If you work through your own limited company, it can be tempting to think about doing your accounts yourself. But should you? If you're thinking about DIY accounting, we've put some information together to help you decide.
Can I do my own company accounts?
There is no requirement to have a professional do your accounts, and you are well within your rights to do them yourself. Some things to consider are:
How much time do you have to dedicate to doing your accounts?
In order for you to be able to successfully manage your finances, you should be able to dedicate around 15 minutes each day. For busy contractors, it can be a challenge to balance this alongside work.
How much do you know about doing your accounts?
While you don't need to be a trained professional to manage your own company numbers, you do need an understanding of bookkeeping and finance. If you make a mistake or miss a deadline, HMRC won't be lenient.
What can an accountant do for me?
Providing an accountancy service involves far more than simply checking invoices and receipts, and then filling in a tax return form once a year. A good accountant will provide ongoing, proactive advice throughout the year and not just at the end when it will probably be too late to save you from an excessive tax bill. And in order to do this, they have to keep abreast of the UK tax system and all of its regulations and legislative changes.
An accountant should:
- Help you to structure your company in the most tax-efficient way possible
- Help you to understand the best way to take money out of your company
- Understand what you can claim by way of expenses and the impact on your income and taxes
- Help you to understand all of your tax liabilities both personal and corporate. These include:
- Employer's National Insurance contributions
- Employee's National Insurance contributions
- Personal income tax
- VAT (Flat Rate Scheme or standard VAT)
- Corporation Tax
- Prepare and complete your personal Self-Assessment Tax Return each year
- Understand when, how much and where to send a payment for all taxes that are due
- Explain the benefits of not taking every penny out of your company along with other tax planning opportunities
Poor tax planning, or even worse no tax planning, can lead to any number of financial difficulties - such as an overdrawn directors loan account, financial penalties due to late or incorrectly submitted tax submissions, incurring additional tax for things that are classed as ‘benefits in kind’ and so on. The list is endless.
Read our full guide to learn what an accountant can do for you.
Why should I use a specialist contractor accountant?
Enlisting the help of a specialist like SJD means that you will have access to your own personal and dedicated accountant via telephone and email to give you all of the help and advice that you need. We’ll also send you email alerts so you never miss a deadline.
We will support you fully, act as an intermediary between you and all HMRC correspondence and contact with regards to VAT, PAYE and other tax-related issues. We will also keep you fully updated with regards to changes in tax law and the UK tax system that may affect you.
How can SJD help me?
If you would like more detail, here is a comprehensive list of what your accountant can do for you. You can also get the guide, here:
- Fully reconcile your bank accounts.
- Analyse other income and sundries.
- Check allowed and disallowed expenses, and provide suggestions for items that are not being claimed.
- Prepare your Company Year-End Accounts* within 28 days of us receiving all the relevant information from you.
- Calculate your Corporation Tax payable and advise you of the amount and date for payment.
- Prepare your Final Accounts, CT600 for HMRC and Abbreviated Accounts for Companies House where necessary.
- Send final paperwork to you for signature and return, reminding you and ‘chasing’ you where necessary, as we understand you may have missed our initial letters, emails or telephone calls.
- Submit Accounts and CT600 to HMRC and Abbreviated Account to Companies House on your behalf.
- If you send cheques to us, we will make sure they reach HMRC with the correct filing information.
- Record P45 details, prepare and submit P46 if necessary.
- Calculation of gross salary, tax and NI amounts due to HMRC.
- Manage your payroll to include: detailed summary with advice of payment to make to HMRC and detailed wages book to show net pay for employees (although you are the director of your own company you are also an employee).
- Real Time Submission filings with HMRC.
- If relevant, we will produce end of year IR35 calculations and advice for payment.
- Salary information provided for the Director i.e. you and one other employee, usually Company Secretary. Although, if you are a new company you probably won’t have a Company Secretary as regulations changed early this year (2008) removing the need to have a Secretary.
- Prepare and submit end of year P35’s and P14’s to HMRC.
- Prepare end of year P60 and send to you for your records.
- Set up new employees/remove employees on your payroll.
- Organise and manage overpayment and underpayment notices throughout the year.
- Change of Revenue Office details.
- Organise HMRC payslip booklets and provide support and advice on their completion.
- Manage any change in tax codes.
- Prepare P11D once you have completed your annual (online) questionnaire and submit to HMRC. If you have benefits in kind we will calculate the tax due and advise you of any payment HMRC will be looking for.
- To help us complete the above we will ask you for your P45 and confirm your IR35 status (we are happy to review any IR35 contract however this is outside the scope of normal work and as such we charge a small amount which is of course fully tax deductible).
- To help us complete the above, we will ask you for your P45 and confirm your IR35 status. We are also happy to review any IR35 contract, however this is outside the scope of normal work and as such we charge a small amount, which is of course fully tax deductible.
- Help you to understand the level of Corporation Tax due following dividends are taken from your company
Dealing with HMRC and Companies House
- We will handle all incoming HMRC and Companies House enquiries on your behalf
- Quarterly VAT Calculations
- Send email and mobile text reminders at the end of each VAT quarter
- VAT registration advice, including whether you would benefit from the Flat Rate Scheme
- Completion of quarterly VAT returns
- Review of spreadsheet for accuracy
- Flat Rate VAT Scheme application if necessary
- Ongoing VAT advice
- Help with any under or overpayment
Completion of Annual Return
- Prepare all Annual Returns
- Send email and mobile text reminders throughout the year to remind you to complete your online questionnaire.
- Prepare and submit your personal tax returns.
- Calculate any tax due, together with payments on account.
- Review and, if possible, reduce the payments on account for the following year.
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We've been providing expert accountancy advice and helping contractors to focus on doing what they do best since 1992.