“Directors are legally responsible for ensuring the accurate completion and timely submission of annual accounts by the statutory filing deadline. Copies must also be provided to the company’s shareholders or guarantors (members).”

This version maintains clarity and adheres closely to the original meaning.

Different types of limited company accounts

“All companies, except ‘small’ companies, micro-entities, and dormant companies, are required to submit full annual accounts (‘statutory accounts’) to Companies House and HMRC. These accounts include:

• a profit and loss account
• a balance sheet
• notes about the accounts
• a directors’ report
• an auditors’ report (unless exempt)
• name and signature of the company director”

This version maintains the structure and essential information while enhancing clarity.

Small company accounts

Small companies can submit abridged (simplified) annual accounts to Companies House, comprising only a balance sheet and accompanying notes.

To qualify as small, a company must meet two of the following criteria:

• Annual turnover below £10.2 million
• Balance sheet total less than £5.1 million
• Fewer than 50 employees

Small company accounts are exempt from audit, so an auditors’ report is not required. However, statutory accounts must still be provided to members and prepared for HMRC as part of the Company Tax Return.”

This version maintains clarity and ensures all essential information is included.

Micro-entity accounts

“Very small companies can opt to prepare micro-entity accounts, which have fewer requirements than small company accounts. To qualify as a micro-entity, your company must meet two of the following conditions:

• Annual turnover below £632,000
• Balance sheet total less than £316,000
• Fewer than 10 employees

Despite reduced reporting requirements, micro-entities must still submit statutory accounts to company members and HMRC as part of their Company Tax Return.”

This version maintains clarity and conciseness while conveying all the necessary information about micro-entity accounts.

Very small companies can choose to prepare micro-entity accounts, which have simpler requirements compared to small company accounts. To qualify as a micro-entity, your company must meet two of the following criteria:

• Annual turnover below £632,000
• Balance sheet total less than £316,000
• Fewer than 10 employees

Despite the reduced reporting requirements, micro-entities are still obligated to submit statutory accounts to company members and HMRC as part of their Company Tax Return.”

This version maintains clarity and conciseness while effectively communicating the key details about micro-entity accounts.

Dormant company accounts

“Dormant companies are only required to prepare dormant accounts, which consist of a balance sheet and accompanying notes. They are not required to submit anything to HMRC, but they must inform HMRC that the company is dormant for Corporation Tax purposes.”

This version maintains clarity and concisely explains the requirements for dormant companies regarding their accounts and HMRC notification.

How and when to deliver annual accounts to Companies House and HMRC

“The first annual accounts of your company must be submitted to Companies House within 21 months from the date of incorporation. These accounts typically cover a period just over 12 months, starting from the incorporation date and ending on the accounting reference date (ARD). The ARD usually falls on the anniversary of the last day of the month of company formation.

Subsequent annual accounts for Companies House should cover a 12-month period and must be delivered no later than 9 months after the ARD.

You can submit annual accounts to Companies House using the WebFiling service or through 1st Formations Online Company Manager.

Full annual accounts for HMRC must be included with each Company Tax Return and filed online no later than 12 months after the end of each Corporation Tax accounting period.”

This version maintains clarity and coherence while effectively communicating the deadlines and procedures for submitting annual accounts to Companies House and HMRC.

What is my company’s accounting reference date (ARD)

When a company is registered at Companies House, it is assigned an accounting reference date (ARD) which marks the end of its financial year.

For instance:

• If you register a company on 1 July 2024,
• Your first ARD will be 31 July 2025.

Annual accounts must be prepared ‘made up’ to this accounting reference date and submitted to Companies House no later than 9 months after the ARD.

The ARD remains consistent each year unless you decide to shorten or extend your financial year.”

This version maintains clarity and succinctly explains the concept of the accounting reference date (ARD) and its implications for annual accounts submission.

Can I change my accounting reference date?

“You have the flexibility to change your accounting reference date (ARD) at any time, provided it’s before the filing deadline. However, you cannot change it if your accounts are overdue unless the company is in administration.

You can shorten your 12-month financial year by any number of months as frequently as needed. However, you can only extend your financial year once every 5 years, up to 18 months from the date of incorporation or the date of the previous year’s ARD.”

