Advice re: accounts for a limited company?

[Waldo 96]

Hello,

 

I have a limited company, though with hindsight, I'm thinking a sole-trader would have been a more appropriate setup for me (given relatively low turn-over and only one employee, me). When I setup as limited, I anticipated having a very irregular income from year to year (some with relatively high profit, some with none), and my thinking was that as a sole trader, I would get hammered by HMRC for this, but with a limited company, I would have more scope to even things out year to year.

 

Anyhow...

 

The last time I had my accounts prepared and sent to HMRC, it took my accountant half a day. I have all my books prepared for this year, they're pretty simple, not many transactions and no profit.

 

I have 2 questions.

 

1. What's involved with transitioning from a limited company to a sole trader.

 

2. How much should I expect to pay an accountant to prepare and submit my accounts to HMRC (expect to take half a day).

 

Many thanks,

[pmurtdlanod1 10]

Hello,

 

I have a limited company, though with hindsight, I'm thinking a sole-trader would have been a more appropriate setup for me (given relatively low turn-over and only one employee, me). When I setup as limited, I anticipated having a very irregular income from year to year (some with relatively high profit, some with none), and my thinking was that as a sole trader, I would get hammered by HMRC for this, but with a limited company, I would have more scope to even things out year to year.

 

Anyhow...

 

The last time I had my accounts prepared and sent to HMRC, it took my accountant half a day. I have all my books prepared for this year, they're pretty simple, not many transactions and no profit.

 

I have 2 questions.

 

1. What's involved with transitioning from a limited company to a sole trader.

 

2. How much should I expect to pay an accountant to prepare and submit my accounts to HMRC (expect to take half a day).

 

Many thanks,

 

i dont think you can change from a ltd co to a sole trader, you will have to close the ltd co which will involve more accountancy costs and then register as self employed sole trader.

 

accountants are all different mine charges £650 for ltd co but depends on the work.

 

why change it now if you have more nett profit than 10k pay yourself dividends and save money on NI etc. if you have no profit this year you may have next?

[Waldo 96]

Thank you. There is a lot to consider. Still, be nice to find an accountant charging less than £200 per hour!

[pmurtdlanod1 10]

Thank you. There is a lot to consider. Still, be nice to find an accountant charging less than £200 per hour!

 

i know but i think you will struggle, good luck and if you find one let me know:)

[Chez2 10]

I think the standard minimum fee is about £600. This was what we were quoted back in 2009. We pay a bit more now but not much more.

 

Included in the fee is a visit to our accountant to go through the year end report and sign it off.

 

Most professional fees start around £500 per day, some are considerably more.

[Waldo 96]

Thanks.

 

Even at £500 a day, if a job is only taking 2 to 3 hours; should come out considerably less than £600, I would think.

 

I guess I find it confusing when accountants charge a set fee for a limited company's accounts and CT return; when you consider some company's have complex financial affairs, and others extremely simple ones.

 

Also considering just not submitting accounts, and letting HMRC fine me and estimate my tax themselves. Should be £200 in fines and no tax to pay.

[Chez2 10]

Thanks.

 

Even at £500 a day, if a job is only taking 2 to 3 hours; should come out considerably less than £600, I would think.

 

I guess I find it confusing when accountants charge a set fee for a limited company's accounts and CT return; when you consider some company's have complex financial affairs, and others extremely simple ones.

 

Also considering just not submitting accounts, and letting HMRC fine me and estimate my tax themselves. Should be £200 in fines and no tax to pay.

 

How do you know it only takes two or three hours? I have never asked our accountants how much time it actually takes them.

 

The set fee is when they have to do the year end report when everything else is pretty much sorted. All our accounts are in quickbooks but the accountant has to run reports (or we do them) then he asks us questions if he needs to. We then go visit him to discuss the year end report and sign.

 

It sounds to me like you are confusing the year end report with more complex issues of running a business and perhaps you don't go in to discuss the year end report before signing.

 

We have no complaints about our accountant.

[Waldo 96]

How do you know it only takes two or three hours?

 

He told me!

 

It sounds to me like you are confusing the year end report with more complex issues of running a business and perhaps you don't go in to discuss the year end report before signing.

 

Yeah, possibly.

 

As I understand it; there is book-keeping (which I do myself), and then there is the production of statutory accounts (either full or abbreviated) in a format required by HRMC and Co House. Along with the statuary accounts, HRMC also require a CT600 corporation tax return (which needs to be submitted electronically).

 

This is what I'll (and presumably most small business owners would) be paying an accountant to do; on the basis of my books, to produce statutory accounts and a CT600 corporation tax return; and submit to Co House and HRMC on my behalf.

[andyofborg 11]

 

Also considering just not submitting accounts, and letting HMRC fine me and estimate my tax themselves. Should be £200 in fines and no tax to pay.

 

that really doesnt seem like a good idea, there will be interest, penalties, interest on the penalties and i presume their estimate will take the various allowances and such like into account to the benefit of the chancellor not you.

 

presumably also, you will get a flag against your name which will encourage them to pick on you for monitoring visits and such like and while they may not cost you directly there will be an indirect cost since you wont be able to work on that day

 

---------- Post added 09-11-2016 at 19:59 ----------

 

 

1. What's involved with transitioning from a limited company to a sole trader.

 

 

you should get professional advice before you do this

 

things may have changed since i was last involved in these things but as far as i remember

 

you pay the bills and dissolve the company and notify hmrc that you are a sole trader

 

any assets left in the company should be divided amongst the shareholder(s) and they will be counted against capital gains tax thresholds.

 

i dont know what you do, but in some sectors, firms are wary of dealing with sole traders since they are pretty much guaranteed to have hmrc find you a disguised employee which is not a pleasant, or cheap, experience.

 

as an employee of your company, you should be eligible for contributory benefits should you need to but as a sole trader you only get the non-contributory benefits.

Edited November 9, 2016 by andyofborg

[Waldo 96]

Thanks Andy. I've done a little more research, and it seems, according to HMRC criteria, my company is a micro-entity.

 

https://www.cchdaily.co.uk/hmrc-simplifies-online-reporting-micro-entities

[steveroberts 10]

 

why change it now if you have more nett profit than 10k pay yourself dividends and save money on NI etc. if you have no profit this year you may have next?

 

The dividend threshold is now £5K...even so the OP should consider this is tax free as you point out.

 

As long as the cost of producing and filing the accounts is less that the tax on £5K...it would appear, to me, to be a 'no brainer'.

 

Plus Limited Liability companies have the benefit that the shareholders liability is limited (subject to any deal with suppliers of credit), whereas a sole trader is exposed to the full liability of any debt.