contractor accounts

Share This Guide, Choose Your Platform!

Introduction

The Companies House annual company accounts (UK) are a set of UK company financial statements. As part of UK statutory reporting, every UK limited company will prepare and file year-end accounts annually. A UK contractor company’s financial accounts are effectively an annual summary of its finances. Therefore, every year, one of the director’s responsibilities for a UK contracting company is to file the annual accounts (Companies House). A second task is to file accounts and a company tax return with HM Revenue & Customs (HMRC). Some UK contractors who are good at accounting may file their contractor accounts themselves. However, many will use a company annual accounts service in the form of a UK contractor specialist accountant. If you don’t have one yet, it may be time to look for an accountant to file annual accounts (limited company) as part of their service.

This guide on UK company end-of-year accounts thoughts will look at accounts for limited companies. We’ll find out what the process is when we prepare the annual accounts of a company. Moreover, we’ll focus on small UK limited companies; contractors work through these to provide their services. Indeed, we’ll investigate the Companies House accounts, which contractors must submit once a year. Further, we’ll look at the pages in a set of accounts and see what information we include in limited company financial statements. Therefore, this guide will look at contractor accounts in detail. Also, we’ll learn how to file your accounts with the UK authorities.

Initial thoughts on contractor accounts 

What are the main reasons for preparing accounts for a business?

Regarding accounting thoughts for UK contractors, what’s the reason for preparing these? There are two primary reasons for preparing year-end accounts (UK) and filing annual accounts for your contracting business. Therefore, the two reasons are:

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

As mentioned, your contractor’s financial statements are prepared and filed annually. In most cases, your accountant will look after filing small company accounts for your business. A good guide from Companies House covers the life of a UK company and what you should do when running your business.

What are the UK annual filing requirements?

Whether you’re a UK contractor or small business owner, you must be aware of the annual accounts requirement once you form your company. However, you don’t have to file the UK year-end accounts with Companies House and HMRC until at least a year in the future.

As part of your UK company filings as a small company, you must file two documents with Companies House annually. Besides the annual contractor accounts, the other document is a Confirmation Statement (formerly known as the UK company `Annual Return’). In addition, you must file Ltd accounts and a business tax return with HMRC every year.

What are your company director’s responsibilities?

Limited company contractors are company directors, and they have specific responsibilities. In addition, they also have several director duties when they run a UK company. One of these duties is to ensure you prepare small company accounts for your financial year once per annum. As a director, you’re legally responsible for ensuring you file the contractor accounts with the UK authorities each year. What’s more, it’s essential to ensure these are received on time by the UK authorities.

Limited company annual accounts (UK) and the size of companies 

First thoughts

When we prepare statutory 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 depends on the company’s size. Their four sizes and their respective conditions, which companies are required to meet to qualify as one of the company sizes, are as follows:

Company size Condition 1 Condition 2 Condition 3
Large Does not meet the conditions for a medium-sized company
Medium-sized A turnover of £36 million or less. £18 million or less on its Balance Sheet. 250 employees or less.
Small A turnover of £10.2 million or less. £5.1 million or less on its Balance Sheet. 50 employees or less.
Micro-entity A turnover of £632,000 or less. £316,000 or less on its Balance Sheet. Ten employees or less.
Note, a company will qualify as one of the above sizes if it meets at least two of the conditions.

Therefore, when we consider the small company definition (UK), it’ll be regarded as `small’ if it meets two of the following conditions:

  • A turnover of £10.2 million or less.
  • £5.1 million or less on its balance sheet.
  • 50 employees or less.

If a company doesn’t qualify for two conditions under company size small, it’ll be a medium or large company. As a result, an audit will be required, and a firm of auditors must be appointed. The auditor will include an Auditor’s Report in the full Ltd accounts.

In March 2024, the government announced changes to the above reporting levels for limited companies. While the full details of the proposals aren’t yet known, the announcement did reveal changes to company size limits, with increases planned in the region of 50%. The proposed new size limits are as follows:

Micro Small Medium
Old New Old New Old New
Annual turnover £632k £1m £10.2m £15m £36m £54m
Balance sheet total £316k £500k £5.1m £7.5m £18m £27m
Average no of employees 10 50 250

Contractor accounts considerations 

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’. Indeed, this is the date the annual accounts (Companies House) are made up to each year. When a company is set up, the year-end auto-defaults 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 2024, the year-end auto-defaults to 31 July 2025.

