Limited company accounting is materially more involved than sole trader bookkeeping. Beyond income and expenses, you need Corporation Tax workflows, statutory accounts that match Companies House filings, dividend voucher management, director payroll, and the ability for your accountant to log in and work alongside you. This guide walks the Ltd-specific criteria.
What's different about Ltd accounting
- Double-entry bookkeeping is essentially required. The simplified single-entry workflow that suits sole traders doesn't satisfy Companies House statutory accounts requirements.
- Corporation Tax (CT600) due 12 months after year-end; tax payable 9 months after year-end.
- Statutory accounts filed at Companies House — these are public.
- Confirmation Statement annually (£34 filing fee at Companies House).
- Director payroll — RTI submissions monthly to HMRC if the director takes a salary.
- Dividend management — dividend vouchers issued for each dividend; declared in board minutes; recorded in company books.
- Accountant collaboration — most Ltds use an accountant (£80–150/month typical). Software must give the accountant easy access.
What to look for
- Full double-entry bookkeeping. Single-entry (QuickBooks Self-Employed) doesn't work for Ltd statutory accounts.
- Corporation Tax (CT600) generation — software-produced figures matching the HMRC form.
- Statutory accounts production — iXBRL-tagged accounts ready for Companies House submission.
- Director payroll integration — RTI submissions for director's salary (typically £12,570).
- Dividend voucher generation — formal vouchers when you declare dividends.
- Accountant access — invite-based, free for the accountant.
- Bank feeds — automatic import from your business bank account.
- Receipt capture — photograph and OCR.
- VAT MTD compliance — required above £90k turnover.
- Multi-currency if you bill overseas clients.
The realistic options
Xero Standard — £30/mo
The UK default for Ltd directors. Most UK accountants prefer Xero. Full statutory accounts generation, CT600, dividend vouchers, accountant invite, multi-currency on Standard tier. Strongest integration ecosystem (1,000+ apps).
Detailed: Xero review.
FreeAgent — £29/mo direct, free with Mettle/NatWest banking
UK-built, NatWest-owned. Strong Ltd workflow: includes director payroll bundled (not an add-on), dividend voucher generation, statutory accounts production. Free if you bank with the right group — saves £348/year vs Xero.
QuickBooks Online Simple Start / Essentials — £15–32/mo
Capable Ltd platform. Simple Start at £15/mo covers basic Ltd needs; Essentials at £32/mo adds multi-currency and bill management. Strong payroll add-on (+£5/mo per employee). Slightly less UK-accountant ubiquity than Xero.
Sage Accounting — £14–36/mo
UK incumbent. Strong if you're already using Sage Payroll or operating in construction (CIS workflow is best-in-class). Less polished UI than Xero. Some traditional UK accountants are Sage-trained.
Pick by scenario
Single-director Ltd, using an accountant
Default: Xero Standard (£30/mo). Ask your accountant first — if they're FreeAgent-fluent and you can bank with Mettle, FreeAgent saves you £348/year. Otherwise Xero is the smoothest accountant collaboration.
Single-director Ltd, DIY-ing accounts
If you bank with Mettle: FreeAgent free. If not: QuickBooks Simple Start (£15/mo) is cheapest. Both produce CT600-ready figures and statutory accounts.
Multi-director Ltd or larger small business
Xero Standard or QuickBooks Essentials. Multi-director scenarios need cleaner separation of director loans, dividend allocations, and multi-user access. FreeAgent works but with slightly more friction.
Construction industry (CIS Ltd)
Sage Accounting wins on CIS workflow. The deduction certificates, monthly returns, and CIS-suffered tracking are best-in-class. Xero can do it but the workflow is more manual.
International / multi-currency Ltd
Xero Standard includes multi-currency. QuickBooks needs Essentials (£32) or above. FreeAgent has it on all plans. See our foreign currency invoice guide.
Director payroll
If you take a director's salary (most Ltd directors take £12,570 to use up personal allowance), you need PAYE registration and monthly RTI submissions:
- FreeAgent: payroll bundled at no extra cost on the Ltd plan
- Xero Payroll: add-on at ~£6/mo per employee
- QuickBooks Payroll: add-on at ~£5/mo per employee
- Sage Payroll: add-on, mature UK product
- Standalone alternative: BrightPay (~£99/year) for low-volume payroll
For single-director Ltds, the £60–72/year payroll add-on is the meaningful Xero vs FreeAgent cost gap.
Dividend management
Dividends require board minutes documenting the declaration plus a dividend voucher issued to each shareholder. All four main platforms (Xero, FreeAgent, QuickBooks, Sage) generate dividend vouchers. FreeAgent's workflow is the simplest; Xero and QuickBooks require slightly more manual setup.
Important: dividends can only be declared from retained profits. The platform tracks distributable reserves so you can't accidentally over-declare. Worth checking the reserves balance before each dividend declaration.
Accountant collaboration
Most UK Ltds use an accountant for year-end. The software must give your accountant access:
- Xero: "Advisor" role — full access, free, your accountant has their own login
- FreeAgent: "Accountant access" — same model
- QuickBooks: "Accountant user" — same model
- Sage: "Accountant access" — same model
Ask your accountant which platform they prefer before subscribing. Working in their familiar system saves 10–20% on monthly fees.
Year-end workflow
For UK Ltds, year-end involves:
- Reconcile the final month
- Review draft accounts (P&L + balance sheet)
- Adjust for accruals, prepayments, depreciation
- Produce statutory accounts in iXBRL format
- Generate CT600 figures
- File statutory accounts at Companies House
- File CT600 with HMRC (9 months after year-end for tax payment)
- File Confirmation Statement at Companies House
Xero and FreeAgent both handle steps 1–4 well; CT600 generation and Companies House filing typically require accountant involvement (or a separate filing service like TaxCalc).
Practically yes. The statutory accounts requirements make pure-spreadsheet bookkeeping painful. Free FreeAgent (via Mettle banking) makes the cost barrier zero, so there's no reason to DIY it.
Yes. All four platforms produce the figures; the actual CT600 filing is via HMRC's filing software or a tax-filing tool like TaxCalc/IRIS. Accountants typically include CT600 filing in their monthly fee.
These are accountant services that bundle bookkeeping + year-end + tax filing for a monthly fee (£90–200). Reasonable if you want everything outsourced. Above £80k turnover, dedicated software + an external accountant is typically cheaper.
Workable but messier than at year-end. The mid-year switch needs careful opening-balance reconciliation. Best to switch right after year-end with accountant sign-off. See switching accounting software.
FreeAgent free via Mettle banking is the cheapest serious option (£0/year). Otherwise QuickBooks Simple Start at £15/mo. Going further down on cost means DIY spreadsheet which is not realistic for Ltd statutory accounts.
No. All four mainstream Ltd platforms handle MTD-VAT submissions natively. The MTD-VAT and MTD-ITSA software lists from HMRC include all of them.
Software records dividends as company outflows but the personal dividend tax is on your Self Assessment, not the company's. Most Ltd-fluent software flags when retained earnings can't support a proposed dividend.
UK mortgage lenders use your accountant-certified figures from the platform. Clean books and properly-produced statutory accounts make mortgage applications faster. See our freelancer mortgage guide.
General Ltd company buyer's guidance as at May 2026. Pricing changes — verify on provider sites.