YOU'VE STARTED A LIMITED COMPANY

When Do You Actually Need an Accountant? 

A practical first-year guide for new company directors 

You do not have to appoint an accountant simply because you have formed a limited company. However, getting support early can prevent problems, improve your records and make your first year end much easier. 

Do I need an accountant as soon as I start a limited company? 

Not necessarily. However, running a limited company brings financial and reporting responsibilities that are different from operating as a sole trader. 

Your company may need to prepare annual accounts, submit information to Companies House, meet Corporation Tax obligations and maintain adequate accounting records. Your first accounts can also cover a period longer than 12 months, while a Corporation Tax accounting period cannot exceed 12 months. In some cases, this means two Company Tax Returns may be required for the period covered by the first accounts. 

Speaking to an accountant early helps you understand what is coming, rather than discovering your responsibilities when a deadline is close. 

The best time to speak to an accountant is often earlier than you think 

A common mistake for new directors is thinking: 

“I don’t need an accountant until my year end.” 

Although your first accounts may not be due yet, the decisions and transactions taking place throughout the year affect the information eventually included in them. An accountant can help you organise your bookkeeping, understand the records you need and set up suitable accounting software from the beginning. 

This avoids trying to reconstruct a full year of activity when your first filing deadline is approaching. 

What should you be doing during your first year? 

1. Keep your bookkeeping up to date 

Do not allow receipts, invoices and bank transactions to build up for months. Regular bookkeeping gives you a clearer picture of company performance and makes preparing the year-end accounts considerably easier. Cloud accounting software, such as Xero, can help keep your records organised throughout the year. 

2. Separate personal and company money 

A limited company is legally separate from you as an individual. Maintain clear records of money entering and leaving the company, ideally using a dedicated business bank account. Take advice before transferring money without understanding how it should be treated in the company records or your director’s loan account. 

3. Think about tax before the year end 

Tax planning is generally more useful before the financial period has finished. Reviewing the company’s position during the year can help you understand likely liabilities, plan cash flow and consider available options before it is too late to act. 

4. Check whether other obligations apply 

Depending on what your company does and how it operates, you may also need to consider: 

• Payroll and workplace pensions 

• VAT registration and VAT returns 

• Business expenses and benefits 

• Director remuneration and dividends 

• Construction Industry Scheme (CIS) obligations 

• Making Tax Digital requirements 

Not every company needs every service, which is why advice based on your circumstances can be valuable. 

When are your first company accounts due? 

A company’s first accounts usually run from its incorporation date to the accounting reference date set by Companies House. As a result, the first set of accounts often covers slightly more than 12 months. 

Corporation Tax works differently because an accounting period cannot be longer than 12 months. Where the first statutory accounts cover more than 12 months, the company may need two Company Tax Returns for that first accounts period. This is one reason not to leave the appointment of an accountant until the last minute. 

So, when should you actually appoint an accountant? 

There is no single answer for every business. As a practical rule, the earlier you establish reliable accounting processes, the easier it tends to be to manage the company and prepare for its first year end. 

You should consider speaking to an accountant if: 

• This is your first limited company 

• You are unsure which records to keep 

• Your bookkeeping is starting to fall behind 

• You are considering VAT registration 

• You are taking on employees 

• You are unsure how to pay yourself 

• Your first company year end is approaching 

• You do not know how much to put aside for tax 

• You want reassurance that your current setup is correct 

Already approaching your first year end? 

If you have been trading for several months and have not yet appointed an accountant, do not panic. This is a very common point at which directors start looking for professional support. 

Gather your bookkeeping records, business bank statements, sales invoices, purchase invoices and details of other company transactions. An accountant can review what has been completed, identify what remains outstanding and help you prepare for the filing and tax obligations ahead. 

The sooner you start the conversation, the more time there is to get everything organised properly. 

Looking for an accountant for your new limited company?

RIPSOL Ltd CAN HELP 

Shelley Ripley at RipSol Ltd Accounting and Payroll Services supports limited company directors with bookkeeping, company accounts, Corporation Tax, payroll, VAT, cloud accounting and ongoing financial guidance. Whether you have just formed your company or your first year end is getting closer, it is never too early to make sure you are on the right track. 

Get in touch for a friendly, no-obligation conversation about the support your business needs.