In the above example, you may not wish for 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 for your annual contractor accounts.

A UK contractor will prepare and file their annual contracting accounts annually. As part of this, they’ll report their company financial information (UK) and results to the UK authorities. What’s more, the business will file the documents with the authorities annually. Generally, Companies House annual accounts (UK) can’t cover a period longer than 18 months. Therefore, the latest date you can change your year-end to in this example is 31 December 2025.

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

Be organised in terms of your contractor accounts

A good aim for any small business is to appoint an accountant from the outset. There are many out there to choose from. However, it’s important to look around and choose a good accountant when preparing company accounts for your business and looking after your affairs in general. Your accountant will take care of your company’s affairs and file your Companies House annual report and Ltd accounts online. This will include the completion of your annual accounts and other tasks. This consists of the annual accounts preparation and statutory Ltd company accounts filing. Most importantly, your accountant will advise you accordingly throughout the year.

If you like to be organised, there’s something else to consider when you’ve your own company. Basically, you should be aware of the various filing dates for your business. These various dates will include:

  • The filing of official documents, such as when you file annual accounts (Companies House) and file accounts and tax returns (with HMRC).
  • The payment of company and personal taxes.

Examples of the filing dates for contractor accounts

Let’s now look at when company accounts need to be filed. When you file your contractor limited company annual accounts with Companies House, the annual accounts deadline for filing these is 9 months after the year-end. Therefore, when filing annual accounts at Companies House, the statutory accounts filing deadline for a business with a 31 July 2025 year-end is 30 April 2026.

When you first register a UK company, the year-end will automatically default to the end of the month it was incorporated in the following year. Therefore, if the business was incorporated on 5 June 2024, the year-end accounts date will default to 30 June 2025. In this case, for the first company year, the limited company accounts (UK) due date is 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 (Companies House) for the first time, the deadline for sending accounts to Companies House may be earlier than usual.

When you file the Corporation Tax (CT) Return and contractor accounts with HMRC, the due date is 12 months after your business year-end. Therefore, an accounting period (UK) for Corporation Tax purposes that ends on 30 June 2024 has a due date for filing with HMRC of 30 June 2025.

There is a due date for paying your CT. It’s due 9 months and 1 day after your year-end. Therefore, a 31 July 2024 year-end has a CT due date of 1 April 2025.

What are some other considerations on contractor limited company accounts? 

Official pages in Companies House statutory accounts

The Companies House end-of-year accounts are shorter than the full Ltd accounts. Under current rules, Companies House only requires certain data when filing small companies accounts. However, when you send accounts to Companies House, you must ensure you include the correct data in your Companies House financial statements (UK companies).

Let’s now research how to prepare accounts for Companies House. When we do this for your business, there are four sections/pages within these shorter accounts. What’s more, the official accounts for a limited company, also known as small company statutory accounts (UK), include various financial information for a business. Therefore, when we look at the company accounts format, the four sections/pages within the company accounts information are:

A signed Director’s Report This is the directors’ annual report, which will report the company’s activities.
A Profit and Loss (P&L) Account This will show the company’s profit or loss for the financial period.
A signed Balance Sheet The Balance Sheet shows the business’s financial position at the company year-end. This displays the balances the business owes and is owed to and by third parties at the Balance Sheet date. Therefore, the Balance Sheet displays any balances due 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. In addition, they show the breakdown of important items in the Profit and Loss account and Balance Sheet.

Our guide on the P&L account and Balance Sheet includes examples of these two pages in limited companies accounts. The examples in this guide are extracts from a contractor accounts template or small companies’ accounts template if you’d like to view them.

Small company & micro accounts -Companies House

Small businesses and micro-entities can use an exemption so that their annual accounts don’t require auditing. They can choose whether to send a copy of the Director’s Report and Profit and Loss account to Companies House as part of their micro-entity accounts. What’s more, your contractor Balance Sheet can be simpler.

