Now I use Xero, do I need an accountant?

Supersonos

I'm the sole director of my limited company (I don't have any employees). I would say my books are pretty straightforward. I invoice, I get paid. Salary/dividends come to me, anything else is either an expense, or is still in my company bank account.

My accountant charges me around £2,000 - £2,500 per year, even though I do my own personal return and VAT returns. For the last couple of years I've been paying £22 per month for Xero - essentially doing a lot of my accountant's work for no reduction in my accountant's fee.

I can't think of a time my accountant has pointed to a way of saving on tax, and my turnover and taxes each year are fairly consistent (turnover of around £180k).

So, do I need an accountant?

Pennywise

Do you understand enough about accounting concepts and tax, i.e. accruals accounting and the matching concept in particular. You can't adopt "cash accounting" for limited companies so you have to make adjustments each year end for unbilled work, stocks, accruals and prepayments. Do you understand the difference between accounting and tax treatment for asset additions, depreciation, etc?

Last time I checked, Xero doesn't automatically produce/submit corporation tax returns nor the statutory accounts in the right format for Companies House. So you'd need to do that outside Xero.

Plenty of people do their own accounts and corporation tax, but the vast majority don't. I'd suggest that £2k plus is rather expensive, so perhaps you'd be better finding a cheaper accountant - £500-£1000 is a more realistic/average cost for just annual accounts and corporation tax return for a business with complete/accurate book-keeping records.

uknick

If the £2,500 includes book keeping then you could do that yourself using Xero and save a fair sum each year. But, as Pennywise says, submitting the various financial returns, with correct figures, each year does require a fair understanding on what you're doing.

Most of our clients do their own book keeping but we still have to make accounting adjustments at year end to ensure the accounts give the correct view of the company. For example, client this year raised some more share capital but had no idea about the correct accounting entries and the legal implications of getting it wrong. We corrected this as part of our monthly fee.

tasticz

2000+ seems rather expensive.

My dad pays around 1750 per year. It includes carrying out SA at the end of the year for him and my mum and also all the bookkeeping.

Recently they have started using software so the only thing we need to do is input all our expenses every month into the software before taking salary and expenses and let them know to mark them as paid etc. on software. For dividends just drop them an email asking how much we can take or how much we plan on taking and they make the adjustment...