The following are notes sent out to a new client and help to clarify some of the issues surrounding the fees issue for being the appointed accountant of a limited company. I hope that any would be trader contemplating their trading structure would find the contents of interest and also educational.
“I can work out a price for you but must warn that for limited companies the price will be more that you trading as a sole trader.”
Revenue and Customs have brought out far more disclosure requirements. (Additionally in the first year of trading two tax comps and two forms CT 600 must be completed and please note that these forms will make make your personal tax return look very simplistic).
Companies House have brought out far more disclosure requirements.
It would be better for me to have details of the existing paye scheme to complete a quote for the company as I will need from you written evidence that monthly CIS and paye deductions have been properly recorded completed correctly with the paye and CIS deductions paid on time and are easily assessable in a form that I can easily use in order to complete the accounts of the limited company.
Books and Records
Are you able to provide me with information on the accurateness of the books and records of the company? Unlike a sole trader a limited company (both Revenue and Customs and Companies House expect this) must have the limited company bank account reconciled statement page by statement page with the cash book in order that it can be reconciled within a materiality of 1% at the end of the year. Has this been completed? In this way Revenue and Customs Companies House as well as others are better able to rely on the figures presented to them.
The sales ledger must be properly reconciled with the bank account lodgements as in this way the figures for turnover and trade debtors are more reliable at the year end and cash/bank receipts. Has this been completed?
Are you able to provide me with details of the directors loan/dividends /paye/mobile phones/use of home/use of personal car and/or company van schedules and how have these transactions been recorded in the books and records of the company? Sometimes these items of expenditure are paid for outside the bank account of the limited company.
I must advise you that completing the accounts of a limited company is completely different to a sole trader and so as well as asking for a price for the cost of preparing and filing the accounts (profits/losses are important but also how precise are the underlying books and records of the company and what is the number of transactions) you must instead ask who is able to properly prepare the accounts of the limited company so as to keep the company safe from enquiries regarding Revenue and Customs and also provide me with proper financial advice based on the limited company accounts and the salaries recorded so as to maximise personal income pension rights on retirement minimise company and personal tax and avoid all fines and penalties for late or incorrect filing.
All limited companies should have an experienced bookkeeper appointed so as to properly record all the transactions of the company as this is the best way to keep down the costs of preparing a limited company accounts. If this is so then the price is far less. Otherwise all the bookkeeping must be completed correctly and separately at a separate price before the beginning of the preparation of limited accounts so as to conform with Revenue and Customs and Companies House disclosure requirements. Please note that at the time I began my practice the law was that the bookkeeper had to be a separate person to the accountant preparing the accounts but is no longer the case.
To cost a limited company accounts is akin to you seeing a building job before you quote on the price.
Do you want to reply by email or instead have a meeting whichever you want?
Please also read my website as I have written several more articles on all the matters above and on limited companies generally.