Running a limited company comes with a range of responsibilities, not least when it comes to accounting.
Keeping accurate financial records is essential for limited companies for both compliance and financial management reasons.
Preparing and filing annual accounts can be time-consuming and complex, and in most cases, businesses will either have an in-house accountancy team or will hire accountancy services.
New companies and those with straightforward financial requirements often ask, can I do my own accounts for a limited company?
Is it a viable option, could it save you money, and what factors do you need to consider before attempting to manage your own limited company accounts?
Let’s explore in more detail.
Can you file your own limited company accounts?
It’s perfectly legal to do your own limited company accounts and file to Companies House if you feel confident in your ability to manage the accounting process.
But what does this mean in practice?
Understanding of accounting principles
You need to be familiar with standard accounting principles, such as double-entry bookkeeping and accrual accounting. You should also know how to prepare financial statements such as the profit and loss account, cash flow statement, and balance sheet. Without this understanding, it may be difficult to ensure the accuracy of your accounts.
Accounting software
Accounting software can make the process of managing accounts more manageable. Software packages are designed to help business owners track income and expenses and generate financial statements. However, to use accounting software appropriately requires some basic accounting knowledge, such as how to categorise transactions.
Business complexity
If your business finances are very straightforward there can be more scope to manage your own accounts. As your business grows and its finances become more complex, this becomes more challenging. As the financial complexity of a business grows, the risk of making mistakes increases which can be costly to put right. In most instances, hiring professional assistance will be more cost-effective.
Time
One of the main reasons why few limited company managers opt to take care of their accounting is the time it takes. If you are new to accounting, it can be even more difficult and time-consuming. You have to ensure that all transactions are recorded accurately, and accounts are reconciled. Any errors may lead to penalties and potential legal issues.
Can I submit my own limited company accounts to Companies House?
All limited companies are required to file annual accounts with Companies House.
These become part of the public record and can be accessed online. They must include a balance sheet, notes to the accounts, and a profit and loss account.
If your company is above a certain size, you may need to include an auditor’s report.
When considering can I prepare my own limited company accounts it’s important to bear in mind the consequences of making mistakes.
These can be costly both in terms of time and expense and may have an adverse impact on your business going forward.
Do you legally need an accountant for a limited company?
When considering can you do limited company accounts yourself, a key question is legal requirements.
While you are not legally required to hire an accountant, there are a number of reasons why most business owners choose to hire professional help.
Accountants are trained professionals with a thorough knowledge and up-to-date understanding of tax laws, standards, and compliance requirements.
They ensure your accounts are accurate, meet all of your compliance obligations, and are submitted on time. They reduce the risk of penalties or legal issues arising out of errors.
Beyond compliance, accountants can offer advice and guidance that help your company become more profitable.
They can identify tax-saving opportunities, ensuring that all allowable deductions and reliefs are being claimed. They can also assist with financial planning, offering strategic support to help your business grow and meet your goals.
Finally, hiring an accountant provides valuable peace of mind that your compliance requirements are being met. They can reduce stress, allowing you to concentrate on other business activities.
So, while the answer to can you submit your own limited company accounts is yes, for most business owners this isn’t a viable or attractive option.
Working with accomplished accountants can not only save you move in the long run, but it can also place your business on a firmer footing going forward.
Let DAAFL take the headaches out of limited company accounts
At DAAFL, our team of financial experts provides a range of services for limited companies, ensuring that they meet their statutory obligations, reduce their liabilities, and optimise their financial record keeping.
Our bespoke limited company account services meet your unique business needs while giving you more time for other business activities.
Contact us to find out more about how we can help.