Businesses come in all shapes, sizes and forms. Therefore, there is not really one set way in which things like accounts, bookkeeping and tax issues can be dealt with and managed.
A limited company is often a large operation, so there is a lot involved and a lot to take care of. This can be time-consuming, and you don’t want anything to go wrong or to pay more tax than you need to, so outsourcing assistance from an accountant could be the best way to manage it all.
They will provide you with the best accounting software for your particular business to help you keep on top of things and automate most of the financial sums, which they can view and contribute towards when they need to. We’ve made it easy to find the best online accountants here at Accountly.
Limited Companies Accountancy Services
A private or public limited company is a business structure where the legal responsibility of its members, shareholders and directors is limited.
Simply put, a limited company is run entirely separately from the affairs of the business owner(s). They are not liable for any debts or costs, and personal artefacts such as property can be safeguarded.
It is one of the best ways to run a large business which relies on investment and financial contributions from others (shares), but small businesses may also choose to operate under a limited company as it is good for keeping personal and business assets separate, which can be a lot more tax efficient for everyone involved.
Accountants can help companies with ongoing bookkeeping and tax affairs, or just assist with year-end obligations.
Taxes To Pay
Compared to sole traders, limited companies have some extra responsibilities and taxes, and may be responsible for:
- Corporation Tax: A tax on annual profits. For the 2018/19 tax year, this stands at 19% but is set to fluctuate slightly over the next few years
- VAT: Any company which brings in over £85,000 must register for VAT. It is charged on almost all goods and services in the UK
- Personal Income: As well as the above, company owners and directors will have to pay tax on the personal income (salary or dividends) they draw from the company. These will be settled with a self-assessment tax return
- Capital Gains Tax: If your business disposes of assets during the tax year (such as shares, investments, or property), there may be a charge on them depending on value, how they were disposed of and who to
This is the biggest tax which a business will face. Unlike sole traders, limited companies don’t pay income tax and National Insurance. Instead, they pay Corporation Tax on their profits (which is income minus allowable running expenses).
So, if your company brought in £100,000 for 2018/19, and had an expenses bill of £10,000, their profits are £90,000. This taxed at the current rate of 19% for that year will mean a liability of £17,100.
How Do I Pay Myself Through A Limited Liability Company?
Because the law states the owner and the company to be two separate entities, you can’t just withdraw money from the company bank account as and when. You need to take a salary or declare a dividend instead, setting up a PAYE.
The company can deduct this from annual profits as a business expense, but there will be personal tax to pay as with ordinary employees.
You can also pay yourself a dividend, which is basically a share of the profits before tax, but this will be taxed.
How Can An Accountant Help My Company?
- Setting Up Tax: You must do a lot of the signing up yourself, telling HMRC you are eligible to pay. An accountant can tell you what you need to register for and do it on your behalf
- Bookkeeping And Accounts: There may be a lot of transactions and expenses to manage on a daily or monthly basis, and they can keep up with this so when the tax returns come, things are easier, and nothing has been missed. This may be easier than inputting everything yourself if there are a lot of entries to make, and it will all be Making Tax Digital compliant
- Year-End Help: You may be okay keeping up with books and accounts, but need help accumulating it all and putting things in the right places with the paperwork, or would like somebody to check over the accounts for anything HMRC will find problematic
- Tax Returns: From Corporation Tax CT600 forms to your quarterly VAT submission, accountants can either do all the hard work for you by assessing your online bookkeeping or show you how to calculate certain figures from your bookkeeping. Most can be done automatically with the right software
- Payroll: If you take on any employees, they must be registered with HMRC straight away and added to payroll. They will have payments taken out of their wage such as National Insurance contributions, and it will affect your taxes too. Accountants can manage this on your behalf, or oversee your calculations through online software
- Representation: Once your accountant is appointed your agent, they can deal with HMRC on your behalf if they’d like to check something or launch an investigation
- Personal Tax Returns And Salary: If an accountant helps with other areas of your business finances, they may also be able to help you with your personal salary and any income tax returns
- Advice: From spending limitations, owner salaries and expenses claims, accountants can offer advice of how best to run your company so you pay less tax or can claim the maximum amount possible, or how to sell assets
Can I Do The Accounting Myself?
There is nothing to stop you taking charge of the accounting and tax, as there are no legal obligations in place for accountants to be mandatory.
However, if the finances are quite a large operation, or you’re concerned about the penalties and fines if you get something wrong, then having an accountant in place will definitely be beneficial.
It will save you spending time managing and learning about this, or having to train up a member of staff to take care of it all. They will show you the best online software to use for your particular accounts, and can oversee your transition to the Making Tax Digital world.
Not only will they be able to get things in order and accurate, but you could also receive advice on how best to deal with expenses, pre-tax profits, annual expenditures and staff payrolls if applicable. For a large company, this could be priceless.