How to file company accounts: a guide for limited companies
It is a legal necessity to prepare business accounts for your limited company accounts, but it can be a difficult undertaking. Here’s a quick rundown of what you’ll need to do.
Full (statutory) annual accounts and your company tax return are included in your company accounts.
Annual financial records created at the end of your company’s fiscal year and given to shareholders, Companies House, and HMRC as part of your tax return are known as statutory accounts.
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Small businesses can send simpler accounts than their larger counterparts, but all limited companies must file their annual accounts.
Before preparing your accounts, please use this information as a guide only and seek expert guidance.
Accounts deadlines in the company
Every company must send a copy of its accounts to each of its members and file their accounts with Companies House at the end of each financial year. The financial statements you file with Companies House are open to the public.
A private company’s accounts must normally be delivered to Companies House within nine months of the accounting reference date (ARD). The end of your financial year is referred to as your ARD.
Your financial year begins on the day of incorporation, and your first accounting reference date is a year later, on the last day of the month in which you incorporated. Your ARD will be on this date every year after that. For example, if you formed your firm on July 6, 2018, your first ARD will be on July 31, 2019, and thereafter every year on July 31.
Because you provide business accounts nine months after receiving your ARD, your initial company accounts won’t be due for another 21 months after you registered with Companies House (your first financial year, plus nine months).
If you file your report late, you will face fines ranging from £150 for filing less than a month late to £1,500 for filing more than six months late.
You calculate corporation tax using your company accounts and tax return, yet corporation tax is due before your company tax return, which is perplexing.
How to produce a small business’s financial statements
The following items are included in statutory accounts:
- The worth of everything the company owns, owes, and is owed is shown on the balance sheet.
- a profit and loss statement that details the company’s sales, operating costs, and any profit or loss for the fiscal year
- Observations on the accounts
You may also need to include a director’s report and an auditor’s report, depending on the size of your company.
If your company is classified as a tiny company or a micro-entity by the government, you may be able to send Companies House simpler ‘abridged’ accounts and avoid having them audited.
If your company has at least two of the following, it is considered small:
- a turnover of less than £10.2 million
- On its balance sheet, it has £5.1 million or less.
- 50 or fewer employees
If it has at least two of the following, it is considered a micro-entity:
- a turnover of less than £632,000
- On its balance sheet, it has £316,000 or less.
- 10 or fewer employees
Small enterprises and micro-entities can apply for an exemption to avoid having their accounts audited, and they can choose whether or not to transmit a copy of the director’s report and profit and loss statement. The balance sheet does not have to be complicated.
Micro-entities can create simpler financial statements that just fulfil the statutory minimums and send only their balance sheet to Companies House.
Statutory accounts must comply with accounting standards in one of two ways:
- Financial Reporting Standards Around the World
- Generally Accepted Accounting Practice (GAAP) in the United Kingdom has been updated.
Further Reading: When and how to file your annual accounts with Companies House
How do I file my business’s accounts?
Accounting software is widely accessible, and you can use it to create and file your annual accounts.
If you’re a tiny or micro-entity, you might be able to use the Company Accounting and Tax Online (CATO) service, which lets you send your accounts data to both Companies House and HMRC at the same time.
You can also prepare your company accounts on paper and mail them to Companies House, however HMRC claims that processing paper accounts takes a long time.
When it comes to filing your company’s tax return, you must do so online. If you have a good cause for not being able to submit online or if you want to file in Welsh, you must use the paper form CT600.
Is it possible for me to prepare my own limited business accounts?
You can choose to handle your limited company’s accounting on your own, including producing and filing annual accounts.
Most small businesses, on the other hand, hire an accountant to manage their accounts. Because the structure and liabilities of a limited company are more complex than those of a sole proprietorship, doing everything oneself can be tough. If you make a mistake, you will face serious consequences.
Accountants are experts in business finance, and if you engage one, they’ll be able to alleviate a lot of the burden associated with completing your accounts with HMRC and Companies House. They can assist you in meeting all legal obligations and avoiding penalties by ensuring that your company’s accounts are compliant with accounting standards.
It’s crucial to note, however, that even if you hire an accountant, the business directors are still legally responsible for ensuring that the accounts are correct.
Accounts for a Limited Company Template
Your accountant or accounting software will usually assist you in properly formatting your annual accounts and including all required information. As previously said, what you need to include in your accounts is determined in part by the size of your company.
If you want to double-check the required format and content for your statutory accounts, go to the government’s law website and look up the appropriate regulations. Accounting standards in the United Kingdom must be followed.
Use caution when using online templates for firm accounting, as they may not fulfil the required criteria. If you’re unsure about something, see an expert.