Every active limited company must file its accounts with HMRC and Companies House at the end of each financial year – here’s our guide to preparing and filing your business accounts.
Company accounts are a record of your business activity during the financial year, and are often prepared at the end of the financial year, called the year end. Business accounts are often called statutory accounts, because as a limited company these must be filed with HMRC and Companies House.
What are statutory accounts for a limited company?
Statutory accounts are prepared as a summary of your small business’s trading activity, and are created from your business records showing earnings, invoices, expenses, costs and you start and end position for the financial year. Legally, you have to ensure that statutory accounts are sent to HMRC and Companies House, as well as all shareholders and anyone who attends any general meetings. As a small business, this will likely be the company directors. There are usually different deadlines for sending accounts to HMRC and Companies House, though you can apply for them to be filed at the same time.
How do I create my statutory accounts?
Statutory accounts are best left to a professional accountant, although if you’re a small business it’s possible to prepare your own statutory accounts – just be aware that all accounts filed must meet either UK Generally Accepted Accounting Standards (GAAP) or the International Financial Reporting Standards. To prepare your statutory accounts you’ll need the following:
- Balance sheet – this is a summary of the company’s financial position on the last day of the financial year. It will include a summary of all the assets the company owns, such as property or equipment, and any debts it owes, such as outstanding money to suppliers. This is effectively the value of the company. It must include the name and signature of a company director.
- Profit and loss account – this shows the trading activity of the business, including the costs incurred in running the business such as overheads and salaries, the revenue it generated from sales of goods and services, and the profit or loss position of the company on the last day of the financial year.
- Accounts commentary – this is a summary of the account that explains the position of the company and provides a brief commentary as to the state of the business.
- A director’s report – this is a further summary by a company director detailing the state of the company and affirming that the accounts are a true picture of the financial position of the business.
- What about small businesses and company accounts?
Small businesses and micro entities are a special exception when it comes to preparing and filing company accounts with Companies House. It is possible to apply to file abbreviated accounts with Companies House. These are simplified accounts that apply if you’re a small business or micro entity.
Small businesses – classified as having two of the following: a turnover of less than £6.5m, has fewer than 50 staff or has less than £3.26m on its balance sheet.
Micro entities – classified has having two of the following: a turnover of less than £632,000, 10 employees or less, or less than £316,000 on the company balance sheet.
Companies House provides a handy Life Of A Company guide that helps you understand the deadlines and requirements of running a small business and limited company.
How do I file my company accounts?
You can file your statutory accounts online using the Government Gateway. You’ll need your business’s Government Gateway ID and password, and the Companies House password and authentication code if you’re filing your accounts at the same time.
Start filing your accounts at the Business Tax section of Gov.uk.
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