While not mandatory, nearly all  limited companies opt to hire an accountant to handle financial matters, ensure compliance, and provide tax advice.

Annual accounts and a confirmation statement must be filed with Companies House each year. Accounts include a balance sheet, profit and loss statement, and appropriate notes.

If your limited company generates profits, it has the option to distribute dividends to its shareholders. It’s essential to note that dividends are not considered a business expense for Corporation Tax purposes. Additionally, it’s illegal to pay dividends if the company lacks sufficient distributable reserves to cover the dividend amount.

The necessity for an audit depends on various factors, including company size and financial status. Generally, if a company’s turnover is below £10.2 million and its assets are under £5.1 million, an audit is not mandatory. However, some companies choose to undergo audits to meet financial obligations, despite falling below these thresholds. For detailed guidelines, consulting HMRC’s website is recommended.

‍Records must be maintained for six years following the conclusion of the last financial year they pertain to. However, they may need to be retained for a longer duration if certain circumstances apply. These include transactions spanning multiple accounting periods, purchases of assets with a lifespan exceeding six years (e.g., equipment or machinery), late submission of the Company Tax Return, or when HMRC initiates a compliance check into the Company Tax Return.

Typically, the most tax-efficient approach for limited company directors involves a blend of salary and dividends. Many directors prefer keeping their salary modest, falling below the National Insurance threshold, while allocating a larger portion of their income as dividends. The salary is dispensed to directors akin to regular employee pay. Our article, “How much should I take as a salary from my limited company?”, provides an in-depth exploration of this process.

Limited companies  have to fulfill various tax obligations. While some taxes are mandatory for all companies, others depend on factors like an employee presence within the company. These taxes may encompass Corporation Tax, VAT, PAYE and Employers National Insurance. 

Companies must file their accounts with Companies House within nine months following the conclusion of the accounting period. Additionally, the Corporation Tax return and accounts must be forwarded to HMRC within 12 months of the year end. For a detailed examination of a company’s tax responsibilities and the respective deadlines, delve into our article addressing the tax obligations of limited companies.

As the Director of your limited company, it falls under your jurisdiction to approve your company accounts and corporation tax return. While Sleek can assist in the preparation and submission of certain returns on your behalf, the final responsibility for their endorsement rests with you!

Managing your Limited Company accounts involves several steps. First, ensure you keep accurate records of all income and expenses related to your business. Then, reconcile your bank statements regularly to ensure accuracy. Next, prepare your annual accounts which will include a profit and loss and balance sheets Finally, file your Accounts and Corporation Tax return to Companies House and HM Revenue & Customs within the required deadlines.

The cost of hiring an accountant for a small Limited Company can vary depending on factors such as the complexity of your accounts, the level of service required, and the accountant’s fees structure. At Sleek, we offer fixed pricing for Limited Company accounting services, starting at low as £49.90.