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

[Adlopa]

I’m new to contracting, and in an unavoidable rush associated with starting my first (and somewhat last-minute) contract, plus some initial uncertainty about whether to go umbrella or LTD, I ultimately used a contractors’ accountants to put everything in place for an LTD.

I freelanced as a VAT registered sole trader for many years (and still do, for different work) and have a clear personal grasp of those accounts and tax returns. I’m also familiar with Companies House requirements, since I’m the company secretary (with all that entails) for a tiny freehold company for my flat. And, after some in-at-the-deep-end learning, I think I now have a reasonable grasp of how things work with a LTD company, too.

So now I’m starting to wonder why I’m paying a monthly fee to an accountant for my LTD company. Its online accounts software is rudimentary (nowhere near as sophisticated as FreeAgent, for example), no timesheets/invoices are required from the accountants’ software (it’s all client side, in this case, and not a problem to handle by other means anyway) and the client pays my LTD directly, with no interaction with the accountant.

The accountant will handle my SA, CT, VAT and CH returns, but I feel perfectly able to do those myself (having handled everything but CT myself for years) — and FreeAgent looks like a lifesaver for the aspects of accounting I have no experience with (P/L, dividends, etc).

Given that the accountants aren’t particularly responsive to email and my tax affairs aren’t particularly complicated (so far), it seems pointless to pay them the equivalent of £1500 a year for something I think I can do myself. (That said, I haven’t yet been involved with personal pension contributions, inside-IR35 matters or anything else that could be considered complicated this tax year.)

So am I:

1. being naïve and simply missing something obvious about an accountants’ value?
2. unlucky enough to have chosen a rubbish accountant?
3. in the category of people who don’t really need an accountant?
4. best switching to a ‘FreeAgent accountant’ who charges less since I’m happy to do some of the work..?

[Louisa@InTouch]

Hi Adlopa,

FreeAgent is good but remember the quality of the VAT returns/accounts/reports available will solely depend on the quality of the information that you enter in.

Accountant's are good to ask questions, make sure you are on the right track and make sure you don't fall into any nasty traps!

And sometimes Google doesn't always have the right answer for you

Most firms would discuss going onto an 'annual' service which would reduce the cost and their role, then only charge a fee for year end accounts. It doesn't have to be a FreeAgent specialist, as long as you grant your accountant secondary access.

[SimonMac]

You pay the accountant for one thing, and one thing alone, their knowledge, everything after that you are still ultimately responsible for even if they submit the returns on your behalf.

I do not use an accountant and do not find it too taxing, I have made mistakes but I don't think enough to cost me more than the £1500+VAT a year that an average accountant would cost

[northernladuk]

You pay the accountant for one thing, and one thing alone, their knowledge, everything after that you are still ultimately responsible for even if they submit the returns on your behalf.

I do not use an accountant and do not find it too taxing, I have made mistakes but I don't think enough to cost me more than the £1500+VAT a year that an average accountant would cost

Where I pay mine under £1000 and I think it's cheap as chips for the piece of mind and getting it all right.

Horses for course I guess.

[VectraMan]

I think you answered your own question. Do it yourself.

[Maslins]

Think there's an element of all your 4 ending points.

DIYing for a sole trader is pretty easy. DIYing for a Ltd Co is a lot more tricky (lots more things to file, in certain formats, with penalties if not done on time), but still certainly possible.

It does sound like you want to DIY, so I'd suggest go for it. Worst case scenario is you cock a few things up, suffer a few penalties, and perhaps get an accountant further down the line to pick it. Best case scenario is you save £1,500 a year with no issues whatsoever.

Just ensure you don't bury your head in the sand if you start getting scary letters you don't understand. What starts as a small penalty can easily escalate if ignored.

[TheFaQQer]

Accountant's are good to ask questions, make sure you are on the right track and make sure you don't fall into any nasty traps!

And that's why I pay you

That and I studied accountancy in my first year at university and could never get any of the numbers to balance.

Quite how it will pan out with the mooted quarterly annual returns will be interesting, to say the least.

[Fred Bloggs]

And that's why I pay you

That and I studied accountancy in my first year at university and could never get any of the numbers to balance.

Quite how it will pan out with the mooted quarterly annual returns will be interesting, to say the least.

I expect that quarterly tax returns and the like will play right into the hands of FreeAgent type systems. The software can submit, quarterly, monthly, weekly, whatever, with minimal user input? The data is already there ready for submission?

[JB3000]

I’m new to contracting, and in an unavoidable rush associated with starting my first (and somewhat last-minute) contract, plus some initial uncertainty about whether to go umbrella or LTD, I ultimately used a contractors’ accountants to put everything in place for an LTD.

I freelanced as a VAT registered sole trader for many years (and still do, for different work) and have a clear personal grasp of those accounts and tax returns. I’m also familiar with Companies House requirements, since I’m the company secretary (with all that entails) for a tiny freehold company for my flat. And, after some in-at-the-deep-end learning, I think I now have a reasonable grasp of how things work with a LTD company, too.

So now I’m starting to wonder why I’m paying a monthly fee to an accountant for my LTD company. Its online accounts software is rudimentary (nowhere near as sophisticated as FreeAgent, for example), no timesheets/invoices are required from the accountants’ software (it’s all client side, in this case, and not a problem to handle by other means anyway) and the client pays my LTD directly, with no interaction with the accountant.

The accountant will handle my SA, CT, VAT and CH returns, but I feel perfectly able to do those myself (having handled everything but CT myself for years) — and FreeAgent looks like a lifesaver for the aspects of accounting I have no experience with (P/L, dividends, etc).

Given that the accountants aren’t particularly responsive to email and my tax affairs aren’t particularly complicated (so far), it seems pointless to pay them the equivalent of £1500 a year for something I think I can do myself. (That said, I haven’t yet been involved with personal pension contributions, inside-IR35 matters or anything else that could be considered complicated this tax year.)

So am I:

1. being naïve and simply missing something obvious about an accountants’ value?
2. unlucky enough to have chosen a rubbish accountant?
3. in the category of people who don’t really need an accountant?
4. best switching to a ‘FreeAgent accountant’ who charges less since I’m happy to do some of the work..?

Sounds like you should go with point number 4 in the first instance ASAP, and then you should opt for a year end only service in the second year (i.e. you do your own payroll, SA and VAT, and the accountants do your accounts and CT) and then finally you should do everything yourself via Free Agent from the 3rd year onwards.

[SueEllen]

Not all accountants charge around £1500 a year, and not all accountants take ages to respond to email. Mine tends to respond in a couple of hours as long as I email them before 5pm.

As you can do some stuff yourself, do some of the stuff yourself and use a cheaper accountant.

However if you want to keep the price down you will have to limit the number of questions you ask. There are things employees/directors can claim but sole traders can't and vice versa.

One advantage of having an accountant is every time you need a reference you have someone external to provide one for you. References tend to be needed for finance, defence and government work.