Limited Company Accounting

There’s no legal obligation for a limited company to have an accountant, but given the legal responsibilities you’ll have as a limited company director, as well as the various taxes your company will need to pay, an accountant is a vital ally.A good accountant can help you stay on top of your business finances, submit your tax returns, and free up your time so you can do what you do best - run your business!

If your limited company has made a profit, it can pay a dividend to shareholders. It’s important to remember that dividends aren’t a business expense when calculating your Corporation Tax, and that it’s illegal to pay a dividend if your company doesn’t have sufficient profit after tax available to cover the dividend amount.

There are complex rules surrounding the type of company which must have an audit. You can find out more if you check HMRC’s website.In general terms, if your company’s turnover is below £10.2 million, and its assets are below £5.1 million, you do not need to have an audit. However, some companies with turnover and assets below these amounts elect to have an audit to comply with financial covenants.

You’ll need to include every business bank transaction that relates to your limited company to ensure your accounts remain in balance and you can reconcile them at year-end.With secure Open Banking connections, you can link your business bank account directly to your Crunch account and import all of your transactions in one simple click. From there, reconciling your bank accounts becomes a simple job!

As a Crunch client, you’ll be able to get a complete overview of what tax you owe with our real-time dashboard, giving you a clear and instant picture of your business finances. You’ll also be able to access all of your limited company records, such as your expense receipts, sales invoices - whether paid or unpaid - and records of your previous tax filings.

‍You must keep records for six years from the end of the last company financial year they relate to, or longer, if:

• they show a transaction that covers more than one of the company’s accounting periods
• the company has bought something that it expects to last more than six years, like equipment or machinery
• you submitted your Company Tax Return late
• HMRC has started a compliance check into your Company Tax Return.

‍
Check out our Knowledge article, “How long should company records be retained for?”, for more information!

At Crunch, our complete Limited Company Pro package costs just £86.50+VAT per month. You get access to a whole team of expert accountants and client managers who can help you manage your business finances, tax responsibilities, and so much more!If you’re happy managing your own accounts, or you have your own accountant already, you can sign up to a Crunch Free account to help you organise your expenses, sales invoices, and other important records.

Your limited company will have an accounting period. When the accounting period ends, you’ll need to prepare accounts and submit them to Companies House and HMRC. Accounts are usually produced using accounting software. To make this process as smooth and accurate as possible, all of your limited company records, such as your expenses, sales invoices etc. should be stored in secure online accounting software. Not only will this help you stay compliant with HMRC’s Making Tax Digital (MTD) rules for VAT and other taxes, it’ll also help you stay more organised and simplify your tax returns.Of course, we would also highly recommend getting an accountant using accessible accounting software to do the heavy lifting for you!

Usually, the most tax-efficient way to pay yourself as a limited company director is by taking a combination of a salary and dividends from your limited company. Most directors prefer to keep their salary low, and below the National Insurance threshold, and pay themselves more in dividends. The salary will be paid to you as a director, in the same way as a regular employee. Our article, "How much should I take as a salary from my limited company?", can talk you through this process in much greater detail.

Limited company directors may be required to pay a number of different taxes: some limited company taxes are mandatory for all directors, while others will depend on factors such as whether your company has employees.Some of the taxes you may be required to pay include Corporation Tax, National Insurance, and VAT. Check out our article on what taxes you pay as a limited company director for a more detailed rundown!

You must file your company’s accounts with Companies House nine months after the company’s accounting period ends. The company’s Corporation Tax return and accounts must be submitted to HMRC within 12 months after the accounting period ends to which it relates.For a more complete rundown of your limited company tax responsibilities and their due dates, check out our article on what taxes you pay as a limited company.

As the director of your limited company, you are responsible for authorising your tax returns. Crunch can help you prepare some of your returns, and even file them for you, but the responsibility for signing them off is ultimately yours!