What Does an Accountant Do and Does My Business Need One?

Almost every UK business owner works with an accountant at some point, yet many are unclear about what they are actually paying for. Is the accountant there simply to file the annual accounts and tax return? Should they be helping with cash flow and pricing? And at what point does a growing business need more than an accountant, such as a finance director or chief financial officer?

The answers depend on the size, structure and ambitions of the business. A sole trader with straightforward income needs something very different from a venture-backed company preparing for a funding round. What is consistent is that directors remain legally responsible for their company’s records and filings, whoever prepares them.

This guide explains what accountants do in a UK context, the difference between statutory and management accounts, how professional qualifications differ, and how to decide what level of financial support your business needs.

What does an accountant actually do?

The work accountants do for businesses falls broadly into four areas. Some firms cover all four; others specialise.

Area	Typical activities	Why it matters
Compliance	Statutory accounts, Corporation Tax returns, VAT returns, confirmation statements, payroll filings	Meets legal deadlines and avoids penalties
Bookkeeping and processing	Recording transactions, bank reconciliations, supplier and customer ledgers, payroll	Accurate records underpin everything else
Tax planning and advice	Structuring remuneration, reliefs and allowances, R&D claims, capital gains planning	Lawfully reduces tax and avoids costly mistakes
Management information and advisory	Management accounts, budgets, forecasts, cash flow, KPIs, funding support	Helps directors make informed decisions

Compliance: meeting obligations to HMRC and Companies House

For a limited company, the core compliance cycle includes preparing statutory annual accounts and filing them at Companies House, filing a Corporation Tax return (CT600) with HMRC, paying Corporation Tax on time, and filing an annual confirmation statement. Private companies normally have nine months after the end of their financial year to file accounts, and Corporation Tax for most companies is due nine months and one day after the end of the accounting period, although the return itself is due within twelve months. First-year deadlines differ, so check yours carefully.

Many businesses also need VAT returns, payroll submissions under Real Time Information (RTI), and potentially returns for employee benefits. Sole traders and partners file Self Assessment returns instead of company accounts.

Bookkeeping

Bookkeeping is the day-to-day recording of financial transactions. Some accountants provide it directly; others work with a separate bookkeeper or expect the business to maintain its own records in cloud software. Either way, the quality of bookkeeping determines the quality of everything built on top of it.

Tax planning

Good accountants do more than calculate tax after the event. They advise on the most efficient way to extract profits, use available reliefs such as capital allowances and research and development relief, and plan ahead for transactions such as selling a business. Tax planning should always be lawful and within both the letter and spirit of the rules.

Advisory and management information

The most valuable accountants help owners understand the numbers and act on them: which products are profitable, how much cash will be needed in six months, and whether the business can afford a new hire. This is where the line between an accountant and a finance director begins to blur.

Statutory accounts vs management accounts

One of the most common sources of confusion is the difference between the accounts a business must produce and the accounts it should produce.

	Statutory accounts	Management accounts
Purpose	Meet legal reporting obligations	Support decision-making
Audience	Companies House, HMRC, shareholders, lenders	Directors, managers, investors, the board
Frequency	Annually	Usually monthly or quarterly
Format	Prescribed by company law and accounting standards (in the UK, typically FRS 102 or FRS 105 for smaller companies)	Flexible, designed around the business
Timing	Can be filed up to nine months after year end	Ideally within a few weeks of month end
Content	Balance sheet, profit and loss, notes; reduced disclosures for small companies	P&L against budget, cash flow, KPIs, forecasts, commentary

Statutory accounts tell you what happened, often many months later. Management accounts tell you what is happening now and help you decide what to do next. A board that meets without timely management accounts is effectively flying blind. Our guide on how to run an effective board meeting covers how financial information should feed into board packs.

Making Tax Digital: what it means for your business

Making Tax Digital (MTD) is HMRC’s programme to move tax record-keeping and reporting online. It has applied to all VAT-registered businesses for VAT periods starting on or after 1 April 2022, which means keeping digital records and submitting VAT returns through compatible software.

MTD for Income Tax is being introduced in phases for sole traders and landlords. It started from 6 April 2026 for those with qualifying income over £50,000, with lower thresholds planned to bring more people in over the following years. Those within scope must keep digital records and send quarterly updates to HMRC. Thresholds and dates can change, so check the latest position on the HMRC pages on GOV.UK.

For businesses, the practical implications are clear: use cloud accounting software, keep records up to date throughout the year rather than in an annual rush, and ensure your accountant is set up to work digitally. A good accountant will help select and configure software and train your team.

Accountancy qualifications in the UK

Anyone can call themselves an “accountant” in the UK; the title itself is not protected. Certain activities are regulated, such as statutory audit and some insolvency work, and firms providing accountancy services must be supervised for anti-money laundering purposes, either by a professional body or by HMRC. Even so, checking professional membership is one of the simplest ways to assess an accountant’s credentials.

