Do you need an accountant for a limited company? Our honest answer
Technically, there is no law that says you must hire one. But the question worth asking is not whether you are legally required to — it is whether going without one is actually saving you money. In most cases we see, it is not.
If you have just formed a limited company — or you are weighing up whether to — the question of whether you need an accountant for a limited company comes up quickly. A quick search will tell you there is no legal obligation to hire one, which is true. Directors are responsible for their own filings, and the law does not mandate professional help to meet them.
But the legal question and the practical question are two different things. Over the years, we have worked with plenty of directors who started out handling everything themselves, either to save money or because they assumed it would not be that complicated. Most of them reached the same conclusion: the cost of getting it wrong — whether in missed tax savings, late penalties, or just the time spent wrestling with filings — outweighed what they thought they were saving.
This post sets out our honest view on when an accountant genuinely earns their fee, and when you might reasonably manage without one.
The legal position: what directors must do
Let us start with the facts, because they matter here. As a limited company director, you have a set of statutory obligations that do not disappear just because you have not hired anyone to help you meet them. Every year, your company must prepare annual accounts and file them with Companies House within nine months of the financial year end. You must also file a Company Tax Return (CT600) with HMRC within twelve months of the accounting period end, and pay any corporation tax due within nine months and one day.
On top of that, you have a confirmation statement to submit each year, payroll obligations if you pay yourself a salary, VAT returns if you are registered, and potentially a Self Assessment return for your personal tax position as a director and shareholder.
That is a minimum of seven distinct obligations for a straightforward one-director company — and each one carries penalties for filing late or getting it wrong. Late accounts at Companies House attract penalties starting at £150 and rising to £1,500, with HMRC adding further charges on top for late corporation tax returns.
The law places the responsibility for all of this squarely on you as a director. No one at Companies House will chase you with reminders. Missing a deadline because you were busy running your business is not treated as a mitigating factor.
Where DIY limited company accounting tends to go wrong
The filing obligations are manageable once you know them — and commercial software exists to help. The deeper issue we see is not that directors cannot file their accounts; it is that they file them without making the most of what a limited company structure actually offers.
The most significant example is the salary and dividend split. One of the primary tax advantages of operating through a limited company is the ability to pay yourself a combination of a low salary and dividends, keeping both your personal income tax and National Insurance contributions down. But getting this wrong — either by taking too high a salary, drawing too many dividends without tracking the tax liability, or ignoring pension contributions — can cost a meaningful amount in unnecessary tax each year. The numbers vary by individual, but it is the kind of thing that adds up quickly when compounded over several years.
We also see directors miss out on legitimate business expenses — things like use of home as office, mileage, equipment, and professional subscriptions — simply because no one has walked them through what is allowable. Similarly, dividend paperwork is often handled informally or not at all, which creates problems if HMRC ever looks more closely at the company’s records.
None of this is complex once you know the rules. But knowing the rules — and applying them correctly to your specific situation — is exactly what you are paying an accountant to do.
The question is not whether you are legally required to hire an accountant — it is whether going without one is actually saving you money. In most cases we see, it is not.
What a good accountant actually does for you
There is a version of accountancy that is purely reactive: you send your paperwork once a year, the accountant files your return, and you hear nothing until the next tax year. We do not think that represents good value, and it is not how we work at Edward Harris.
The accountants who genuinely earn their fee are doing something more proactive. They are reviewing your numbers throughout the year, flagging when your corporation tax liability is likely to be higher than expected, and advising on the most tax-efficient way to extract profit from your company before the year end — not after it.
They are also the people you call when HMRC sends a letter you do not understand, when you are thinking about taking on an employee, when a client asks you to sign a contract with unusual payment terms, or when you are wondering whether to buy equipment outright or lease it.
That kind of year-round support is hard to put a precise number on, but the directors we work with consistently tell us that the clarity it gives them — knowing their tax position, understanding their cash flow, feeling confident about decisions — is worth more than the cost of the service itself. As one of our clients put it: knowing someone is on top of it means they can focus on actually running the business.
When managing without an accountant might make sense
We want to be honest here, because this post is meant to give you a straight answer rather than just a pitch for our services.
If your limited company is dormant — meaning it has been incorporated but has not traded — the filing obligations are significantly simpler, and managing them yourself is reasonable. A dormant company still needs a confirmation statement and abbreviated accounts, but those are not onerous if you understand what is required.
If you have a strong financial background and a genuine interest in staying on top of tax legislation, you may also find that the compliance side of things is within your capability. The caveat is that tax rules change regularly, and the time cost of keeping up with those changes is real. The question to ask yourself is: is this actually the best use of your time, or is it something you are doing because it feels like saving money?
For the majority of actively trading limited company directors, especially those running owner-managed businesses without a dedicated finance person in the team, we think a good accountant pays for themselves. The combination of tax savings, time reclaimed, and penalties avoided typically puts you ahead of the monthly fee — often comfortably so.
Our take
Do you need an accountant for a limited company? Legally, no. Practically, for most actively trading directors, yes — and the sooner the better. Getting the right structure in place from the start, and having someone proactively managing your tax position throughout the year, tends to be worth considerably more than the cost of the service.
If you have recently incorporated, or you are running a limited company and not entirely sure your tax affairs are as efficient as they could be, that is exactly the kind of thing we help clients with at Edward Harris. Initial conversations are free and without pressure — if it turns out you are handling things well already, we will tell you that too.
Common questions
Is there a legal requirement to use an accountant for a limited company?
No. There is no legal requirement to hire an accountant for a UK limited company. Directors are legally responsible for preparing and filing their company’s accounts and tax returns, but they can do this themselves. However, the complexity of the obligations and the tax planning opportunities involved mean that most directors benefit from professional help.
What happens if I miss a Companies House filing deadline?
Companies House imposes automatic late filing penalties on limited companies that miss their accounts deadline. Penalties start at £150 for accounts up to one month late and rise to £1,500 for accounts more than six months late. HMRC applies separate penalties for late corporation tax returns, and interest accrues on unpaid tax.
How much does a limited company accountant cost in the UK?
For a typical owner-managed limited company, monthly accountancy fees generally range from around £80 to £150 per month depending on the scope of service and complexity of the business. That cost typically covers year-end accounts, corporation tax, Self Assessment, payroll, and ongoing advice. See our related guide for a fuller breakdown of accountant costs for limited companies.
Can a director file their own company accounts and tax return?
Yes. Directors can prepare and file their own annual accounts and Company Tax Return using commercial software. HMRC also provides guidance on GOV.UK. The challenge is not usually the filing process itself — it is ensuring the accounts are accurate, expenses are correctly claimed, and the tax position is properly optimised before submission.
Do I need an audit for my limited company?
Most small limited companies do not require a statutory audit. An audit is only mandatory if your company exceeds two of three thresholds: turnover above £10.2 million, balance sheet total above £5.1 million, or more than 50 employees. The vast majority of owner-managed businesses fall well below these thresholds and are exempt.