Have you ever wondered what the difference is between a limited company and a sole trader or freelancer when it comes to the cost of accounting? If the answer is ‘yep, I definitely have’, then you’ve come to the right place! Keep reading to find out more about the costs of accounting for limited companies, and why we think Mazuma could be the best (and cheapest!) option for you and your business.

What is a limited company?

A limited company is a legal entity within its own right. As the owner of a limited company, you’re legally responsible for any debts to the extent of the amount of capital that you’ve invested. In other words, you’re not personally liable for any financial losses made by the business. Phew!

Being a limited company can also make it easier to secure loans and investment, because other businesses will know that you’re not personally responsible for the funds of your company. So, it can be a good decision to become a limited company if you’re looking to expand your business.  

You can also benefit from some tax advantages, which you can about in our blogs about the benefits of registering as a limited company and the pros and cons of a limited company for more info.

The cost of accounting for a limited company 

As a limited company, it’s likely that you’ll have more accounting requirements than a sole trader or freelancer. There will be more paperwork, more expenses you can claim for, and you’ll probably have more clients too. For this reason, limited company accounting costs can be a little higher. 

What do you need to submit to HMRC as a limited company?

• Company Tax Return - Your Company Tax Return – also known as the CT600 - outlines your company’s income, aside from any tax allowances or expenses. HMRC then uses the remaining amount – your profit – to work out how much Corporation Tax you need to pay
• Annual accounts - This includes submitting your Income Statement, Statement of Financial Positioning and Footnotes. You’ll also need to prepare your annual accounts for submission to Companies House, where they will publicly be displayed for the world to see! Sounds scary, doesn’t it? We know! But using an accountant will help make sure that all your financial affairs are in order.  

To make sure that you’re prepared to submit your finances to HMRC, all of your expenses need to be in order, all outstanding invoices have been paid and settled, and all your financial paperwork must be organised. The last thing you want is to be missing some vital information! You also need to keep yourself up to date with HMRC deadlines to make sure that you avoid any unwanted fines for late payments.

It’s quite a lot of work to keep on top of all these finances as a limited company, which is why using an accountant is so invaluable. It means you’ll have more time for you to spend working on your business, and you’ll have peace of mind that everything is being taken care of. 

Accounting with Mazuma

We’ve already mentioned that accounting with a limited company account can be pricier than doing so as a sole trader or freelancer, which we know isn’t ideal. But we do have good news – Mazuma could be the answer to your cost cutting prayers. We are a particularly cost-effective accounting service because we keep prices by providing our customers with an online service – yay! Unlike traditional accountants, we reduce the need for you to spend time dealing with your accounts and attending meetings, so that you can invest your time and money where it really matters – into your business! 

We also offer a specific package for Ltd Company accounts and corporation tax return, which we call the Ltd Weight option! So if you need a set of company accounts done but don't want to spend an arm and a leg, Mazuma is the way to go. 

For more information on our services for limited companies, get in touch today.