds up.

[WordIsBond]

Accountancy is not rocket science. Any competent IT contractor could learn to do it if they took the time. So you can learn to do the things you need to be able to do, and it sounds like you've got a handle on most of them already.

So competency isn't the issue (if we believe that you really know what you are doing).

Issues to consider:
1) Value-added. Can an accountant save you money by pointing out tax benefits of which you may not be aware? Very possibly. How much? Probably not very much.
2) Opportunity cost. You can take the time to file all the reports, to make sure you know what is due when, to stay up on all the rules and tax legislation. It will save you some money. Would you have spent that time earning money? If so, you've had an opportunity cost. How much? Maybe a lot. Maybe there's no opportunity cost, you do it on your Saturdays and couldn't have worked then anyway.
3) Personal cost. How much extra time will you spend on accountancy that you could have spent doing something you enjoy more? If you have no family and no friends and no hobbies and like researching tax rules, go for it. Otherwise, you have to decide if it is worth it.

The impact of each of these depends to an extent on how thorough your knowledge already is.

You also have to decide how aggressive/risky you want to be on tax. If you are a cautious person and don't try to claim everything you can, only those that are absolutely ironclad, you may not need an accountant. If you want to walk as close to the edge of the cliff as you can without falling over, having an accountant to warn against the steps that would take you over the edge might be a good plan.

For me, it is absolutely worth it, because of the opportunity cost. I have more work than I can do, and I would lose too much money if I took the time to be an accountant-lite. But everyone is different and has different knowledge.

There are some plumbing things I know how to do, and I'll do them if needed around the house. Others, I get a professional. Electrical, I opt out. I could learn, of course, but it wouldn't be cost effective. I mow the lawn, but I get a gardener to do some other things. I could wash the windows, but I pay for that. And so on. The accounting decision is really no different from these kinds of decisions. If you want to take the time to learn it right, go for it. Maybe that means paying someone for one year so you can then use what they've done as part of your education.

Any company director should be reasonably informed about accountancy, you are ultimately responsible. But I can't see ever taking the time to be my own accountant.

[Adlopa]

Thanks for those constructive replies — all really useful.

Since I have no interest in sailing close to the wind, tax-wise, I suspect it'll be simple enough for me to manage everything myself and perhaps switch to a cheaper accountant if I decide I need a safety net for the short/medium term.

I'm all for paying for third-party help when I lack the skill/knowledge/time, but I'm not at all comfortable just signing off work an accountant has done when I don't have a complete understanding of the steps involved. So since I'd almost certainly continue to duplicate all the necessary 'paperwork' for my own peace of mind, whatever the situation, I won't be losing much, time-wise, with a DIY approach.

[Maslins]

I'm all for paying for third-party help when I lack the skill/knowledge/time, but I'm not at all comfortable just signing off work an accountant has done when I don't have a complete understanding of the steps involved. So since I'd almost certainly continue to duplicate all the necessary 'paperwork' for my own peace of mind, whatever the situation, I won't be losing much, time-wise, with a DIY approach.

This makes me smile, just because it's quite common that we email statutory figures to a client for them to approve, and their response is "well, it agrees to FreeAgent, so it must be right". They don't seem to be aware that we tweaked FreeAgent to match! I guess my point is you shouldn't be duplicating paperwork, with something like FreeAgent as the link between you and accountant, key thing is that you both understand it. No duplication required.

I'm not trying to sway you, but I'd agree wholeheartedly that even if you were to have an accountant, it's important you at least understand the key numbers, as at the end of the day you're signing the figures off whether you have an accountant or not.

Good luck with it

[phileds]

In 15 years of contracting via a LTD company, my experiences with two accountants was pretty poor and their value add was almost zero. The one time I asked my accountant a simple but off-piste tax question that wasn't to do with running a limited company he advised me with total confidence of the wrong answer, and having double-checked on Google and found the opposite advice (from HMRC no less) sent him the link and he backtracked. Not a confidence builder.

