Taking care of your annual accounts can seem like a confusing process. It’s the reason why most limited companies will choose to work with a professional accountancy service to ensure they’re compliant.
To makes things a little simpler, here’s a quick guide to limited company annual accounts.
What are annual accounts?
A limited company is required to file accounts every year. These are documents that are prepared at the end of every financial year which set out how the company has performed financially over the accounting period.
A set of accounts will usually consist of:
- a profit and loss account
- a balance sheet
- notes
- a director’s report
In some circumstances, an auditor’s report may be required.
How big is your company?
The size of your company will determine what needs to be included in your annual accounts. If you have a turnover of no more than £632,000, £316,00 or less on your balance sheet and few than ten employees, your company qualifies as a micro-entity.
Most limited companies in the UK fall into this category. Micro-entities can prepare simplified balance sheets, and profit and loss accounts. Micro-entities and small companies do not need to supply an auditor’s report. Micro-entities and small companies do not have to deliver a copy of the directors’ report or the profit and loss account to Companies House. If they choose not to deliver a copy of the profit and loss, the company must state this on the balance sheet
Different submission requirements apply to small, medium and large companies, and the qualifying categories can change. It’s therefore important to find out which category your company belongs to. Your accountant will be able to advise about the category within which your company falls and what you are required to submit.
Balance sheet and profit and loss
Two key requirements that every limited company will need to file are a balance sheet and a profit and loss statement. A balance sheet sets out the value of your company and how resources are used.
Assets include cash, inventory, receivable, land, equipment and any intellectual property. Liabilities are costs such as payroll costs, debt and rent.
The profit and loss statement sets out how profitable the business is, and includes details of costs, revenues and expenses. It summarises the revenues of the company, costs and expenses during a specific time period for purposes of taxation.
What is a director’s report?
Depending on the size of the company they may need to provide a directors’ report to Companies House.
The directors’ report outlines the state of the company’s finances, how well the company is performing and whether it has the capacity to expand and grow. Crucially, it’s also required to set out how the company is complying with financial regulations.
Filing on time
Owners of limited companies need to ensure that they file the required documentation with Companies House by the deadline. If the deadlines are not met, then you will receive a financial penalty. Companies who are late by up to a month will receive a £150 fine, rising to £1,500 if you’re more than six months late. If you are late for two years in a row, then these fees are doubled.
It is possible to apply for an extension as well as to appeal any fines, but these are only granted in exceptional circumstances such as family bereavement, life-threatening illness or disability, or a fire at your premises.
While it’s possible to file your own accounts online, many limited companies will choose to work with professional accountancy services. As well as ensuring you are compliant, a professional can offer business and financial advice to help you make the right decisions.
Your statutory accounts taken care of
At Venn Accounts, we can take care of your limited company annual accounts allowing you to concentrate on other aspects of your business.
We’re committed to providing a comprehensive, yet straightforward and jargon-free service. Because we’re cloud-based we can provide a professional service wherever you are in the UK
Our statutory accounts service makes sure your accounts stand up to scrutiny and that you’re on track to meet your goals and objectives.
To find out more about how we can make your annual accounts simple while saving you money speak to one of our experts today.
