contractor accounts

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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 on an annual basis. A 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 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 who’ll file annual accounts (limited company) as part of their service.

In this guide on UK company end of year accounts thoughts, we’ll look at accounts for limited companies. We’ll find out what’s the process when we prepare annual accounts of a company. What’s more, we’ll focus in particular on small UK limited companies, as contractors work through these to provide their services. Indeed, we’ll investigate the Companies House accounts which contractors need to submit once per year. Further, we’ll take a look at the pages in a set of accounts and see what information we include in limited company financial statements. Therefore, in this guide, we’ll look at a contractor’s accounts in detail. Also, we’ll discover how to file your accounts with the UK’s authorities.

Initial thoughts -contractor accounts 

The main reasons for preparing accounts

When it comes to accounting thoughts for UK contractors, what’s the reason for preparing these? Basically, there’s two primary reasons for the preparation of year-end accounts (UK) and filing annual accounts for your contracting business. Therefore, the two reasons are to:

  • 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 financial statements are prepared and filed on an annual basis. In most cases, your accountant will take care of 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 own limited business.

Annual filing

Whether you’re a 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, there’s two main documents to file with Companies House on an annual basis. Besides the annual contractor accounts, the other document is a Confirmation Statement (this is formerly known as the UK company `Annual Return’). In addition, on an annual basis you also need to file Ltd accounts and a business tax return with HMRC.

Company director responsibilities

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

Common questions

As a contractor and UK business owner, you may have certain questions on your company year-end accounts. Therefore, examples of such questions on ltd company year-end accounts could include:

  • What is a small company (UK)?
  • What are year-end accounts?
  • How to do year-end accounts?
  • Can I prepare my own accounts for my business?
  • How to prepare annual accounts?
  • How to prepare annual financial statements?
  • When to file business accounts?
  • How to file end of year accounts?
  • What are filleted accounts?
  • How to prepare micro-entity accounts?

In this guide, we’ll take a look at UK companies’ financial statements and consider what we need to think about in respect of accounts for a small company.

Limited company annual accounts (UK) -the size of a company 

Initial considerations

When we prepare statutory accounts in accordance with the Companies Act 2006 (CA 2006), there’s four sizes of companies to consider. The type of UK company accounts to prepare depends on the size of the company. 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 conditions for 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 of the conditions under company size small, it’ll be a medium or large company. As a result, it will require an audit and need to appoint a firm of auditors. As part of this, the auditor will include an Auditor’s Report in the full Ltd accounts.

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 2023, the year-end auto-defaults to 31 July 2024.

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 to a different date for your annual contractor accounts.

A UK contractor will prepare and file their annual contracting accounts on an annual basis. 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. As a general rule, Companies House annual accounts (UK) can’t cover a period which is longer than 18 months. Therefore, the latest date you can change your year-end to in this example will be 31 December 2024.

If you wish to change your business year-end, you have to 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.

Contractor accounts -be organised   

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 it comes to preparing company accounts for your business and looking after your affairs in general. Your accountant will look after and file online your Companies House annual report and Ltd accounts. This’ll include the completion of your annual accounts and other tasks. This includes the annual accounts preparation, along with statutory ltd company accounts filing. Most importantly, your accountant will also advise you accordingly throughout the year.

If you like to be organised, there’s something else to consider when you have 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 your contractor accounts

Let’s now look at when do company accounts need to be filed. Basically, 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 one is filing annual accounts at Companies House, the statutory accounts filing deadline for a business with a 31 July 2023 year-end, is 30 April 2024.

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 2023, the year-end accounts date will default to 30 June 2024. In this case, for the first company year, the limited company accounts (UK) 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 (Companies House) for the first time, the deadline for sending accounts to Companies House may be earlier than usual.

In terms of 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 which ends on 31 July 2023 will have a due date for filing with HMRC of 31 July 2024.

There is also a due date for in respect of paying your CT. The date that it’s due is 9 months and one day after your year-end. Therefore, a 31 July 2023 year-end will have a CT due date of 1 May 2024.

Other considerations on contractor ltd accounts 

The official pages in Companies House statutory accounts

The Companies House end of year accounts are a shorter version than the full Ltd accounts. This is because under current rules, Companies House only require certain data when filing small companies accounts. However, when you send accounts to Companies House, you’ll need to make sure that you include the correct data in your Companies House financial statements (UK companies).

Let’s now look into how to prepare accounts for Companies House. When we do this, there’s four sections/pages within these shorter accounts for your business. 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 company accounts format, the four sections/pages within company accounts information are:

A signed Director’s Report This is the annual report of the directors, and this 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 financial position of the business at the company year end. In effect, 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 Basically, 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 include examples of these two pages in limited companies accounts. The examples in this guide are also extracts from a contractor accounts template or small companies’ accounts template, if you’d like to view these.

Small company and micro accounts -Companies House

Small businesses and micro-entities can use an exemption so that their annual accounts don’t need auditing. As part of their micro-entity accounts, they can also choose whether to send a copy of the Director’s Report and Profit and Loss account to Companies House. Your contractor Balance Sheet can also be more-simple.

When you run a small company, you may fall into the micro-entity category. As a result, the rules enable you to file simple company accounts with Companies House. Basically, the UK micro-entity accounts have to meet the statutory minimum requirements. Therefore, when preparing micro-entity accounts (UK), a micro limited company only needs to send their Companies House Balance Sheet, when they file micro-entity accounts with Companies House. However, the HMRC micro-entity accounts will be the full version of accounts, just like it is for small companies.

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

File your annual contractor accounts with the authorities   

When you file annual accounts (Companies House) these are a shorter version of the full reports. This is because Companies House only require certain 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 accounts or filleted accounts for small companies, as part of their annual Companies House accounts submission. Furthermore, when you file your accounts with Companies House, how do you do this? Although you can use the HMRC website to do this, it’s much easier to file accounts online via specialist software. Therefore, when you or your accountant file company accounts online and submit accounts to Companies House, you also need the Companies House authentication code.

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

Besides filing with Companies House, you also have to 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 be done via the HMRC website too.

Micro company accounts (Companies House)

As we mentioned earlier, Companies House has an option to prepare and file company accounts for a micro entity. By Companies House definition, 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 you have 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 should also 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 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, even though dormant companies may not be a priority for the directors that own them, they still have to file accounts. The accounts need filing once per annum as does the Confirmation Statement.

Companies House -extend year-end or shorten year-end

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

Something else worth a note is if you’re running close to your Companies House deadline for accounts filing, you can shorten your year end by one day. In turn, this extends the Companies House filing deadline by three months from the date that you make the change. Please note however, the extend Companies House filing deadline or change of accounting reference date filing deadline is the actual 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 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 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. The accountant will also file the business tax return and year-end accounts with HMRC on their behalf. Finally, your accountant will also ensure that your business will meet any filing dates and deadlines in respect of your contractor accounts and any other reporting requirements.

Link to Contractor Advice UK group on

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

Published On: January 4th, 2024 / Categories: Accounting /

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