The main professional bodies

• ICAEW (Institute of Chartered Accountants in England and Wales): members use the ACA or FCA designation and the title “chartered accountant”. Many audit and advisory practices are ICAEW firms.
• ICAS (Institute of Chartered Accountants of Scotland): the Scottish chartered body, whose members use CA.
• ACCA (Association of Chartered Certified Accountants): a global body whose members are “chartered certified accountants”, common in practice and industry.
• CIMA (Chartered Institute of Management Accountants): focused on management accounting, strategy and business finance, and often held by finance professionals working inside businesses.

Other relevant qualifications include the Chartered Institute of Taxation’s CTA for tax specialists and AAT for accounting technicians, who often handle bookkeeping and compliance work.

What qualifications tell you, and what they do not

Membership of a recognised body indicates training, ongoing professional development and adherence to an ethical code. It does not tell you whether the accountant understands your sector, works well with growing businesses or offers the advisory support you need. Ask about relevant experience and the services they provide.

Does my business need an accountant?

There is no legal requirement to use an accountant. A director can prepare and file accounts and tax returns personally, and some very small businesses do. In practice, most limited companies benefit from professional support for several reasons:

• Directors are legally responsible. Late filings and errors can lead to penalties, and persistent failures can have more serious consequences for directors.
• Tax rules are complex. Professional advice frequently identifies reliefs or structures that save more than the fee.
• Lenders and investors expect it. Accounts prepared or reviewed by a qualified professional carry more credibility.
• Time is limited. Every hour a founder spends on bookkeeping is an hour not spent on customers, product or people.

Whether a company needs an audit is a separate question. Many small companies are exempt from statutory audit if they meet the size criteria, although shareholders, lenders or investors may still require one. Companies House is also implementing reforms under the Economic Crime and Corporate Transparency Act 2023, including identity verification for directors and people with significant control, which became mandatory from 18 November 2025, so keep an eye on changes to filing requirements.

When you need more than an accountant

As a business grows, its financial needs shift from compliance towards strategy. Typical signs that you need more senior finance leadership include:

• You are preparing to raise investment or debt and need a robust financial model and data room.
• Cash flow is tight or unpredictable, and you lack a reliable rolling forecast.
• The board needs better financial reporting, KPIs and challenge.
• You are considering an acquisition, a new market or an exit.
• The finance team needs leadership, systems and controls appropriate to a larger business.

At this stage, many businesses appoint a finance director or CFO. For SMEs and scale-ups that cannot justify a full-time appointment, a fractional CFO offers senior expertise for a few days a month.

Accountant vs fractional CFO: how they compare

	External accountant	Fractional CFO
Main focus	Compliance, tax and historic reporting	Strategy, forecasting, funding and performance
Time horizon	Mostly backward-looking	Mostly forward-looking
Relationship	External adviser	Part of the leadership team, often attends board meetings
Typical outputs	Statutory accounts, tax returns, payroll	Budgets, cash flow forecasts, board packs, investor models, KPI frameworks
Best for	Every business needing to meet its obligations	Growing businesses facing funding, scaling or exit decisions

The two roles are complementary rather than competing. Most businesses with a fractional CFO keep an external accountant for compliance and tax, with the CFO overseeing the relationship. You can explore the model in more detail through our fractional directors service or estimate costs using our fractional cost calculator.

How to choose the right accountant

Choosing an accountant is a long-term decision. Questions worth asking include:

1. Which professional body are you a member of, and who is your anti-money laundering supervisor?
2. What experience do you have with businesses of our size, sector and structure?
3. Which accounting software do you support, and can you help us meet Making Tax Digital requirements?
4. Is your fee fixed or time-based, and what exactly is included?
5. Who will we deal with day to day, and how quickly do you respond?
6. Do you provide management accounts and advisory support, or compliance only?
7. What professional indemnity insurance do you hold?

Ask for a written engagement letter setting out the scope of services, responsibilities and fees. If you plan to raise funding or sell the business, ask how the firm has supported similar processes; our investor readiness checklist shows the financial information investors typically expect.

Frequently asked questions

Do I legally need an accountant for my limited company?

No. There is no legal requirement to appoint an accountant, but directors are responsible for keeping proper records and filing accounts and returns on time. Most companies find professional support worthwhile given the complexity and the penalties for getting it wrong.

What is the difference between a bookkeeper and an accountant?

A bookkeeper records day-to-day transactions and maintains ledgers. An accountant typically uses those records to prepare accounts and tax returns, and provides analysis and advice. Some firms offer both services.

What is a chartered accountant?

In the UK, “chartered accountant” usually refers to members of ICAEW, ICAS or Chartered Accountants Ireland. ACCA members are chartered certified accountants and CIMA members are chartered management accountants. All indicate professional training and ongoing regulation by their body.

Does Making Tax Digital apply to limited companies?

MTD for VAT applies to all VAT-registered businesses, including limited companies. MTD for Income Tax applies to sole traders and landlords above the relevant income thresholds. At the time of writing, no mandatory start date has been confirmed for MTD for Corporation Tax.

When should I hire a fractional CFO instead of relying on my accountant?

Consider a fractional CFO when you need forward-looking financial leadership: fundraising, cash flow management, board reporting, pricing decisions or exit planning. Most businesses keep their accountant for compliance alongside the CFO.

Last reviewed: 24 April 2026