Professionally prepared Financial Accounts are a must for any business. Firstly, they will tell you how your business has performed and how much profit you have made. Secondly, they will form the basis for calculating your tax liability.
For Companies and LLPs, there are also the statutory compliance requirements for preparing and filing Company annual accounts. Directors are legally responsible for making sure the annual accounts are completed accurately and submitted by the statutory filing deadlines. Copies of the statutory accounts must be sent to:
- all shareholders
- people who can go to the company’s general meetings
- Companies House
- HM Revenue and Customs (HMRC) as part of Company Tax Returns
There are different deadlines for sending accounts to Companies House and tax returns to HMRC. However, it may be possible to send them at the same time.
If your company is small, a micro entity or dormant, you might be able to send simpler (‘abridged’) accounts.
How to put together Statutory Financial Accounts
Statutory accounts must include:
- a ‘balance sheet’
- a ‘profit and loss account’
- notes about the accounts
- a director’s report (exemption for a ‘micro-entity’)
You might have to include an auditor’s report but this depends on the size of your company. The balance sheet must have the name of a director printed on it. It must also be signed by a director. Statutory accounts must meet either:
- International Financial Reporting Standards
- New UK Generally Accepted Accounting Practice
Search online to find out more about the standards. Or ask your accountant or tax adviser.
Micro-entities, small and dormant companies
You might be able to send simpler (‘abridged’) accounts to Companies House and be exempt from audit. This depends on whether your company is dormant or qualifies as a small company or ‘micro-entity’.
You must still send statutory accounts to your members and to HMRC as part of your Company Tax Return though.
Your company is called ‘dormant’ by Companies House if it’s had no ‘significant’ transactions in the financial year that you’d normally report. Significant transactions do not include:
- filing fees paid to Companies House
- penalties for late filing of accounts
- money paid for shares when the company was incorporated
Dormant companies that qualify as ‘small’ do not need to be audited. Check if your company is also dormant for Corporation Tax.
Your company will be ‘small’ if it has any 2 of the following:
- a turnover of £10.2 million or less
- £5.1 million or less on its balance sheet
- 50 employees or less
If your company is small, you can:
- use the exemption so your company’s accounts do not need to be audited
- choose whether or not to send a copy of the director’s report and profit and loss account to Companies House
- send abridged accounts to Companies House
Sending abridged accounts
You can only send abridged accounts if all your company members agree to it.
Abridged accounts must contain a simpler balance sheet, along with any notes. You can also choose to include a simpler profit and loss account and a copy of the director’s report.
The balance sheet must have the name of a director printed on it and must be signed by a director.
Sending abridged accounts means less information about your company will be publicly available from Companies House.
Micro-entities are very small companies. Your company will be a micro-entity if it has any 2 of the following:
- a turnover of £632,000 or less
- £316,000 or less on its balance sheet
- 10 employees or less
If your company is a micro-entity, you can:
- prepare simpler accounts that meet statutory minimum requirements
- send only your balance sheet with less information to Companies House
- benefit from the same exemptions available to small companies
Find out exactly what to include in your accounts depending on your company type, for example micro-entity, small, medium or dormant.
Filing your accounts and tax return
You can file with Companies House and HMRC together or separately.
You must take additional steps:
Using accountants or tax advisers to file for you
- give your accountant or tax adviser your Companies House authentication code so they can file your accounts
- appoint an agent to file your Company Tax Return
Working with you, I can help with:
- Preparation of annual accounts
- Calculation of your Tax liability
- Submission of Tax Returns