You may fall into the micro-entity category when you run a small company. As a result, the rules enable you to file simple company accounts with Companies House. The UK micro-entity accounts must meet the statutory minimum requirements. Therefore, when preparing micro-entity accounts (UK), a micro limited company sends only their Companies House Balance Sheet when they file micro-entity accounts with Companies House. However, the HMRC micro-entity accounts are the full version of accounts, just like those for small companies.

You can also file abridged accounts (if all members agree), and many small businesses who file their Ltd accounts themselves may choose to do this. These accounts show less information and exclude net profit from the accounts.

File your annual contractor accounts with the UK authorities

When you file annual accounts (Companies House), these are shorter versions of the full reports. This is because Companies House only require specific information. The Profit and Loss Account and most of the notes to the accounts aren’t part of the shorter version of UK company financials. Therefore, many accountants prepare abbreviated or filleted accounts for small companies as part of their annual Companies House accounts submission. Furthermore, how do you file your accounts with Companies House? Although you can use the HMRC website, it’s much easier to file accounts online via specialist software. Moreover, when you or your accountant file company accounts online and submit accounts to Companies House, you require the Companies House authentication code.

When you file the Confirmation Statement with Companies House each year, the Companies House authentication code is required. If you make any other official change with Companies House, you also need this code. The Confirmation Statement shows statutory/legal information, whereas the accounts show financial data. Such statutory information includes who the directors and shareholders are and other details. The Confirmation Statement was formerly known as the limited company Annual Return.

Besides filing with Companies House, you must file your company annual accounts (the full version) and company tax return with HMRC. Once again, specialist software is usually used to submit and file the business tax return and accounts online, although this can also be done via the HMRC website.

Micro company accounts (Companies House)

As we mentioned earlier, there is an option with Companies House to prepare and file company accounts for a micro entity. The Companies House definition states that micro-entities are very small companies. If your company is a micro-entity (UK), you can:

  • Prepare simpler accounts for your Ltd company 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.

You can find a micro-entity accounts template here. This page contains sample accounts and an example of a micro-entity Balance Sheet template.

Whether a small company (UK) or a micro-entity, your business must file the full set of accounts with HMRC when it does its annual accounts filing. In addition, when we look at how to file micro-entity accounts, your accountant can do this, or you can do it online via specialist software or your HMRC Business Tax account.

Besides filing micro-entity accounts or accounts for a small company (UK), your business must file a company tax return (CT600) each year along with the contractor accounts. The tax return will show the company’s taxable profit and any Corporation Tax due to be paid. Once again, your accountant can do this, or you can do this online via your HMRC Business Tax account.

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

Dormant companies

A dormant company is one that hasn’t begun trading yet or has very few transactions. However, although dormant companies may not be a priority for the directors who own them, they must still file accounts. The accounts require filing once per annum, as does the Confirmation Statement.

Companies House -extend or shorten the business year-end

A company can shorten its year-end as often as it likes without constraints. On the other hand, in terms of extending the company year-end, a company can only do this once every five years in normal circumstances, the only exception being if it’s under administration.

Something else worth noting is if you’re running close to your Companies House deadline for accounts filing, you can shorten your year-end by one day. This extends the Companies House filing deadline by three months from the date you make the change. However, please note that the extend Companies House filing deadline or change of accounting reference date filing deadline is the current filing deadline for your accounts. Therefore, if you try to shorten (or extend) your company year-end after this deadline, Companies House will reject this.

If you require a change in your company year-end, your accountant can make the change for you.

Final thoughts

Due to the complexity, most small businesses provide the relevant information to their accountants to prepare their annual accounts. The business owner can then have peace of mind that any reporting requirements are taken care of. Their accountant can then prepare and file the annual accounts with Companies House and HMRC. Moreover, the accountant will file the business tax return and year-end accounts with HMRC on their behalf. Finally, your accountant will ensure your business meets filing dates and deadlines for contractor accounts and other reporting requirements.

If you are looking for accountants for contractors who specialise in this area please get in touch by completing the form at the bpottom of the home page.

Link to Contractor Advice UK group on

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

Published On: April 6th, 2024 / Categories: Accounting /

Share This Guide, Choose Your Platform!

Leave A Comment