To 'Accountant' or not to 'Accountant' - tis the question?

[Hemingfield]

Hi,

If you run your limited company in a very straight forward manner and work out all tax and vat payments yourself can you theoretically not require the use of an accountant?

I - by no means wish to put a downer on using an accountant in any way, shape or form. I am aware that a good accountant are worth their weight in gold. I'm just setting up and trying to keep costs down (until I get going).

Cheers muchily,

Hem

[ASB]

Yes. Just don't do anything wrong. Don't forget to ensure you claim all capital allowances etc. in the CT calculation. Differentiate correctly between expenses and capital purchases too.

There is a school of thought that says HMRC don't particularly like books submitted by individuals and may be more likely to investigate.

[malvolio]

If an accountant costs you money he's doing it wrong. You are more likely to lose by not using one until you are 100% happy with the rules and processes and timings - and even then I can still demonstrate they're cheaper than DIY.

[PAH]

Ditch the accountant. It's cheaper to get IR35 and tax evasion insurance.

[malvolio]

Ditch the accountant. It's cheaper to get IR35 and tax evasion insurance.

Except you have to make some kind of effort to stay onside with the taxation rules, and you have a legal obligation to ensure YourCo is solvent and legal. Having an accountant or not has sod all to do with IR35 insurance. Also, you can't insure agasint evasion, since that's a criminal offence.

So all in all, perhaps not a very intelligent contribution, eh?

[thunderlizard]

I don't think you can get insurance against making a balls up of your year-end accounts.

It's all down to your appetite for organisation and following fairly complicated rules, and remembering deadlines. It is certainly possible to read up on the obligations of a small limited company and fill in all the forms yourself. People on the HMRC helplines actually are helpful too. If you're just starting up and you don't want to sign away £1k a year, doing it yourself is a strong option. But I like having my accountant - even though they're of the production-line variety, I'm sure they let me enjoy at least 3-4 weekends a year that I'd otherwise spend poring over accounts.

[PAH]

Except you have to make some kind of effort to stay onside with the taxation rules, and you have a legal obligation to ensure YourCo is solvent and legal. Having an accountant or not has sod all to do with IR35 insurance. Also, you can't insure agasint evasion, since that's a criminal offence.

So all in all, perhaps not a very intelligent contribution, eh?

Sorry, was getting ahead of myself. Please re-read my post in a year's time when Churchill will have launched tax evasion insurance, I'm sure. Since when has not being able to get a payout ever stopped the insurance companies from (mis)selling it.

[dude69]

Hi,

If you run your limited company in a very straight forward manner and work out all tax and vat payments yourself can you theoretically not require the use of an accountant?

I - by no means wish to put a downer on using an accountant in any way, shape or form. I am aware that a good accountant are worth their weight in gold. I'm just setting up and trying to keep costs down (until I get going).

Why not?

The VAT on flat rate scheme is trivial, just submit every three months online return for 13% (12% first year) of monies received, and pay online. Takes about 10 minutes every 3 months. Call it 1 hour per year.

PAYE is fairly straight-forward, though they do use silly tables rather than calculating it via the percentages. Annual return can take 15 minutes online, but there are various silly forms that you may wish to print out and file. Monthly payslips can be printed out in the event that you need them. Schedule standing order to pay PAYE.

Companies House annual return is just directors' names, shareholdings, etc., very very simply, 10 minutes work.

Ongoing work is a transaction spreadsheet showing dates, payees, and amounts for receipts and purchases. This is somewhat time-consuming, but even if you pay an accountant you need to do this (they won't just take a pile of receipts and invoices and tally things up), so there's no extra time here.

Annual accounts via Companies House is a fill-in-the-boxes pdf file, with balance sheet (no P&L). Most of this is really straight-forward; the main thing at this point is to understand the fact that you need to show your liabilities (VAT on sales already made but not yet remitted to HMRC, and corporation tax on your profits), and you need to account for accured income (work that has been done but not yet billed). You also need to understand about depreciation of assets - when you buy an asset, it doesn't cost your company anything in terms of its balance sheet - £1k goes off cash, £1k goes on assets. What costs you is the depreciation, which you can model as 25% per year, so you put down £750 for the asset value.

The Corporation Tax return is done at the same time, once a year. You need to prepare a P&L for this. The P&L is fairly straightforward, just break down expenses (including depreciation) and income into categories, and then calculate net profit from this. Then you need a separate sheet to show Corporation Tax, which should be split between tax years in proportion to days, if your accounts year is not April 1 - March 31st. This is just Net Profit + non-allowable expenses (depreciation, entertaining, etc.) - capital allowances (which will be 100% from April 1st) * 20% CT rate (going up to 21%).

All together, that's an evening a year to do your accounts, plus a couple of hours for VAT, PAYE, and annual return.

Really there's absolutely no use for an accountant, except the annual return, which you can spend a little time to understand yourself, or even pay an accountant to compile. I can't see the sense in retaining one year round.

[fossunited]

I'm new here, but just thought I'd put my 2 cents in.

I'm an accountant, and I don't even dream of doing my own books. In fact, most of my friends who are also accounting contractors don't bother either, because it isn't worth the hassle.

If you work through the right company they can pretty much do it all for you without much hassle. In the last year I have paid less than 20% of my total earnings in tax and accounting fees, I paid an extra £120 or so for them to do my tax return, and still got a refund at the end of it. In return for giving up this, I had all my nights free, no issues with having to file anything. All in all, I think the fact that I don't have the hassle of all of the paperwork required is worth it.

[hgllgh]

You can register on the HMRC website for VAT and PAYE returns and submit them online. You need to keep your books anyway. I am doing this now but havent submitted PAYE year end as yet. I plan to get an accountant to do my Companies House and CT return just in case.