Accounted for Limited Companies: Full Guide

Not Just for Sole Traders

When we launched Accounted, sole traders were our primary focus -- and they still are. The majority of our users are self-employed individuals who need simple, effective bookkeeping without the complexity of traditional accounting software. But we heard the same request repeatedly: "I've just incorporated -- can I still use Accounted?"

The answer is yes. Accounted now supports small limited companies, with features specifically designed for the unique bookkeeping needs of director-owners running their own businesses. Penny understands the differences between sole trader and limited company accounting, and she adapts accordingly.

Here's what Accounted offers limited company directors, and how it works in practice.

Setting Up as a Limited Company

When you sign up or convert your Accounted account to a limited company, Penny asks a few additional questions:

• Your company registration number
• Your VAT registration number (if applicable)
• Your financial year end date
• Whether you pay yourself a salary, dividends, or both
• Whether you have employees beyond yourself

Based on your answers, Penny configures your account with the correct tax calculations, category mappings, and compliance requirements. The entire setup happens through WhatsApp -- no forms to fill in, no dashboards to navigate.

Transaction Categorisation for Limited Companies

The fundamentals of transaction categorisation work the same way for limited companies as for sole traders. Penny's three-tier reasoning engine analyses each transaction and assigns it to the appropriate category with a confidence score.

The key difference is the category structure. Limited companies have additional categories and considerations:

Corporation Tax Categories

Limited company expenses map to Corporation Tax categories rather than self-employment categories. Penny handles this mapping automatically -- you don't need to know the difference between "allowable expenses for self-employment" and "deductible expenses for Corporation Tax purposes." You just confirm what the expense was for, and Penny categorises it correctly.

Director-Specific Transactions

Penny recognises and correctly handles:

• Director salary payments -- categorised as staff costs
• Dividend payments -- categorised separately from salary (not a business expense)
• Personal expenses paid through the company -- flagged and tracked through the director's loan account
• Pension contributions -- employer contributions categorised as an allowable expense

VAT Handling

For VAT-registered companies, Penny identifies the VAT component of every transaction where possible and tracks input VAT (what you've paid) and output VAT (what you've collected) separately. This feeds directly into your VAT returns.

Corporation Tax Estimates

One of the most valuable features for limited company directors is real-time Corporation Tax estimation. Ask Penny at any point:

You: What's my Corporation Tax looking like?

Penny: Here's your estimated position for the year ending 31 March 2026:

• Turnover: £85,400
• Allowable expenses: £32,150
• Director's salary: £12,570
• Employer NIC on salary: £692
• Pension contributions: £6,000
• Taxable profit: £33,988
• Estimated Corporation Tax (25%): £8,497

Note: This assumes the main rate of 25% applies. If your taxable profit for the full year falls below £50,000, the small profits rate of 19% would apply, reducing your estimated tax to £6,458.

This real-time visibility means no nasty surprises nine months after your year end when your accountant calculates your Corporation Tax bill. You always know roughly where you stand.

The estimate updates with every transaction Penny processes, so it's always based on your actual financial position, not a projection made months ago.

Salary vs Dividends Tracking

For most director-owners, the question of how much to take as salary and how much as dividends is one of the most important tax planning decisions. Accounted helps by tracking both clearly:

Salary Tracking

Penny monitors your salary payments and tracks:

• Gross salary paid year to date
• PAYE income tax deducted
• Employee National Insurance deducted
• Employer National Insurance cost to the company

Dividend Tracking

When you pay yourself dividends, Penny records:

• Dividend amount and date
• Running total of dividends paid in the current tax year
• Your remaining dividend allowance (currently £500 tax-free for 2025/26)
• Estimated personal tax liability on dividends above the allowance

The Combined Picture

Ask Penny for your combined position:

You: What have I taken out of the company this year?