I paid between £800-£1200 per year over that time, and really didn't see what I got for the money. I was the one collating the paperwork, putting expenses and income into spreadsheets, all to make their life as easy as possible. I did hear rumours that some accountants will sort out receipts for you - but not any I met.

As far as I'm aware they also have very little liability, it's ultimately the director's responsibility to sign the paperwork which heads to HMRC and Companies House, as the accountant relies totally on you to provide the necessary info. If that's the case, and you are really confident enough (perhaps with an accountant mate who can help with the odd question), I don't see why you can't do it yourself. Most LTD company IT contractors do nothing other than invoice, and pay the occasional expense.

That said....it's their job to keep up to date with the regs, and yours is to earn the money. If you're not 100% confident, go for the cheapest qualified accountant (preferably not a one man band) you can find. I spent more to find a London-based one, but it wasn't worth it, he could've been based in Aberdeen really, phone and email were all that was required. Avoid the one man band solution in case he gets run over by a bus or, as happened to one acquaintance, turns out to be keen on illegal tax dodges and then develops an alcohol problem, leaving matey very high and dry.

[Maslins]

I paid between £800-£1200 per year over that time, and really didn't see what I got for the money. I was the one collating the paperwork, putting expenses and income into spreadsheets, all to make their life as easy as possible.

I'm afraid that's fairly normal. Not too dissimilar to my memories of getting my first website done. I paid the web bod, but I had to supply all the content, tell them what layout/colours I wanted, choose pics etc etc. They just put all the info I gave them into a pretty format. They'd then potentially make some suggestions re the data I'd given them, but at the end of the day it was down to me, and I'd be responsible for whether or not the website pulled in '000s of visitors who went on to buy or flopped completely. It's not too different.

[northernladuk]

Thing is you don't see it because everything is going well. Look at the endless threads of people in trouble without one. I'd say the fact nothing's gone wrong and you don't see it is one of the benefits of having one. And for 800 quid a year? I charge my client more than that for taking a year's worth of dumps. Probably pay more than that for a cleaner as well. For the same money I've got a professional dealing with my entire financial situation. Cheap as chips....

[northernladuk]

Anyway.... This discussion could go on for ever because you are asking the wrong question. What you should be asking is 'What can an accountant do for ME?'

There are a couple of types of people..

Those that are switched on to what's going on around them, keep up to date with legislation and have a good understanding of their accounts. Do they really need an accountant. Probably not.
Those that are either new or don't have a clue and struggle to get to grips with what they do let alone the finer points of their accounting. Do they really need an accountant. Absolutely.
There is then a bit group of people that sit somewhere between the two. Those that think it's easy but don't know what they don't know, others that just can't be bothered for the cost, those that stumble on in ignorance and so on... Do they need an accountant. I'd say most do even if they are going to argue they don't. For the price it would be the safest option.

When you understand your requirements THEN you can ask the question if an accountant is needed.

[VectraMan]

Thing is you don't see it because everything is going well. Look at the endless threads of people in trouble without one.

There's quite a lot of threads of people in trouble with an accountant as well.

I was looking at FreeAgent yesterday (it's neither free, an agent, or an NNTP client). It does look quite good; perhaps worth the money to make the whole process more integrated. At the moment I use SJD's spreadsheet (which is free), Payroo for PAYE (which is free) and CT600 PDF for the CT and annual accounts, also free. But having everything in one system would certainly be better.

[northernladuk]

There's quite a lot of threads of people in trouble with an accountant as well.

I was looking at FreeAgent yesterday (it's neither free, an agent, or an NNTP client). It does look quite good; perhaps worth the money to make the whole process more integrated. At the moment I use SJD's spreadsheet (which is free), Payroo for PAYE (which is free) and CT600 PDF for the CT and annual accounts, also free. But having everything in one system would certainly be better.

That's very true but you have to deal with that as a separate topic. Quality of the service provided is different to do I need an accountant.