Understanding company accounts can be tricky, especially if you’re just starting out. The rules around filing and financial statements can feel overwhelming. But getting a handle on your company’s finances is vital for staying compliant and growing your business.
In this post of Company Accounts FAQs, we’ll tackle some key questions that every business owner should know. What happens if you file late? How do you know if you qualify as a micro-entity? What’s the difference between full and abridged accounts?
Let’s break it down. You’ll walk away with the knowledge you need to manage your company accounts confidently.
Company Accounts FAQs
What are a company accounts?
Company accounts are financial statements that provide a snapshot of a company's financial position and performance over a specific period, usually one year.
They typically include:
A balance sheet showing the company's assets, liabilities, and shareholders' equity
A profit and loss account detailing income, expenses, and profit or loss
Notes providing additional explanations and context
A directors' report outlining the company's financial health and performance
These documents are prepared annually and must be filed with Companies House.
Can I file my own limited company accounts?
Yes, you can file your own limited company accounts. However, it's crucial to ensure accuracy and compliance with UK accounting standards. Companies House offers online filing options, but you must:
Register for online filing
Provide an email address
Choose a password
Have the company's authentication code
While self-filing is possible, many small businesses opt to use an accountant to ensure accuracy and compliance.
Can I see company accounts?
Yes, company accounts are publicly available. You can access them through:
Companies House website (free basic information)
Third-party services like Company Check (more detailed reports, some for a fee)
These services allow you to view financial information, filing history, and other company details.
What are full company accounts?
Full company accounts, also known as statutory accounts, include:
Balance sheet
Profit and loss account
Notes to the accounts
Directors' report
Auditor's report (if applicable)
Small companies may be eligible to file abridged accounts, which contain less detailed information.
Do I need an accountant for a limited company?
While not legally required, many limited companies use accountants because:
They ensure compliance with complex tax laws and accounting standards
They can save time and potentially money through efficient tax planning
They reduce the risk of errors in filing, which can lead to penalties
The decision often depends on the company's size, complexity, and the director's financial expertise.
What should company accounts look like?
Company accounts should be:
Clear and easy to understand
Compliant with UK accounting standards
Consistent from year to year
Accurate and free from material misstatements
Prepared using appropriate accounting policies
They typically include tables, charts, and explanatory notes to present financial information clearly.
How to prepare company accounts?
To prepare company accounts:
Gather all financial records (invoices, receipts, bank statements)
Reconcile bank statements with your records
Prepare a trial balance
Create financial statements (balance sheet, profit and loss account)
Write accompanying notes and reports
Ensure compliance with relevant accounting standards
Have the accounts reviewed or audited if required
File the accounts with Companies House
What are the basics in accounting of a company?
Basic company accounting involves:
Recording all financial transactions
Categorising transactions into appropriate accounts
Preparing financial statements (balance sheet, profit and loss account)
Reconciling accounts regularly
Maintaining accurate records for tax purposes
Filing required reports with Companies House and HMRC
This process ensures accurate financial reporting and compliance with legal requirements.
Can I prepare my own company accounts?
Yes, you can prepare your own company accounts if you have the necessary knowledge and skills. However, consider:
The complexity of your business
Your understanding of accounting principles and UK regulations
The time required to prepare accurate accounts
The potential consequences of errors
Many small business owners choose to use accounting software or hire professionals to ensure accuracy and compliance.
Can I submit my own accounts to Companies House?
Yes, you can submit your own accounts to Companies House. You can do this:
Online through the Companies House WebFiling service
By post using paper forms
Ensure you meet filing deadlines and provide all required information to avoid penalties.
Can I prepare small company accounts?
Yes, small companies can prepare their own accounts. If your company meets at least two of these criteria:
Turnover less than £10.2 million
Balance sheet total less than £5.1 million
Fewer than 50 employees
You can file simpler accounts with less detail.
However, ensure you comply with relevant accounting standards and filing requirements.
What happens if you don't file accounts with Companies House?
Failing to file accounts with Companies House can result in:
Financial penalties (increasing with the length of delay)
Criminal prosecution of company directors
The company being struck off the register
It's crucial to file accounts on time to avoid these consequences.
What turnover requires full accounts?
Companies must file full accounts if they don't qualify as 'small'. A company is not small if it exceeds two of these criteria:
Annual turnover over £10.2 million
Balance sheet total over £5.1 million
More than 50 employees
Companies exceeding these limits must file full accounts.
