FREEAGENT ACCOUNTANTS  

While FreeAgent is excellent accounting software that automates many tasks and helps with compliance, a limited company using FreeAgent still significantly benefits from having an accountant. There are many benefits of a company collaborating with an accountant like us. Here's why:
1. Legal and Compliance Complexity for Limited Companies:

• Distinct Legal Entity: A limited company is a separate legal entity from its owners. This brings additional legal and financial obligations that don't apply to sole traders.

• Companies House Filings: Limited companies have strict filing requirements with Companies House, including:

  • Annual Accounts: These must be prepared in a specific format (e.g., FRS 102 Section 1A or FRS 105 for small companies) and submitted annually. FreeAgent can help generate reports, but ensuring they meet all statutory requirements and are accurate for filing can be complex.

  • Confirmation Statements: These provide Companies House with up-to-date information about the company.

• Corporation Tax: Limited companies pay Corporation Tax on their profits. While FreeAgent calculates an estimated Corporation Tax liability, an accountant ensures all reliefs, allowances, and strategies are considered to minimize the tax burden legally. They also handle the actual submission of the CT600 to HMRC.

• Dividend Declarations: Properly declaring dividends, ensuring there are sufficient distributable profits, and preparing the necessary paperwork (e.g., dividend vouchers) are crucial. Incorrect dividend declarations can lead to serious tax penalties.

• PAYE and Payroll: If the limited company employs directors or staff, a PAYE scheme is required. While FreeAgent has payroll functionality, an accountant can ensure correct calculations, RTI submissions, and compliance with ever-changing payroll legislation (e.g., minimum wage, pension auto-enrolment).

2. Tax Optimisation and Strategic Advice:

• Beyond Basic Calculations: FreeAgent is designed to calculate taxes based on the data entered. However, it doesn't offer proactive tax planning. An accountant can advise on:

  • Director's Salary vs. Dividends: The most tax-efficient way to extract money from the company, considering personal tax thresholds, National Insurance, and Corporation Tax.

  • Allowable Expenses: Ensuring all legitimate business expenses are claimed to reduce taxable profit. This includes identifying less obvious deductible expenses.

  • Capital Allowances: Maximising claims for capital expenditure.

  • Loss Relief: How to utilize company losses to reduce current or future tax liabilities.

  • VAT Schemes: Advising on the most appropriate VAT scheme (e.g., Flat Rate Scheme) for the business.

• Future Planning: Accountants provide valuable insights into the company's financial health, helping owners make informed decisions about growth, investment, and future tax liabilities.

• Complex Scenarios: If the company deals with international transactions, has multiple income streams, or experiences significant changes (e.g., selling assets, taking on debt), an accountant's expertise is invaluable.

3. Error Checking and Peace of Mind:

• Data Entry Accuracy: While FreeAgent automates much of the process, the accuracy of its output depends entirely on the accuracy of the data inputted. An accountant provides a crucial second pair of eyes to review transactions, categorize them correctly, and identify any errors or omissions before filings are submitted.

• Avoiding Penalties: Incorrect or late filings with Companies House or HMRC can result in significant fines and reputational damage. An accountant ensures deadlines are met and submissions are accurate, providing peace of mind.

• HMRC Enquiries: If HMRC raises queries or opens an investigation, an accountant can act as an intermediary, handling communication and providing the necessary documentation, saving the company owner considerable stress and time.

4. Time Savings and Focus:

• Free Up Your Time: Even with FreeAgent, managing a limited company's accounts can be time-consuming. Offloading the more complex aspects to an accountant allows the business owner to focus on core business activities, growth, and client work.

• Understanding Reports: While FreeAgent generates reports, an accountant can interpret these reports, explain what they mean for the business, and help identify trends or areas for improvement.

In summary, while FreeAgent simplifies bookkeeping and some tax calculations, the complexities and legal obligations of a limited company, combined with the potential for significant tax savings and strategic advice, make an accountant an essential partner. They don't just process data; they provide expert guidance to ensure compliance, optimize tax efficiency, and support the overall financial health and growth of the business.