Every business is required by law to file accounts each year, but how you choose to file your accounts is up to you.
You can either submit a full set of accounts known as statutory or annual accounts, or you can file an abridged set of accounts.
If you choose to file statutory accounts, we have listed some information below that you will need to be aware of…
What are statutory accounts?
Statutory accounts are an annual report prepared by limited companies. These are used to monitor and report financial actions taken by the company in that year.
Do all businesses have to file statutory accounts?
If you run a small business you don’t have to file a full set of accounts to Companies House, this can be an abridged version instead.
However, a full set of accounts will still need to be provided to your shareholders and to HMRC when you file your company tax return.
Why are statutory accounts important?
Also known as annual accounts, statutory accounts are an important part of running any business. They allow your shareholders to see how the company is performing, as well as ensuring your records are kept up to date with Companies House.
What is included in statutory accounts?
Statutory accounts must include the following pages:
1. Company information page
The Company Information page should include:
- company name
- registered number
- registered office address
- names of directors and accountant
2. Balance sheet
The Balance Sheet shows the value of everything your company owns, owes, and is owed.
It should include figures for the reporting year and the previous year, along with a numbered reference to any explanatory notes that appear in the Additional Notes page (see below).
The balance sheet should be signed by a director, with a statement to say it has been approved by the board.
3. Profit and loss account
The Profit and Loss account ultimately shows your company’s profits by taking the sum of sales minus any costs.
It shows the company’s sales, running costs, and any profit or loss that has been made over the financial year. One of the most important figures in this page is the pre-tax profit.
4. Cashflow statement
The Cashflow Statement is only needed for larger companies, and shows the money coming in and going out of the business. It includes money from business activities, returns on investment, tax charges, capital spending, and dividends paid.
5. Directors’ Report
The Directors’ Report is only required for companies with a turnover of £10.2million or over 50 employees.
This report outlines the main activities of your business, as well as the performance and prospects of the company. It will also include details of any dividends paid to shareholders, the names of directors, and brief details of their responsibilities.
The Directors’ Report should be signed by a director, with a statement to say it has been approved by the board.
6. Additional Notes
This section allows you to provide more information and detail to the balance sheet or profit and loss account.
The notes must include a statement of the accounting principles you use and an explanation of the way you represent turnover and depreciation.
When do I have to file my statutory accounts?
Your first set of accounts must be filed 21 months after you have registered with Companies House. You then need to file nine months after your company’s financial year ends.
Late filing could cause you to be fined up to £1,500, depending on how late the accounts are.
If you have any questions about preparing or filing your accounts, please feel free to get in touch with us here at Magpie Accountancy.