As a limited company, you’re legally required to file annual accounts (also known as statutory accounts) with HMRC and Companies House.
These accounts are an important part of running your business, providing a clear picture of your finances for your shareholders. They’ll serve as an up-to-date report on your company’s financial health and as a way to keep current records with Companies House.
This article will explain what makes up your statutory accounts and how you should file them every year.
What should you include?
There are three main elements that make up your statutory accounts.
The first is your balance sheet, which shows the total value of everything the company owns, including tangible and fixed assets, as well as stocks. This document will also have your company’s outstanding debts and any money owed to you.
The balance sheet must include the signature and printed name of a director on behalf of the board.
Your statutory accounts should also include your profit and loss (P&L) accounts. This will give you an overview of your profits once you’ve deducted your costs from your total sales. In your P&L, you will show the following:
- cost of sales
- gross profit
- tax on activities
- profit on activities before tax
- profit for the financial year.
The last essential element of your statutory accounts will be your cashflow statement. Your cashflow statement will be mandatory if you’re part of a larger company. Smaller companies are exempt from including it.
This document shows the money coming in and out of the company and will include return on investment, tax charges, capital spending and dividends. Cashflow statements are incredibly useful as they provide an accurate picture of a company’s financial health.
Medium and large-sized companies will also be required to include a directors’ report in the submission of their accounts which outlines the company’s activities as well as its performance and any dividends paid to shareholders.
The directors’ report will also name all of those involved in the reporting year and their responsibilities within the company.
You should also include any notes on your accounts, explaining any finer details of your balance sheet or P&L. This is mainly to provide insight into any money owed to the company or vice versa.
Small company exemptions
As part of the Companies Act 2006, smaller companies are not legally obliged to disclose as much information as medium and large companies.
For accounting periods on or after 1 January 2016, a small company must meet at least two of the following conditions:
- annual turnover of no more than £10.2 million
- the balance sheet total must not be more than £5.1m
- the average number of employees must not be more than 50.
If these criteria are met, your smaller company could qualify for exemption from including its audit in its statutory accounts. Information on this audit exemption can be found on the Government website.
Filing your accounts
Once registered with Companies House, you’ll have 21 months to file your first set of accounts. Moving forward, you’ll have nine months to file after your company’s financial year ends. If you miss the deadline, you could incur penalties of up to £1,500.
All of your accounts must be submitted online via the Companies House service page.
Get in touch
As a limited company, it’s important to follow all of the compliance rules set out by HMRC. JCS offers companies like yours support and guidance to make sure your deadlines are met and your statutory accounts are an accurate reflection of your finances.
Talk to our team for help with your statutory accounts.