Running a limited company comes with legal accounting obligations that are quite different from sole trader tax returns, and the consequences of getting them wrong fall on you personally as a director. This guide explains exactly what you are required to do, when to do it, and where most directors run into trouble.

Why limited company accounting is more demanding than most directors expect

When you incorporate, you take on legal duties that do not exist for sole traders. Your company is a separate legal entity, which means it must file its own accounts with Companies House, submit a Corporation Tax return to HMRC, and maintain its own financial records entirely apart from your personal finances. These are not optional. They are statutory requirements that carry penalties regardless of whether the company made a profit.

The filing deadlines are unforgiving. According to GOV.UK guidance, private limited companies have nine months after their accounting reference period ends to submit accounts to Companies House. Your Corporation Tax return goes to HMRC separately, with the tax itself due nine months and one day after the end of your accounting period. Missing either deadline triggers automatic penalties, and they escalate quickly.

Where most directors go wrong with limited company accounting

The mistakes I see most often are not caused by carelessness. They happen because directors assume limited company accounting works like self assessment, or because they underestimate how much has changed since they incorporated. A few specific errors tend to cause the most damage.

Mixing personal and company money

This is one of the most common issues I deal with. Using your business account for personal purchases, or paying company expenses from your personal account without recording them properly, creates a mess that takes time and money to untangle. It can also create an unintended director’s loan, which has its own tax consequences if the balance is not cleared within nine months of your company’s year end.

Getting the salary and dividend split wrong

Most director-shareholders pay themselves a combination of salary and dividends to manage their tax position efficiently. But the split matters, and so does the paperwork behind it. Dividends can only be paid from retained profits, must be formally declared with a board minute, and are taxed differently to salary. Drawing money without following this process can result in the payment being reclassified as a director’s loan or additional salary, both of which carry tax implications.

What you need to do each year as a limited company director

Limited company accounting has a predictable annual cycle. Understanding each step in order helps you avoid the panic that tends to build when a deadline is two weeks away and you have not started yet.

1. Keep your bookkeeping up to date throughout the year. This means recording all income and expenditure, reconciling your bank account monthly, and keeping receipts. If you use cloud accounting software such as QuickBooks, FreeAgent, Xero or Sage, much of this can be automated. Good records are the foundation for everything else, and they make your accountant’s job faster and cheaper.
2. Prepare and file your statutory accounts. These are the formal financial statements, including a balance sheet and profit and loss account, that must be submitted to Companies House within nine months of your year end. From April 2028, all companies will be required to file accounts using commercial software in iXBRL format, and paper filing will no longer be accepted. Small companies will also lose the option to file abridged accounts.
3. File your Corporation Tax return (CT600) with HMRC and pay any tax owed. The CT600 is separate from Companies House and has its own deadline, twelve months after your accounting period ends, though the tax itself is due earlier at nine months and one day. You also need to file a Confirmation Statement with Companies House annually, confirming that your company information on the register is accurate.

There are also ongoing obligations depending on your circumstances: VAT returns if your turnover exceeds the threshold (currently £90,000), payroll filings via Real Time Information (RTI) if you pay yourself or anyone else a salary, and CIS returns if you operate in construction. Each of these has its own reporting schedule and penalties for late submission.

Costs and what to realistically expect

The cost of getting limited company accounting wrong is almost always higher than the cost of getting it right. Late filing penalties at Companies House start at £150 for accounts up to one month late and rise to £1,500 for accounts over six months late, doubling if the company is late in two consecutive years. Beyond penalties, there is the time cost of sorting out disorganised records, and the risk that an error triggers an HMRC enquiry. Paying a fixed monthly fee to an accountant who tracks your deadlines for you is the most predictable approach. It also means you are not faced with a large one-off bill at year end.

How to get on top of your limited company accounting now

The most useful thing you can do today is establish where you currently stand. Check your Companies House account to confirm your accounting reference date and when your next accounts filing deadline is. Then look at your bookkeeping and ask honestly whether your records are complete enough to produce accurate accounts from. If the answer is no, that is the starting point.

• Log in to your Companies House account and note your accounting reference date and the deadline for your next accounts filing. Write both dates down somewhere you will see them.
• Review your bank statements for the current accounting period and check whether your bookkeeping reflects every transaction. If you are not using cloud accounting software, assess whether a tool like QuickBooks, FreeAgent or Xero would make this manageable on an ongoing basis.