Most limited company directors benefit from hiring a limited company accountant. We say that knowing we are one. The compliance burden is real: annual accounts, corporation tax returns, confirmation statements, payroll if you have employees, dividend paperwork, possibly VAT. Miss a filing deadline and the penalties stack fast.
But not every limited company needs an accountant every year. There are specific scenarios where doing your own accounting is cheaper, low risk, and perfectly sensible. The key is knowing which scenario you are in.
Here are five situations where a limited company accountant may not be worth the fee.
1. Your Company Is Dormant with No Transactions
A dormant company is one with no significant accounting transactions in the year. No income, no expenses, no dividends, no director loans. Just the company sitting there, registered at Companies House, doing nothing.
If that is your situation, you can file dormant company accounts yourself for free. Companies House provides a simple online filing service. You submit a confirmation statement every 12 months (£13 filing fee, or £34 if you file by post). No corporation tax return is needed if the company has notified HMRC it is dormant.
The process takes about 20 minutes per year. The cost is £13. Compare that to an accountant's annual fee, which for a dormant company typically runs between £150 and £400 plus VAT.
The maths: You save £150 to £400 per year. The risk is near zero because there are no transactions to get wrong.
One caveat: if your company has ever traded, even briefly, check that HMRC accepts its dormant status. You file a CT600 with nil figures for the first dormant year to formalise it. If you are unsure, a one-off chat with an accountant costs less than a full engagement.
2. You Are a Single Director with Straightforward Income
Say you are the only director of your limited company. You take a salary of £12,570 per year (the personal allowance and primary NI threshold). You take dividends up to the basic rate band, say £37,700 of taxable dividends after the £500 allowance. You have no employees, no VAT, no foreign income, no complex assets.
Your annual compliance is:
- Annual accounts and corporation tax return (CT600)
- Confirmation statement
- Self assessment tax return (SA100)
- Payroll: one RTI submission per month (or quarterly) for your salary
If you use accounting software like FreeAgent or Xero, these tasks are largely automated. FreeAgent, for example, generates your annual accounts and CT600 with a few clicks. It handles RTI payroll submissions automatically. You file the CT600 through the software's HMRC integration.
The software costs roughly £20 to £40 per month. Your total annual cost is £240 to £480 plus the £13 confirmation statement fee. An accountant doing the same work would charge £600 to £1,200 per year.
The maths: You save £360 to £720 per year. The risk is low because the transactions are simple and the software flags obvious errors.
This works best if you are comfortable with basic bookkeeping. You need to categorise expenses correctly (office costs, travel, professional fees, etc.) and understand the difference between a director's loan and a dividend. If you are not confident on those points, the saving may not be worth the stress.
3. Your Company Has No Employees and No VAT
Many contractors and freelancers operate through a limited company with just themselves as director. No staff, no subcontractors, no VAT registration because turnover is below the £90,000 threshold.
This is the simplest structure a limited company can have. The accounting is essentially one bank account, one director, one set of transactions. No PAYE beyond your own salary, no CIS deductions, no VAT returns.
If your turnover is between, say, £40,000 and £80,000 and you have no employees, your annual accounting work is:
- Reconcile your bank account each month (15 minutes)
- Categorise transactions (10 minutes)
- Run payroll for yourself once a month (5 minutes with software)
- File annual accounts and CT600 (30 minutes with software)
- File your self assessment (20 minutes)
Total: about 12 hours per year. At the software cost of £240 to £480, your effective hourly rate for doing it yourself is negative compared to an accountant's fee. But the real saving is the £600 to £1,200 you do not pay the accountant.
Where this falls apart is if your affairs are not that simple. If you have multiple income streams, significant director's loan activity, or capital transactions, the risk of error increases. An accountant's value is not just filing the forms. It is spotting what you missed.
4. You Are Exiting the Business and Want to Minimise Costs
If you are closing your limited company or selling it, the final year of accounts and the winding-up process can be expensive. Some accountants charge £1,000 to £2,500 for a final set of accounts plus the dissolution paperwork.
If your company is simple and you are solvent, you can file the final accounts yourself using software. You then apply for voluntary strike-off using the Companies House DS01 form (£8 fee). The process takes about 3 months from application to dissolution.
You still need to file a final CT600 and pay any corporation tax due. But if your company has no assets beyond cash and no complex tax issues, the DIY route is straightforward.
The maths: You save £1,000 to £2,500 on the final year's fees. The risk is low provided you have paid all liabilities and distributed remaining assets correctly.
