How much admin. involved in running a Ltd Company?

janesmith · 15 March 2018 at 6:20PM

I am thinking of setting up a new (small) company and was curious to ask how much paperwork and administration was involved every year in running a limited company i.e. registered with Companies House?

The business won't be very big. It will provide consultancy services to other businesses and should "only" involve about twenty payments going into and another fifteen going out of the business bank account every month.

I am already fed-up with adminstration in other parts of my life and so am concerned that the amount of red tape will keep me tied to my computer on Sunday evenings forevermore doing this and that!

HMRC will soon require quarterly filings, as well as the annual paperwork for them, and then there's calculating the income, every single expenditure, all the VAT etc.

I think for such a small company it'll be more efficient and quicker doing it myself than dealing with an external party - an accountant - all the time.

Very approximately, how many hours every month or year does all the admin with Companies House, HMRC etc. take? I appreciate it varies from business to business.

Your advice would be most welcome! Thank you.

Savvy_Sue · 16 March 2018 at 2:02AM

Those who set up limited companies are usually recommended to use an accountant, simply because without a reasonable understanding of what needs to be in company accounts and how to file them it's easy to mess up and face automatic fines.

It can also become complicated when you want to either pay yourself regularly from the company or withdraw money from the company, and an accountant can certainly point you to the most tax efficient ways of doing this, plus they can tell you how NOT to do it!

As in all areas of life, the key to minimising the admin is to keep on top of it. So getting your records up to date on a weekly basis might be needed, or monthly might be enough. But using an accountant ought not to make it more time consuming, IMO.

Pennywise · 16 March 2018 at 7:19AM

Most limited company owners use an accountant to reduce the time/stress of trying to work out what needs doing and when. If you don't like admin, how do you feel about having to spend a lot of time researching how to work out corporation tax, learning how to prepare company accounts, learning how to run your own payroll? Most people decide that it's better to have an accountant to look after that. Just doing your own basic book-keeping is enough for most people. I'd suggest you talk to a few accountants (most offer free first consultation or will be happy to talk on the phone) to discuss options etc. It's far better to have an accountant on board from day one so you do things right, rather than get one a year later only to find you've been doing things wrong which may mean you pay more tax, penalties etc than you needed to. Being a simple sole trader is a lot easier and most smaller simple sole traders can do their own accounts/tax returns without too much stress. Limited companies are very different and not for the amateur.

fishybusiness · 16 March 2018 at 6:52PM

Get an accountant!!

I tried it without for 2 years, not a big business, but a busy one.

Payroll is dead easy, plenty of online portals for that, CH yearly statement is easy, but then there are the books, the dreaded book keeping and HMRC returns.

You'll find yourself spending your time trying to understand 'proper' accounting, maybe getting it wrong, maybe not, it becomes a job in itself.

My partner is a book keeper, so she knows more than me, and between us we realised it just isn't within our remit to do it properly - employ a pro and focus on your core business skills.

ThemeOne · 16 March 2018 at 7:02PM

The problem with employing a "pro" is some of them aren't very good and make lots of mistakes themselves. I have personal experience! So I would only go with a recommendation from someone who also runs a company.

It is actually *not* particularly complicated to do it all yourself, though you will find plenty who claim it is, as on this thread. I think nearer the truth is that it's not the kind of work everyone feels comfortable with, particularly if you've never had much contact with accountancy.

fishybusiness · 16 March 2018 at 7:12PM

The problem with employing a "pro" is some of them aren't very good

So find a good one, there are plenty out there - we tried two others before settling on a really great accountant. Find a solution rather than make a problem.

Simple book keeping is not complicated, nor is most of the admin, as I said, it is fairly easy. It gets more in depth with putting expenses in the correct journal, with adding allowances, and ensuring they are updated each year, plus keeping on top of other changes for example the changes in dividends.

Any business that is busy making its money is much better off sticking to core skills and paying an accountant to do it right.

Pennywise · 16 March 2018 at 7:35PM

ThemeOne wrote: »

The problem with employing a "pro" is some of them aren't very good and make lots of mistakes themselves.

Mostly because people chose the cheapest or the unqualified ones. I've seen some pretty horrific cases, and have one on my desk this week where using an unqualified accountant has cost him £50k for failing to give even the simplest of advice that anyone calling themselves an accountant should know.

Savvy_Sue · 17 March 2018 at 2:13AM

fishybusiness wrote: »

Payroll is dead easy, plenty of online portals for that,

I would give a slight caveat with that: BITS of payroll are dead easy, but if you are employing anyone what's not necessarily quite so easy is knowing everything that goes WITH payroll, eg what to do when someone is sick / goes on maternity leave / requests parental leave etc etc etc. And it can take quite a while to get your head round it all.

So if you have employees, then the first thing you need is legal advice about their terms and conditions (and you need to communicate these to your employees), and having a competent person running payroll will save a good deal of time whenever there is anything the least bit out of the ordinary.

And payroll for the directors of a limited company is definitely something to take advice on before you get started!

Having said all that, knowing how PAYE works has been extremely useful, even when I've not been running it. I've run two small payrolls in the past, the first time entirely paperbased before there were any online tools, and the second time when you could calculate what to pay via the HMRC site but you then had to record the results manually. It was always a 'wet towel round the head and a strong black coffee to hand' time, but understanding the principles is invaluable.

ThemeOne · 17 March 2018 at 2:40PM

Pennywise wrote: »

Mostly because people chose the cheapest or the unqualified ones. I've seen some pretty horrific cases, and have one on my desk this week where using an unqualified accountant has cost him £50k for failing to give even the simplest of advice that anyone calling themselves an accountant should know.

But in my experience even paying more doesn't guarantee you get someone who knows what they're doing and does a conscientious job.

ThemeOne · 17 March 2018 at 2:43PM

fishybusiness wrote: »

Find a solution rather than make a problem.

I'm not really sure why stating the fact that some accountants aren't very good is "making a problem" - the problem is already there!

Pennywise · 17 March 2018 at 7:55PM

There are good and bad in absolutely every trade or profession. As the buyer, you have to research and make your own choices. Luckily, there are thousands of general accountants out there, so plenty of choice to find one that suits you.

How much admin. involved in running a Ltd Company?

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