Penny: Here's your total remuneration for 2025/26 so far:

• Salary (gross): £12,570
• Dividends: £35,000
• Total extracted: £47,570

Estimated personal tax on this:

• Income tax on salary: £0 (within personal allowance)
• NIC on salary: £0 (below threshold)
• Tax on dividends: £2,918 (£500 at 0%, £34,500 at 8.75%)

Company has sufficient retained profits to cover these dividends.

This visibility helps you and your accountant make informed decisions about the most tax-efficient way to extract profits from your company.

Director's Loan Account

The director's loan account (DLA) is one of the most common areas where small limited company directors get into trouble. Every time you use company money for personal expenses -- or put personal money into the company -- the director's loan account is affected.

Accounted tracks your DLA automatically:

• Company pays for personal items: Penny spots personal transactions (a restaurant meal with your partner, a non-business Amazon purchase) and adds them to your DLA balance
• You put personal money into the company: Penny records this as a credit to your DLA
• Running balance: Ask Penny at any time:

You: What's my director's loan account at?

Penny: Your DLA currently stands at £1,240 owed to the company. This means the company has paid for £1,240 of your personal expenses that haven't been repaid.

If this isn't repaid within 9 months of your year end, the company will owe Section 455 tax of £409.20 (33.75%). Want me to remind you before the deadline?

This is crucial because director's loan account balances above £10,000 can trigger benefit-in-kind charges, and unpaid balances trigger Section 455 Corporation Tax charges. Penny helps you stay on top of it before it becomes a problem.

Accountant Collaboration

While Accounted handles day-to-day bookkeeping brilliantly, most limited company directors have an accountant for year-end accounts, Corporation Tax returns, and strategic tax planning. Accounted's accountant portal makes collaboration seamless:

• Your accountant gets free access to your Accounted records
• They can view all categorised transactions, receipts, and tax estimates
• They can add notes and flag items for discussion
• They can review your records before any HMRC submissions
• Year-end pack generation gives them everything they need in one download

This means your accountant spends less time on data entry and reconciliation, and more time on advice that actually helps your business. That typically translates to lower accountancy fees -- which is a real benefit considering the average limited company pays £1,000-2,000 per year for accounting services.

Read more about how the ICAEW views AI-assisted bookkeeping and its impact on the accountant-client relationship.

MTD for Corporation Tax

While MTD for Income Tax is the immediate priority (from April 2026), HMRC has signalled that MTD for Corporation Tax will follow in due course. Accounted is being built with this in mind:

• Digital record-keeping is already in place
• Transaction categorisation already maps to Corporation Tax categories
• The HMRC submission infrastructure supports multiple submission types
• When MTD for Corporation Tax launches, Penny will handle it the same way she handles MTD for Income Tax -- through WhatsApp, with minimal effort from you

What Limited Company Features Are Coming

Accounted's limited company support is actively expanding. Features on our roadmap include:

• Payroll integration -- basic RTI submissions for single-director companies
• Auto-enrolment -- workplace pension compliance for companies with employees
• Confirmation Statement reminders -- annual filing reminders with Companies House
• IR35 assessment -- for companies that provide services through contracts (read our IR35 assessment guide)
• Multi-director support -- tracking salary, dividends, and DLA for multiple directors

Is Accounted Right for Your Limited Company?

Accounted works best for small limited companies where:

• You're the sole director (or one of two)
• You have few or no employees beyond the director(s)
• Your bookkeeping is relatively straightforward
• You want to reduce the time spent on day-to-day financial admin
• You have an accountant for year-end accounts and Corporation Tax returns

If you're running a larger company with multiple employees, complex payroll, or international operations, you'll likely need more comprehensive software like Xero or Sage. But for the thousands of one-person limited companies in the UK, Accounted offers a simpler, faster, more affordable alternative.

See how we compare in our Accounted vs Xero guide, explore all features, or start your free trial.

Useful Resources

• HMRC's MTD for Income Tax requirements
• HMRC's list of MTD-compatible software