After you've completed the business registration process, you'll need to fill out a number of important papers, including our annual accounts. The objective of these accounts is to disclose the company's financial activities and, as a result, determine how much Corporation Tax it must pay to HMRC.
In this article, we'll go over everything you need to know about a company's yearly accounts, including how to submit them and the penalties for failing to do so on time.
What is an Annual Company Account? When you form a Limited Company in the United Kingdom, you must submit ‘Company Accounts’ once a year. Because this file is mandated by law, it is referred to as ‘Company Statutory Accounts’.
Who is responsible for this task? Directors are legally obligated to ensure that yearly accounts are done correctly and submitted within the statutory date. Copies must be distributed to the company's shareholders or guarantors as well.
What should be included in an Annual Company Account? Every company, except for defunct and minor businesses, is required to submit detailed, statutory yearly accounts to Companies House.
The legal obligation for ensuring that annual accounts are handled on time by the statutory filing date rests with the board of directors. A copy of the annual accounts must also be provided to shareholders.
In a company's full statutory annual accounts, the following must be included:
A balance sheet shows the total worth of your company's assets;
A profit and loss statement that details a company's sales and operating costs, as well as the loss or profit it earned during its most recent fiscal year;
Notes on the yearly financial statements;
A director's report;
On the balance sheet, the name and signature of the director;
Unless the firm is exempt, an auditor's report is required.
Small businesses can simply submit an abridged version of the annual accounts which consists of a balance sheet and notes on the accounts.
When and how should annual accounts be delivered to Companies House and HMRC? Within 21 months of the establishment of your company, you must submit your first annual accounts to Companies House. These normally last a little over a year, beginning on the day of incorporation and ending on the Accounting Reference Date (ARD). The ARD is usually the anniversary of the company's foundation on the final day of the month.
Accounts for Companies House beyond the first year should generally cover 12 months and be produced no later than 9 months following the ARD.
You may utilise WebFiling to transmit yearly accounts to Companies House.
Each Company Tax Return must include full yearly accounts for HMRC, which must be submitted online no later than 12 months following the end of each Corporation Tax accounting period.
Navigate to the Companies House website, which will walk you through the rest of the process. This approach should be straightforward if you have meticulously prepared your reports.
Should I prepare my Annual Company Accounts? As aforementioned, Limited Company directors have a legal obligation to keep correct accounting records, they must also submit fair yearly accounts with Companies House and HMRC, alongside this they must calculate the company's tax liabilities, submit Company Tax Returns, and prepare their Self Assessment tax returns if needed.
This procedure may be extremely complicated, especially if you have other company obligations, therefore we strongly suggest you outsource it to an experienced accountant who can provide you with a great deal of efficiency and competence in these accounting chores.
What are the consequences if I fail to submit these Annual Company Accounts on time? Companies House will charge you £100 if you fail to submit your limited company accounts by the due date. This figure quickly rises to £1,500, therefore we highly advise that you stay vigilant and keep track of your Company Accounts filing deadlines or hire an accountant to do it for you. If this happens again in the second year, the fine you'll have to pay will be doubled.
Many business owners find annual company accounts complex, but at Persona Finance, we attempt to make your accounting process as straightforward as possible. Please contact us now at [enquiries@personafinance.co.uk] for additional information about our services or other queries.