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Expert answers: Do I need two accountants for my limited company and sole trader business?

Readers Question: I do fostering and am classed as self-employed and I have an accountant that deals with my accounts and also my personal allowances with the tax office. I am thinking of running a property business – buy to let and set up a limited company. Will I need a different accountant to deal with my small business company hence 2 accountants?

two accountants for my limited company and sole trader business

Expert Answer: The expert for this article is Nishi Patel, the managing director of Northants Accounting.

Different Taxes

At first glance you’ve got two different taxes involved here and it would be convenient to separate them out to two different accountants. On one hand, there’s your self-assessment tax return and on the other is your Company accounts and tax work. As business owners are continuously told that their limited companies are a separate entity then the separation of accountants might also seem logical, plus it’s also often the case that certain accountants only specialise in self-assessment and don’t get involved in limited companies.

Levels of Tax Planning

To really understand the root of the question it’s worth considering what people want from an accountant. Is it to save money? Stay safe from an HMRC enquiry? Or even to save some time and effort?

Usually, it’s a combination of all three, plus some others which is why it helps to recognise that there are different levels of tax planning if you’re looking to save money. Yes, it’s possible to save money by putting the right expenses through your books and many businesses out there are satisfied with this. But the majority of tax savings happen when you have a tax strategy that has been customised to your lifestyle, family and business.

The Bigger Picture

If we can agree that to really benefit from tax planning, you’d need to coordinate the various elements of your business and personal life, then how well placed are two separate accountants to do this? Over time the decisions you make with your personal tax will impact your property company and vice versa. Which accountants’ responsibility will it be to help you adapt your tax planning strategy? And will the other be happy to follow someone else’s lead?

Hopefully, you’ll see where I’m going with this answer, however, the question that should also be asked is: Do I need a separate company for my properties?

Properties in a limited company can be a tax trap that we’re seeing more and more people fall into these days. It’s certainly not suitable for everyone and making the wrong decisions can cost you a lot more in the long term. This is where one accountant with an overview of your whole tax situation can help you make the right decision.

Yes but…

I suspect that at the heart of this question lies the fact that you’re unhappy with the service you’ve received from your current accountants and aren’t eager to send more work over to them. Or that you feel they’re not competent enough to handle a limited company otherwise you would have appointed them for your limited company already.

Either way, tax is an area where you need 100% confidence in the professionals you deal with, so perhaps its time to start shopping around.

More on sole trader accounts and bookkeeping and limited company accountants.

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