Do I need an accountant to file company accounts?
While not legally required, many companies use accountants because:
They ensure compliance with complex regulations
They can provide valuable tax planning advice
They reduce the risk of errors and associated penalties
They save time, allowing you to focus on running your business
The decision depends on your company's complexity and your financial expertise.
How much is an accountant for a limited company?
Accountant fees for limited companies vary widely based on:
Company size and complexity
Services required (e.g., bookkeeping, tax returns, payroll)
Location
Accountant's experience and qualifications
It's best to get quotes from multiple accountants for an accurate estimate. We are more than happy to discuss your requirements, just get in touch to have an informal chat.
Do self-employed individuals have to submit accounts?
Self-employed individuals don't submit formal accounts to Companies House. However, they must:
Keep records of income and expenses
Submit a Self Assessment tax return to HMRC annually
Pay Income Tax and National Insurance on their profits
While not required, many self-employed individuals use accountants to ensure compliance and optimise their tax position.
How much tax do I pay as a limited company?
Limited companies pay Corporation Tax on their profits. As of 2024, the main rate is 25% for companies with profits over £250,000. Companies with profits between £50,000 and £250,000 pay a tapered rate. Those with profits under £50,000 pay 19%.Directors may also need to pay:
Income Tax on salaries and dividends
National Insurance contributions
The exact amount depends on the company's profit and how income is extracted.
Do limited companies have to publish accounts?
Yes, limited companies must publish their accounts by filing them with Companies House. These become public records. However:
Small companies can file abridged accounts with less detail
Micro-entities can file even simpler accounts
All limited companies must file some form of accounts, which are then publicly accessible
What are the penalties for late filing of company accounts?
Penalties for late filing of company accounts in the UK are as follows:
Up to 1 month late: £150
1 to 3 months late: £375
3 to 6 months late: £750
More than 6 months late: £1,500
For companies filing late for the second consecutive year, these penalties are doubled.
Additionally:
Directors may face personal prosecution and fines
The company risks being struck off the register
Late filing can negatively impact the company's credit rating
It's crucial to file accounts on time to avoid these consequences.
How can I determine if my company qualifies as a micro-entity?
To qualify as a micro-entity, your company must meet at least two of the following criteria:
Annual turnover not exceeding £632,000
Balance sheet total not exceeding £316,000
Average number of employees not exceeding 10
Additionally, your company must not be:
An investment undertaking
A financial holding company
A credit institution
An insurance company
A charity
A parent company whose group doesn't qualify as small
If you meet these criteria, you can file simplified micro-entity accounts.
What are the key differences between full company accounts and abridged accounts?
The main differences between full and abridged accounts are:
Level of detail: Abridged accounts contain less information than full accounts
Balance sheet: Abridged accounts have a simplified balance sheet
Profit and loss account: This is optional in abridged accounts
Directors' report: Not required in abridged accounts
Notes to the accounts: Fewer notes are required in abridged accounts
Public disclosure: Abridged accounts provide less publicly available information
Small companies and micro-entities can choose to file abridged accounts, while larger companies must file full accounts.
How do I register for the Companies House email reminder service?
To register for the Companies House email reminder service:
Go to the Companies House website
Click on the "Follow a company" service
Create an account or sign in if you already have one
Search for your company using its name or company number
Click "Follow" next to your company's name
Choose the option to receive email reminders for accounts filing
This service will send you reminders before your accounts are due, helping you avoid late filing penalties.
What information is required to file company accounts online?
To file company accounts online, you'll need:
A Companies House online filing account
Your company authentication code
Your Government Gateway user ID and password (if filing with HMRC simultaneously)
The company's financial information, including:
Balance sheet
Profit and loss account (if required)
Notes to the accounts
Directors' report (if required)
Auditor's report (if applicable)
You'll also need to ensure your accounts are prepared in the correct format (e.g., iXBRL for full accounts) and meet the relevant accounting standards for your company size.
Remember to file well before the deadline to avoid any last-minute technical issues or delays.
Conclusion
In the world of business, knowledge is power.
Understanding your company accounts isn’t just about ticking boxes; it’s about setting your business up for success. By staying informed and proactive, you can avoid costly mistakes and make smarter financial decisions.
So, take these FAQs to heart and make them part of your business toolkit.
Remember, the clearer you are on your finances, the better equipped you’ll be to drive your business forward.
Keep learning, keep growing!
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