What Does a Limited Company Accountant Actually Do?

Introduction

Running a limited company offers many benefits, such as limited liability, tax efficiency, and a professional business structure. However, it also brings extra financial and legal responsibilities. From managing accounts to staying compliant with HMRC and Companies House, there is a lot to handle.

That is where a limited company accountant comes in. Their role goes far beyond just filing taxes — they help business owners manage their finances, plan for growth, and stay compliant with complex regulations. This article explains what a limited company accountant actually does and why they are essential for any successful business.

1. Setting Up the Company Correctly

A limited company accountant can help you set up your business from the start. They ensure the company is registered properly with Companies House and HMRC, and that all the required structures are in place.

They will:

• Register the company for Corporation Tax.

• Set up PAYE for directors and employees.

• Advise on VAT registration and whether it is necessary.

• Help open a business bank account and set up accounting software.

Getting these foundations right prevents problems later and ensures your company starts off fully compliant.

2. Bookkeeping and Record Keeping

Good bookkeeping is the backbone of any business. Accountants make sure your financial records are accurate, up to date, and meet statutory requirements.

They can:

• Record sales, purchases, and expenses.

• Reconcile bank transactions.

• Manage invoices and receipts.

• Track cash flow.

Some accountants provide full bookkeeping services, while others work with your in-house or online systems to review and correct your records. This ensures your accounts are always ready for inspection or reporting.

3. Preparing Annual Accounts

Every limited company must file annual accounts with Companies House and HMRC. These financial statements show the company’s performance and position over the year.

Your accountant prepares these reports to meet statutory standards and deadlines. This includes:

• The balance sheet (showing assets, liabilities, and equity).

• The profit and loss statement (showing income and expenses).

• Notes and disclosures required under accounting standards.

Accountants ensure that your accounts comply with both UK accounting standards and tax legislation, reducing the risk of penalties or errors.

4. Managing Corporation Tax

Corporation Tax is a major part of running a limited company. Your accountant calculates how much your company owes, files the Company Tax Return (CT600), and ensures you pay on time.

They will also:

• Identify allowable expenses and deductions.

• Apply reliefs such as capital allowances and R&D credits.

• Advise on the best way to extract profits (for example, dividends or bonuses).

By understanding the latest tax laws, accountants help you stay compliant while reducing your overall tax bill.

5. Handling Payroll and Director Payments

If your company pays salaries to employees or directors, your accountant manages PAYE and ensures all payroll taxes are paid correctly.

They can:

• Run monthly payroll and issue payslips.

• Calculate and deduct Income Tax and National Insurance.

• Submit Real Time Information (RTI) to HMRC.

• Manage pension auto-enrolment.

For directors, accountants often recommend the most tax-efficient combination of salary and dividends to maximise take-home pay while keeping tax liabilities low.

6. VAT Registration and Returns

If your company’s turnover exceeds the VAT threshold (£90,000 for 2024 25), or you choose to register voluntarily, your accountant will handle VAT compliance.

They will:

• Register the company for VAT.

• Advise on the best VAT scheme (Standard, Flat Rate, or Cash Accounting).

• File quarterly VAT returns.

• Ensure VAT on sales and purchases is calculated correctly.

With VAT being a complex area, having an accountant manage it prevents costly mistakes and late submission penalties.

7. Filing the Confirmation Statement

Every company must file an annual Confirmation Statement (CS01) with Companies House to confirm its details. An accountant can take care of this administrative task, ensuring your company remains active and compliant.

They will review and update:

• Registered office details.

• Director and shareholder information.

• Share capital.

• Persons with Significant Control (PSC).

Although this filing is simple, missing it can result in penalties or your company being struck off the register, so it is best handled professionally.

8. Managing Dividends and Shareholder Records

Limited company accountants help calculate and distribute dividends correctly. They ensure that:

• Dividends are paid only from post-tax profits.

• Proper documentation, such as dividend vouchers and board meeting minutes, is prepared.

• Shareholder records are updated accurately.

Incorrect dividend payments can lead to tax issues or be treated as illegal distributions, so having an accountant manage this process keeps everything above board.

9. Business Planning and Financial Forecasting

A good accountant does more than record numbers — they help you interpret them. Accountants use your financial data to create forecasts and budgets that guide your business decisions.

They can:

• Analyse trends in income and expenses.

• Help with cash flow planning and funding applications.

• Provide insight into business performance.

• Offer strategies to improve profitability and manage growth.

This forward-looking approach ensures you can anticipate challenges rather than react to them.

10. Dealing with HMRC and Companies House

Accountants act as intermediaries between your company and HMRC or Companies House. They handle communications, respond to queries, and represent you during investigations or audits.

Having a professional manage correspondence with tax authorities saves time and reduces the risk of misunderstanding complex tax rules.

11. Compliance and Deadlines

Missing statutory deadlines can lead to penalties or damage your company’s reputation. Accountants keep track of key filing dates, such as:

• Corporation Tax payment deadlines.

• Annual accounts submission dates.

• VAT and PAYE filing schedules.

• Confirmation Statement due dates.

They make sure everything is filed correctly and on time, keeping your company compliant year-round.

12. Tax and Dividend Planning for Directors

One of the biggest advantages of having an accountant is their ability to optimise how directors take money out of the business. They can advise on:

• Salary versus dividend combinations.

• Pension contributions.

• Expense claims.

• Director’s loan accounts.

This tailored tax planning ensures directors remain compliant while minimising their personal tax liabilities.

Example Scenario

Mark runs a small consultancy through a limited company. His accountant sets up payroll, manages VAT returns, files annual accounts, and submits his Corporation Tax return. When Mark wants to buy new equipment, his accountant advises how to claim capital allowances and spread costs for tax efficiency.

By outsourcing financial management, Mark can focus on running his business with confidence, knowing his company’s finances are in good order and compliant with regulations.

The Benefits of Having an Accountant

Hiring a limited company accountant provides several advantages:

• Peace of mind that your company meets all legal obligations.

• Reduced risk of penalties for missed deadlines or errors.

• Better understanding of your company’s financial position.

• Tax savings through strategic planning.

• More time to focus on running and growing your business.

Conclusion

A limited company accountant does much more than prepare your tax return. They manage compliance, handle day-to-day finances, optimise your tax position, and offer strategic advice to support business growth.

Whether you are just starting your company or managing an established business, having an accountant ensures accuracy, efficiency, and peace of mind. Their expertise keeps your company compliant, your finances organised, and your profits working harder for you.