One important point: if you are claiming Business Asset Disposal Relief (formerly Entrepreneurs' Relief) on the sale or closure, the paperwork is more involved. BADR claims require specific disclosures on your self assessment and the company's final return. Getting that wrong can cost you thousands in extra CGT. In that scenario, an accountant's fee is money well spent.
5. You Have a Second Company or Partnership That Complicates Things
Wait. This sounds like the opposite of a scenario where an accountant is not worth the fee. But hear me out.
If you have one simple limited company and a separate sole trade or partnership that is also simple, you can often do both yourself. The key is that each entity is straightforward on its own. The complexity comes from the interaction: associated company rules for corporation tax, dividend planning across entities, personal service company risks.
However, if both entities are genuinely simple and your total income across both is below the higher rate threshold, the DIY approach still works. You file separate accounts for each entity, separate self assessment pages (SA103 for the sole trade, employment pages for your director salary), and ensure you understand the associated company rules for corporation tax marginal relief.
The maths: If your two entities each cost £600 to £1,200 in accountant fees, doing both yourself saves £1,200 to £2,400 per year. The risk is moderate because you need to understand associated company rules. But if your profits in each company are below £50,000, the marginal relief calculation is straightforward.
Where this becomes a bad idea is if one entity has employees, or VAT, or significant assets. Then the interaction effects multiply and an accountant's expertise is hard to replace.
When DIY Accounting Becomes a False Economy
The scenarios above work because the company is genuinely simple. Here is when DIY accounting costs you more than it saves:
- You miss a filing deadline. Late filing of accounts at Companies House costs £150 (1 month late) up to £1,500 (6+ months late). Late corporation tax payment incurs interest at 7.25% plus penalties.
- You get the tax wrong. Underpaying corporation tax by £2,000 triggers interest and possibly penalties. Overpaying means you gave HMRC an interest-free loan.
- You miss reliefs. R&D tax credits, capital allowances, trivial benefits, pension contributions. These are easy to miss if you do not know what to look for.
- You trigger a compliance check. HMRC opens about 300,000 compliance checks per year on small companies. If your return is wrong, even innocently, the cost of dealing with the enquiry can dwarf any accounting fee saving.
As ICAEW qualified accountants, we see the aftermath of DIY mistakes regularly. A client saves £800 on accounting fees one year, then pays £3,000 to fix an incorrect CT600 the next. That is not a saving.
How to Decide Whether You Need an Accountant
Ask yourself these four questions:
- Is my company dormant or very simple? If yes, DIY is low risk.
- Am I confident with numbers and software? If you dread reconciling your bank account, pay an accountant.
- Do I have any complex transactions? Director's loans, share issues, asset sales, foreign income. If yes, get professional help.
- What is my time worth? If you bill at £100 per hour and DIY accounting takes 12 hours per year, your effective cost is £1,200 in lost billing. That may be more than an accountant's fee.
If you answered yes to question 1 and yes to question 2, and no to question 3, and your time is worth less than an accountant's fee, DIY is a sensible choice.
If any of those answers flip, an accountant is likely worth the fee.
A Middle Ground: One-Off Advice with DIY Filing
There is a hybrid approach that many directors overlook. You pay an accountant for a one-off review of your set-up and tax strategy, then do the ongoing filing yourself.
For example, you might pay £300 for an initial consultation where the accountant confirms your dividend strategy is tax efficient, your salary is set correctly, and your company structure is appropriate. Then you handle the monthly bookkeeping and annual filing using software.
This gives you the confidence that your foundations are right, without the ongoing cost of a full service. You then return to the accountant every 2-3 years for a health check, or when something changes (new product line, taking on employees, buying a van).
We offer this kind of advisory service at Holloway Davies. It is not for everyone, but it works well for directors who are capable with software and want a safety net.
Final Check: Know Your Limits
The scenarios where a limited company accountant is not worth the fee are real, but they are narrow. If your company has employees, VAT, significant assets, complex transactions, or if you are unsure about any aspect of your tax position, the fee is almost certainly worth it.
If your company is genuinely simple, you are comfortable with software, and you have the discipline to file on time, DIY accounting can save you hundreds of pounds per year. Just be honest with yourself about which category you fall into.
If your turnover crossed the VAT threshold in the last 30 days, or you took a director's loan you have not repaid, or you bought a company car, those are triggers to speak to an accountant. Do not DIY those decisions.
And if you are unsure, get in touch. A 15-minute chat costs nothing and will tell you whether you need us or not. We will tell you straight.