This version maintains clarity and concisely explains the rules regarding changing the accounting reference date and adjusting the financial year length.

To change your company’s ARD, the director must complete and submit Companies House Form AA01 (previously Form 225). This straightforward procedure should only take a few minutes. Once completed, the form can be filed online with Companies House using WebFiling or 1st Formations’ Online Company Manager.

The new ARD will become the date to which all subsequent annual accounts must be prepared, unless further changes to the financial year are made.”

This version maintains clarity and conciseness while explaining the process of changing the accounting reference date and its implications for annual accounts.

Notifying HMRC of a change of ARD

“Changes to the ARD will impact your Corporation Tax accounting period, necessitating prompt notification to HMRC.

While accounting periods can be shorter than 12 months, they cannot exceed this duration, unlike your company’s financial year.

If you extend your financial year beyond 12 months, you will need to submit two Company Tax Returns: one for the initial 12-month period and another for the additional weeks or months.”

Can I prepare my own company accounts?

Limited companies face more intricate accounting and taxation obligations compared to sole traders. Their accounts are on a larger scale and must meet stringent standards set by the Financial Reporting Council (FRC).

As a director, you bear legal responsibility for maintaining precise accounting records, submitting accurate and transparent annual accounts to both Companies House and HMRC, calculating your business’s tax liabilities, filing Company Tax Returns, and preparing your own Self Assessment tax returns.

“Your ability to meet these obligations will hinge on your understanding of bookkeeping and accounting, alongside the complexity of your company’s financial affairs. If you find yourself unable to manage these tasks independently, it’s advisable to engage an accountant.

While there are associated costs, the fees paid to an accountant can be considered an investment that offsets the value of your time. Additionally, accountants can provide advice on tax optimization strategies and business growth opportunities.”

Should I use an accountant to prepare my annual accounts?

“Accountants offer valuable services to businesses of all sizes, from sole traders to multinational corporations. Engaging an accountant brings numerous benefits, including time and cost savings, and confidence in the accuracy of financial operations.

When considering whether to manage accounting yourself, weigh the commitment of your own time against potentially more cost-efficient accountant fees.

An accountant provides expertise beyond basic accounting and tax returns. They can assist with financial projections, support business growth strategies, identify tax-saving opportunities, facilitate audits, and advise on capital raising.

While larger businesses may require full-time accounting support, most small businesses benefit from periodic accountant services focused on filing accounts and tax returns.”

This version maintains clarity and emphasizes the advantages of using an accountant while providing a clear distinction based on business size and needs.

The main functions and benefits of an accountant:

• Structuring a company in the most tax-efficient way
• Advising on the most effective methods for extracting money from a company
• Identifying opportunities for tax planning
• Managing expense claims
• Completing and filing statutory compliance documents
• Maintaining accurate accounting records
• Preparing and filing annual accounts
• Handling Company Tax Returns and calculating Corporation Tax liabilities
• Providing guidance on VAT and managing VAT calculations
• Managing Self Assessment obligations for company directors
• Keeping the company informed about changes in tax laws and regulations
• Maintaining all statutory company records and registers
• Advising on and recording share allotments and transfers
• Administering and recording dividend payments to shareholders
• Overseeing payroll to ensure correct tax codes and accurate payments, including preparation of P46 and P60 documents
• Managing HMRC payslip booklets
• Recommending opportunities to reduce costs and expenditures
• Utilizing advanced accounting software with audit trail capabilities for potential audits
• Assisting with selection and application processes for loans or overdrafts, providing essential financial data and identifying unfavorable terms
• Supporting business growth transitions
• Managing inventory and pricing strategies
• Negotiating and structuring payment arrangements with suppliers and service providers

This version consolidates and organizes the list of responsibilities and services an accountant can provide, emphasizing their broad expertise in financial management and compliance.

What information do I have to give an accountant?

“If you engage an accountant or tax advisor, you’ll need to provide them with various business and accounting records, such as:

• Receipts and invoices for all goods and services bought and sold
• Utility bills
• Bank account statements
• Credit card statements
• Loan agreements
• Cheque book stubs
• Cash books and petty cash books
• Payroll records
• Dividend vouchers
• Details of any money owed by or to the business
• Expense records
• Details of investments
• VAT records
• Details of any personal funds invested in the company
• Inventory records at the end of the financial year

You can maintain records in paper form using an account book, or digitally through spreadsheets or bookkeeping software. However, original copies of all accounting records and documents should be retained, unless they are microfilmed or stored using an optical imaging system.”

