Does a one man band Ltd company really need an accountant?

[Johnny1975]

Is it possible for a one man band to take care of the accounting themselves? I've been learning about accounting for about a week (as well as all the HMRC / Companies House stuff), and although I have quite a bit further to go and there are lots of things that I still don't quite understand, I feel like I could do it, once I can fully grasp it. I don't feel like it's a super complicated thing, especially if you're not constantly dealing with lots of transactions every day.

Is it realistic for one guy to take care of his own accounting? I feel that it is but I just want to get some input in case I'm vastly underestimating it. It's just that when I see little shops here and there and think about how that person must be doing everything themselves, if they can do it surely I can too.

What thinkest thou?

 

[Annoying Donkey]

It is possible, but why would you want to...?
I'd suggest it's likely a false economy...

 

[STDFR33]

One of many, many examples on the forum:
http://www.ukbusinessforums.co.uk/t...-current-self-assessment.368797/#post-2715847

You can read the .Gov pages (which are inaccurate in many places, in others just completely wrong), but it won't substitute years of studying and experience that an accountant has.

 

[johndon68]

I'm a one man band limited company and I do know accounts up to and including management accounts (albeit I have no formal qualifications) but I still use an accountant for my end of year returns. I know I could do it myself but the peace of mind of knowing that everything is being done and being done properly outweighs the cost...

John

 

[Ian J]

I feel like I could do it, once I can fully grasp it. I don't feel like it's a super complicated thing, especially if you're not constantly dealing with lots of transactions every day.

Is it realistic for one guy to take care of his own accounting?

I think that you are talking about bookkeeping and there is no reason at all why you shouldn't do it yourself, especially with all of the computer software that will do most of it for you.

An Accountant will do so much more than bookkeeping though including preparation of the accounts and tax returns and it's lase economy to try and do that part yourself unless you really know what you are doing

 

[ffox]

Is it possible for a one man band to take care of the accounting themselves?

Yes it is. But, the question you should be asking is - What return do I get from my spend on company accounts?
Don't forget that, if you DIY, you will need to spend time on it and that is a cost.
Professional accounting services may reduce your tax bill and save you money. You need to discover what the cost/benefit is.
Professional accounting services may offer business health guidance and help you maximise the power of the cash going through your business. It's up to you to quantify what can be achieved and what business services your accountant includes in the fees charged.
Professional accounting services may reduce financial risk. It's yours to determine what risks your business may be exposed to and what costs you are prepared to incur to reduce risk.

It's a business decision and should be assessed on a cost/benefit/risk basis.

 

[ADW]

It is supposedly more complex completing the Ltd accounts than sole traders. The thing is you probably can complete them, but how well is a question you can't really answer. You can find plenty of Chartered Accountants working from home who will be flexible in what level of work you complete so they have less to finish off. Problem is, if you make a hash of things whether you go alone or complete as much as possible yourself, it will cost you more in the long run putting it right.

 

[Pish_Pash]

I'm as tight as they come....I really wanted NOT to use an accountant, but I had to relent - so, I do the book-keeping but use an accountant for my year end stuff...at the end of the day, I was just too worried that if I researched/learnt how to do all this myself, then I'd start dressing & acting like an accountant.

 

[MyAccountantOnline]

Is it possible for a one man band to take care of the accounting themselves? .....

What thinkest thou?

I appreciate that my view is bias as an accountant, but I have been an accountant for a long time and I've lost count of the number of people I've seen who have tried to DIY and ended up paying totally avoidable tax and penalties.

Maintaining good accurate accounting records is certainly something you can, and should, be doing so that you keep on track of how your business is performing etc., but using an accountant to do what they do best means you will have peace of mind that you are paying no more tax than you have to, and are avoiding penalties and charges for getting things wrong or sending them late.

 

[MyAccountantOnline]

Bear in mind too it takes a long time to become an accountant (and I mean a fully qualified accountant not someone who calls them self an accountant)

 

[Johnny1975]

I simply don't have the budget for an accountant. That's the problem. I have £1,000 to start my business, and that's it. No room for anything else. I just can't afford it.

 

[Scalloway]

For doing your bookkeeping there are free programs you can use

Install VT Cashbookon your PC
http://www.vtsoftware.co.uk/cashbook/download.htm

Or Wave Accounting online
https://www.waveapps.com/

 

[STDFR33]

I simply don't have the budget for an accountant. That's the problem. I have £1,000 to start my business, and that's it. No room for anything else. I just can't afford it.

