Company annual accounts

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Introduction

The Companies House annual company accounts are a set of financial statements. Every UK limited company prepares year-end accounts on an annual basis. A company’s financial accounts are effectively an annual summary of its finances. Therefore, every year one of the director’s responsibilities is to file annual accounts with Companies House and HM Revenue & Customs (HMRC). The primary reasons for preparing year-end accounts are to:

  • Report your figures to the UK authorities -Companies House and HMRC.
  • Report your results to your company’s shareholders.

Whether a contractor or small business owner, you must be aware of company annual accounts once you form your company. However, you do not need to file these with Companies House and HMRC until at least a year in the future.

There are two main documents to file with Companies House on an annual basis. Besides the annual accounts, the other document is a Confirmation Statement (formerly known as the `Annual Return’).

Company directors have responsibilities when they run a UK company and have certain director duties. One key task is to ensure that they prepare accounts for your company’s financial year once per annum. As a director, you are also legally responsible for ensuring that you file the accounts with the UK authorities each year. It is also important to ensure that these are on time

Limited company annual accounts -the size of a company

When we prepare a company’s year-end accounts in accordance with the Companies Act 2006 (CA 2006), there are four sizes of companies to consider. The type of UK company accounts to prepare will depend on the size of the company, and the four sizes of a company are:

  • Micro-entity.
  • Small.
  • Medium-sized.
  • Large.

Your company will count as a micro-entity if it meets at least two of the following conditions:

  • A turnover of £632,000 or less.
  • £316,000 or less on its Balance Sheet.
  • Ten employees or less.

A company will count as small if it meets two of the following:

  • A turnover of £10.2 million or less.
  • £5.1 million or less on its Balance Sheet.
  • 50 employees or less.

Your company will count as medium-sized if it meets two of the following:

  • A turnover of £36 million or less.
  • £18 million or less on its Balance Sheet.
  • 250 employees or less.

Small businesses and micro-entities have the ability to use an exemption so that their accounts do not need auditing. They can also choose whether to send a copy of the Director’s Report and Profit and Loss account to Companies House. The Balance Sheet can also be simpler.

Micro-entities can also prepare simpler accounts. Notably, the UK micro-entity accounts just need to meet the statutory minimum requirements. Therefore, they are only required to send their Balance Sheet to Companies House.

Accounting Reference Date (ARD)

When you set up a company, a more common name for the ARD is the company’s `year-end’. Notably, this is the date the financial accounts are made up to each year. When a company is set up, the year-end will auto-default to the last day of the month of the current month in the following year. Therefore, if you set up your company on 22 July 2022, the year-end will auto-default to 31 July 2023.

In the above example, you may not want your year-end to end on 31 July. If this is the case, you or your accountant can file a form online with Companies House to change the year-end date to a different date.

A company prepares accounts to report its financial activities. The business will file the UK company accounts with the authorities usually every 12 months.

As a general rule, Companies House annual accounts cannot cover a period longer than 18 months.

Therefore, the latest date you can change your year-end to in the above example will be 31 December 2022.

If you wish to change your business year-end, you need to do this before the UK limited company accounts for the current period are due for filing with Companies House. Therefore, you cannot change the year-end after the current filing date.

Be organised

A good aim for any small business will be to appoint an accountant. There are many out there to choose from. However, it is important to look around and choose a good accountant. They will look after your accounts and other related tasks if you make the right choice. This will include the preparation of the formal accounts, along with statutory filing. They will also advise you accordingly throughout the year.

If you like to be organised, there is something else to consider when you have your own company. This is to be aware of when the various filing dates are for your business. The various dates will include:

  • The filing of official documents such as accounts and tax returns.
  • The payment of company and personal taxes.

Examples of filing dates

When you file your limited company annual accounts with Companies House, the filing deadline is 9 months after the year-end. Therefore, a 31 July 2022 year-end has a due date of 30 April 2023.

When you first register a UK company, the year-end will automatically default to the end of the month during which it was incorporated, in the following year. Therefore, if the business was incorporated on 5 June 2022, the year-end accounts date will default to 30 June 2023. In this case, for the first company year, the UK limited company accounts due date will be the earlier of:

  • 9 months after the company year-end.
  • 21 months after the date of incorporation.

Therefore, when you or your accountant file annual accounts with Companies House for the first time, the deadline may be earlier than usual.

In terms of when you file the Corporation Tax (CT) Return and accounts with HMRC, the due date is 12 months after your company year-end. Therefore, an accounting period for Corporation Tax purposes which ends on 31 July 2022 will have a due date for filing with HMRC of 31 July 2023.

There is also a due date for paying your CT. The date that it is due is 9 months and one day after your year-end. Therefore, a 31 July 2022 year-end will have a due date for paying the CT of 1 May 2023.

The pages in the company’s statutory accounts

The pages within a small company’s set of statutory accounts will contain:

  • A signed Director’s Report. This is the annual report of the directors, and this reports the company’s activities.
  • A signed Balance Sheet. This shows the balances the business owes and is owed at the financial year-end. The balances will be owed by or to third parties. Therefore, the Balance Sheet displays any balances owed to and by the company as of the year-end date.
  • Notes to the accounts -the notes give further information on the company’s accounting policies. They also show the breakdown of important items in the Profit and Loss account and Balance Sheet.

File your annual accounts with the authorities

Notably, when you file annual accounts with Companies House these are a shorter version of the full reports. This is because Companies House only requires certain information. The Profit and Loss Account and most of the notes to the accounts are not included in the shortened version. Therefore, many accountants prepare `filleted accounts’ for small companies.

When you file UK limited company accounts with Companies House via electronic software, the Companies House authentication code is required. You also need this code when you file the Confirmation Statement or any other official changes with Companies House.

As mentioned earlier, Companies House has an option to prepare and file accounts for a micro entity. By Companies House definition, micro-entities are very small companies. Your company will qualify as a micro-entity if it has any two of the following:

  • A turnover of £632,000 or less.
  • £316,000 or less on its balance sheet.
  • Ten 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.

Whether you have a small company or a micro-entity, your company will still need to file the full accounts with HMRC. Your business will also file a company tax return (CT600) each year along with the accounts. The tax return will show the company’s taxable profit and any Corporation Tax due to be paid.

As a business owner, you should also give your company’s shareholders a copy of the accounts.

Shorten or extend your year-end

A company can shorten its year-end as often as it likes, without constraints. On the other hand, it can only extend the accounting period once every five years in normal circumstances. The only exception of which is if it is under administration.

If and when you require, your accountant can make any changes to your company’s year-end for you.

Final thoughts

Due to the complexity, most small businesses will provide the relevant information to their accountants to prepare their UK company accounts. The business owner can then have peace of mind that reporting requirements are taken care of. Their accountant can then prepare and file the company’s annual accounts with Companies House and HMRC. The accountant will also file the company tax return with HMRC on their behalf. Finally, the accountant will also be able to ensure that your company meets any filing dates and deadlines.

Link to Contractor Advice UK group on LinkedIn

https://www.linkedin.com/groups/4660081/

Published On: August 1st, 2022 / Categories: Accounting /

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