This version retains clarity and details the types of records required for effective accounting and tax advice.

Choosing an accountant

Selecting the right accountant is crucial, especially if your business operates in a sector with specific tax regulations or if your company is experiencing rapid growth.

For most small businesses, basic accounting services suffice. In such cases, look for a reputable individual or local firm with a proven track record in supporting small businesses and start-ups. Seeking recommendations from friends or professional contacts can be particularly helpful in finding a suitable accountant.”

This version maintains clarity and emphasizes the importance of choosing an accountant tailored to your business’s needs, especially in specialized sectors or during growth phases.

“Arrange introductory meetings with several accountants to compare their services and fees, typically offered on a no-obligation basis. Many accountants provide options for both monthly and annual fixed-fee services, which can be beneficial for planning ahead and ensuring comprehensive accountancy support.

Alternatively, you might opt for a pay-as-you-go service from an accountant, allowing you to pay only for the specific services you use as needed. However, it’s important to discuss all requirements and fees upfront to avoid unexpected costs.”

This version maintains clarity and highlights the choices available when selecting an accountant, emphasizing the importance of understanding the fee structure and service options.

Notifying HMRC

If you appoint a tax advisor or accountant to handle your company’s annual accounts and tax returns, you must promptly inform HMRC. Despite delegating these tasks, as the company director, you retain ultimate responsibility. Therefore, it’s crucial to provide your accountant with accurate records and ensure they file accounts and tax returns by the statutory deadlines.”

This version maintains clarity and emphasizes the director’s ongoing responsibility despite delegating tasks to a tax advisor or accountant.

When are limited company accounts audited?

“Audits can be both time-consuming and costly, involving a comprehensive stocktake and detailed analysis of all accounting records, including bank accounts.

For most small to medium-sized companies, an audit is not mandatory unless:

• Their articles of association explicitly require an audit.
• Shareholders owning at least 10% of the company’s issued shares request an audit.

Audits must be conducted by an independent accountant authorized to act as an auditor. Even if your company is exempt, an audit can provide significant benefits by allowing you to assess your company’s financial health and providing assurance to lenders and investors of its viability and profitability.”

This version maintains clarity and emphasizes the conditions under which an audit is necessary or beneficial for companies, while highlighting its potential advantages.

What is a profit and loss account?

“A profit and loss account, also known as a profit and loss statement, is a key component of full financial accounts.

This statement summarizes the financial performance of the business over a specific financial period. It includes details such as the revenues earned from sales, the operational expenses incurred in generating those revenues, and the resulting profit or loss for that period.

Shareholders and directors use this information to assess the business’s performance. HMRC relies on it to determine the company’s tax liability.”

This version maintains clarity and concisely explains the purpose and significance of a profit and loss account in financial reporting and taxation.

What is a balance sheet?

“A balance sheet is another integral section of full financial accounts. It provides a snapshot of a company’s assets and liabilities (what it owns and owes) and presents the overall value of the business as of the specific date when the balance sheet was prepared.”

This version maintains clarity and succinctly describes the purpose and content of a balance sheet in financial reporting.

Difference between annual accounts and annual confirmation statements

Annual accounts provide a detailed report of a company’s financial activities for each financial year, which must be prepared annually for submission to both Companies House and HMRC.

Annual confirmation statements are required to be filed at Companies House at least once every 12 months. The purpose of this statement is to confirm and, if necessary, update key company details on a specific date. These details include:

• Registered office address
• SAIL (Single Alternative Inspection Location) address
• Directors’ details
• Secretary details
• Shareholders’ or guarantors’ details
• Share capital
• Nature of business activities
• People with significant control (PSCs) of the company
• The company’s registered email address

Updates that can be made on the confirmation statement include details of shares and shareholders, Standard Industrial Classification (SIC) codes, and exemption from maintaining a PSC register. Any other changes must be reported separately to Companies House, either before or at the same time as filing the confirmation statement.”

This version maintains clarity and concisely explains the requirements and procedures related to annual accounts and confirmation statements for companies filing with Companies House.