Question is redundant then!

Though you are probably best registering as self employed. The respsibilities of running a company are much greater.

 

[MyAccountantOnline]

I simply don't have the budget for an accountant. That's the problem. I have £1,000 to start my business, and that's it. No room for anything else. I just can't afford it.

Are you actually sure a limited company is the best option for you?

 

[Johnny1975]

Are you actually sure a limited company is the best option for you?

I don't like the idea of me and the business being one and the same, and as a Ltd company I would pay less tax. Also, I believe that for what I'll be doing, I would need to have a Ltd company.

 

[MyAccountantOnline]

I don't like the idea of me and the business being one and the same, and as a Ltd company I would pay less tax. Also, I believe that for what I'll be doing, I would need to have a Ltd company.

Johnny no disrespect intended but if you are earning sufficient to benefit from paying lower tax by trading through a limited company I'm really surprised you feel unable to pay for an accountant.

 

[The Byre]

I have been engaged in many start-ups, ranging from shops to news agencies and sometimes I did so from positions of such extreme impecuniousness, that feeding the family was a fraught affair. But never would I have, in a million years, attempted to launch a going concern with the equivalent in today's money of just £1,000.

One thing is certain, HMRC try to restrict audits to those instances, where they are more likely to find something of 'interest' - that means going after those candidates that attempt to negotiate the waters of the most complex tax system in the World, without the assistance of an accountant!

The DIY boys nearly always give them something funny to laugh at, for the office notice board.

 

[Johnny1975]

Johnny no disrespect intended but if you are earning sufficient to benefit from paying lower tax by trading through a limited company I'm really surprised you feel unable to pay for an accountant.

What I mean is that I have no more right now for an accountant. Sure, if the business (which isn't set up by the way) earns enough to afford one, I would pay for one. What I'm saying is that right now I have just enough money to start the business, but no money for an accountant. I would have to do everything myself until I can. That's why I've been learning about it so I can do it.

 

[Johnny1975]

I have been engaged in many start-ups, ranging from shops to news agencies and sometimes I did so from positions of such extreme impecuniousness, that feeding the family was a fraught affair. But never would I have, in a million years, attempted to launch a going concern with the equivalent in today's money of just £1,000.

One thing is certain, HMRC try to restrict audits to those instances, where they are more likely to find something of 'interest' - that means going after those candidates that attempt to negotiate the waters of the most complex tax system in the World, without the assistance of an accountant!

The DIY boys nearly always give them something funny to laugh at, for the office notice board.

I'm poor. What do you want me to do? Even the £1,000 is a loan. Starting an internet business doesn't cost that much compared to brick and mortar.

 

[Pish_Pash]

In answer to your question (because I've walked in your proposed shoes)....no, you don't need an accountant at the beginning of Y1 ....you just need to keep your books in order with accounts software (I used Quickbooks - it's fine for its purpose), but you will need an accountant to take your accounts data & present it in a way for HMRC...your HMRC corp tax return is needed at the end of Y1 + 10 months or so - I think! (so about 22 months for you to trade & bag some sales/dosh) this needn't cost much (hackles get raised when I report how little I pay an accountant to do this basic 'spit & polish' service.).

For those that say "You need an accountant to save you money" ...yes, that's probably true, but not so urgent if you're 'Bernie Flint' & starting up with £1,000.

 

[Johnny1975]

In answer to your question (because I've walked in your proposed shoes)....no, you don't need an accountant at the beginning of Y1 ....you just need to keep your books in order with accounts software (I used Quickbooks - it's fine for its purpose), but you will need an accountant to take your accounts data & present it in a way for HMRC...your HMRC corp tax return is needed at the end of Y1 + 10 months or so - I think! (so about 22 months for you to trade & bag some sales/dosh) this needn't cost much (hackles get raised when I report how little I pay an accountant to do this basic 'spit & polish' service.).

For those that say "You need an accountant to save you money" ...yes, that's probably true, but not so urgent if you're 'Bernie Flint' & starting up with £1,000.

Well that sounds reasonable. Tell me if this is right :

During year 1, all I do is keep all receipts and other evidence of all transactions, maybe scan them or do screenshots or whatever, and I also use accounting software (I downloaded Gnucash - is that a good choice?) to do the accounts on a transaction by transaction basis. The software automatically generates a balance sheet and income statement.

Then I give an accountant all the info that I've compiled over the year, and they do whatever it is that they do, then hand it back to me and I then present it all to HMRC and Companies House. They also do my tax return (the deadline I believe is a year + 9 months, but I'm sure they'll get it all done way before then).

Is that how it works?

Why is it suspicious that you only pay for a basic service from an accountant?

 

[Pish_Pash]

You've got the gist...but the accountant won't do your personal tax return unless you ask him to (though I suspect you mean your corporation tax)

Why is it suspicious that you only pay for a basic service from an accountant?

I didn't say it was suspicious...but folks round these parts get well miffed that some of their brothers are prepared to work for very little. I found my (Chartered) accountant via people per hour...he did my first CT submission for £75...though as I've grown I've upped his amount a fair bit (still pay a fraction of what others seem to pay though) ...the secret is to hire someone where costs are low (tip deprived areas!) & who are doing it in their evenings (outside of their main employment!).

 

[Johnny1975]

You've got the gist...but the accountant won't do your personal tax return unless you ask him to (though I suspect you mean your corporation tax)



I didn't say it was suspicious...but folks round these parts get well miffed that some of their brothers are prepared to work for very little. I found my accountant via people per hour...he did my first CT submission for £75...though as I've grown I've upped his amount a fair bit (still pay a fraction of what other pay though) ...the secret is to hire someone where costs are low (tip deprived areas!) & who are doing it in their evenings (outside of their main employment!)

You mean Joe Bloggs down the road would be sufficient? I'm happy to pay anyone who can do it, but I wouldn't want them to do a second rate job.

Also, I take it I should continue learning accounting so I can do the day to day stuff? Should I not bother learning how to do anything beyond the basics?

 

[Pish_Pash]

I winged it ...in fact I winged it in the worst possible way. I started of with Excel spreadsheets, didn't register for VAT (didn't want to until I crossed the threshold) ....& boy did I pay for it (in time, having to enter six months of data retrospectively into Quickbooks). But I'd say that if you used accounts software from Day 1 you'd be in reasonable shape...as you'll not have many transactions to enter initially & you'll be able to verify/double check each one (& what changes in your accounts software).

Re using the guy down the street....no, that's not what I said, use a accountant when the time comes to submit your accounts to HMRC (but like I say, so long as you keep your books in order, you can do this much later).

I'm (still) on the most basic packages with my accountant - he gives me no advice....nor do I seek it ....but I'm now getting to the stage where soon I'm going to need advice (of the kind given to Jimmy Carr)

 

[Ian J]

I winged it ...in fact I winged it in the worst possible way. I started of with Excel spreadsheets, didn't register for VAT (didn't want to until I crossed the threshold) ....& boy did I pay for it (in time, having to enter six months of data retrospectively into Quickbooks).

Ten years on and I'm still using Excel. Many business (like mine) don't have that many invoices so even if I did have to enter six months data it would still only take me an hour

 

[Mr D]

Getting an accountant after the end of your first year, providing all the electronic, printed and received documents they need then them doing the accounts for you is cost effective.
You do the work of keeping on top of data entry, receipts, payments etc - something you need to know how the business is doing.
Then someone else tidying it all up and presenting the accounts for companies house and HMRC.
May cost several hundred pounds. Will be worth it.

If you are unsure at the start that you will have a grand to spend on the accountant in 12 - 18 months or whenever you provide the paperwork to them then don't start as limited company.

 

[Johnny1975]

I winged it ...in fact I winged it in the worst possible way. I started of with Excel spreadsheets, didn't register for VAT (didn't want to until I crossed the threshold) ....& boy did I pay for it (in time, having to enter six months of data retrospectively into Quickbooks). But I'd say that if you used accounts software from Day 1 you'd be in reasonable shape...as you'll not have many transactions to enter initially & you'll be able to verify/double check each one (& what changes in your accounts software).

Re using the guy down the street....no, that's not what I said, use a accountant when the time comes to submit your accounts to HMRC (but like I say, so long as you keep your books in order, you can do this much later).

I'm (still) on the most basic packages with my accountant - he gives me no advice....nor do I seek it ....but I'm now getting to the stage where soon I'm going to need advice (of the kind given to Jimmy Carr)

How did you not registering for VAT work against you? I thought it was only necessary if your revenue is £83,000 p.a. or more.

 

[STDFR33]

How did you not registering for VAT work against you? I thought it was only necessary if your revenue is £83,000 p.a. or more.

You can voluntarily register.

 

[STDFR33]

Getting someone to do the work at the very end means everything has been done. You may have made some terrible, costly decisions that could have been avoided had you engaged a professional.

Many people also service their car regularly rather than waiting till the thing is absolutely knackered.

 

[Johnny1975]

Getting an accountant after the end of your first year, providing all the electronic, printed and received documents they need then them doing the accounts for you is cost effective.
You do the work of keeping on top of data entry, receipts, payments etc - something you need to know how the business is doing.
Then someone else tidying it all up and presenting the accounts for companies house and HMRC.
May cost several hundred pounds. Will be worth it.

If you are unsure at the start that you will have a grand to spend on the accountant in 12 - 18 months or whenever you provide the paperwork to them then don't start as limited company.

I suppose I could start as a sole trader, then switch to Ltd in year 2. I've read that if you're a sole trader the accounting side is easy enough that I could do absolutely everything myself, because HMRC / Companies House don't need to see anything beyond simplified accounts. Would you say that's accurate?

 

[STDFR33]

I suppose I could start as a sole trader, then switch to Ltd in year 2. I've read that if you're a sole trader the accounting side is easy enough that I could do absolutely everything myself, because HMRC / Companies House don't need to see anything beyond simplified accounts. Would you say that's accurate?

As a sole trader, nothing goes to Companies House.

You just need to submit a Self Assessment Tax Return.

 

[Mr D]

A sole trader is dead easy for accounts.
Think my last self employed tax return I did took 20 minutes - the self employed side was under a minute as all the info was to hand in quickbooks from entering it previously.

 

[Pish_Pash]

How did you not registering for VAT work against you? I thought it was only necessary if your revenue is £83,000 p.a. or more.

Because you have to track what you bought/sold from a VAT perspective (& can therefore claim back the VAT on prior purchases that you still have on hand)...this is very time consuming if you choose to go VAT registered not from day 1 but say 6 months down the line (even worse if - like me - you set off thinking "I'll address my accounts when I have to!"

 

[Johnny1975]

Because you have to track what you bought/sold from a VAT perspective (& can therefore claim back the VAT on prior purchases that you still have on hand)...this is very time consuming if you choose to go VAT registered not from day 1 but say 6 months down the line (even worse if - like me - you set off thinking "I'll address my accounts when I have to!"

Best not to bother with VAT at all then,I take it.

 

[Johnny1975]

As a sole trader, nothing goes to Companies House.

You just need to submit a Self Assessment Tax Return.

Well I did hear that tax doesn't have to be taxing. Sole trader sounds fine I guess, to begin with, and then save up a couple of hundred for an accountant. The only thing is that for what I'm doing, I read somewhere that I have to be a Ltd company, or at least it's better to be. I'll have to look into that.

Just to clarify, I want to buy goods from suppliers in China on the Alibaba website, and sell them on Amazon (FBA) in the US. I don't know if that changes anything.

 

[The Byre]

I'd be doing a walk-run thing here! Set up as sole trader and not VAT registered and if the gods smile upon you, you can always go Ltd and VAT registered.

BTW, are you the Leafar Music that does rap? If so, I really like what you are doing!

 

[DontAsk]

I simply don't have the budget for an accountant. That's the problem. I have £1,000 to start my business, and that's it. No room for anything else. I just can't afford it.

It cost me £170 to have an accountant set up the business. I do all the bookkeeping. I paid nothing else until after the first year end when the accountant took the "books" and did the accounts. Just make sure you put enough money aside to cover this and taxes due.

 

[Johnny1975]

It cost me £170 to have an accountant set up the business. I do all the bookkeeping. I paid nothing else until after the first year end when the accountant took the "books" and did the accounts. Just make sure you put enough money aside to cover this and taxes due.

Oh right, now I'm tempted to change my mind again and have a Ltd company. So with just £200 or less I can have this side of things taken care of, and all I do is the day to day bookkeeping and basic accounts? Is it really as simple as that?

 

[DontAsk]

Oh right, now I'm tempted to change my mind again and have a Ltd company. So with just £200 or less I can have this side of things taken care of, and all I do is the day to day bookkeeping and basic accounts? Is it really as simple as that?

It can be. If you are methodical and have a tidy mind it makes the accountants job that much easier at the end of the year. I was complemented on my record keeping

 

[Johnny1975]

It can be. If you are methodical and have a tidy mind it makes the accountants job that much easier at the end of the year. I was complemented on my record keeping

Oh yes I'm very tidy. I've reduced the pile of papers on my desk to just 1 foot high. Just kidding, I'm not too disorganized.