Small Company Accounts

We prepare company accounts for small, private limited companies.

We prepare company accounts for small, private limited companies.

What are company size thresholds, and why do they matter?

It’s important to be aware of the size and stature of your business, because this provides the means by which you are registered in commercial law. This is laid out in large part by the Companies Act 2006, which designates a series of thresholds and definitions to define company size.

A company that falls under the designation of ‘large’ can be classified as:

  • A micro-entity (these are companies defined by having a turnover of less than £632,000 with total sheet balances less than £316,000. They must have no more than 10 employees) – this often includes sole traders.
  • Small (these are companies defined by having a turnover of less than £10.2m, with total balance sheet assets of less than £5.1m. They must have no more than 50 employees.)
  • Medium (these include companies defined by having a turnover of less than £36m, with total balance sheet assets less than £18m. They must have no more than 250 employees).

These designations are essential because they will define just how comprehensive the statutory accounts will be. Small business entities are granted the chance to offer a small and simpler statutory report at the end of the year, eschewing the usual breadth and depth of its reporting to only the most salient and important statistics and figures.

The Two-Year Rule

It’s not uncommon to hear the ‘two-year rule’ mentioned in business parlance, but what does it mean? Put simply, the first year of a business’s operation is often defined by the figure that have been calculated in that breadth of time, often easy to find, to source, to compare and to calculate. However, when the second-year ends, it’s clear to see that there are many more comparative metrics worth considering, and of course reporting in your accounts.

This involves:

Full Accounts

What classification denotes what reports you need to create, and what compliance measures you are expected to follow? Let’s showcase some of the following advice to help you in that direction:

Micro-Entity Companies –

Micro entities are expected to give a simple balance sheet, including the signature of the director stamped at the bottom, as well as a declaration of accounts prepared in line with the correct guidelines. In some cases where an audit is required, an auditor’s report will also be present, although you can apply for exemption from this.

Small-Sized Companies –

Small companies must provide a balance sheet with the director’s signature and declaration, a profit and loss account, a director’s report which includes notes to the accounts, and an auditor’s report if an exemption is not granted.

Medium-Sized Companies –

Medium-sized companies must provide a balance sheet, a profit and loss account, a director’s report and signature, notes to the accounts, auditors reports, and must also provide all of this to the companies house, so that they can track and thoroughly ensure all is verified. You can also apply for an auditor’s exemption in certain circumstances.

Abridged Accounts for Small Companies

Under section 381 of the Companies Act 2006, certain small companies are afforded the chance to provide abridged accounts. This allows for a small and simpler list of details, making it easier to keep up with paperwork and to gain verification in your reporting habits each year. This is not afforded to medium, large or micro-entity businesses.

Abridged accounts include an abridged profit and loss account, an auditor’s report (unless exemption is claimed) a director’s signature placed on the balance sheet, a notes to the account, and statement on the balance sheet, and a statement that all parties consent to the abridged forms.

Filing End-Of-Year Accounts

Filing your end of year accounts is still a difficult and complex logistical task, but modern software solutions have made this effort much easier for businesses to tackle and index. You may find that preparing your annual account is aided by the CATO service, known as the Company Accounts and Tax Online service, which enables you to provide your paperwork to both Companies House AND HRMC at the same time – hitting two birds with one stone, as it were. Note – this is usually only available for micro-entity firms or small accounting fir

Can I Prepare My Own Limited Company Accounts?

Yes, but this often takes time, can be an arduous process, and may even leave you incurring penalties if mistakes are made. You don’t have to be incompetent to make mistakes either, there are many financial figures at play in end-of-year account reporting, but even honest mistakes can lead to fines.

For this reason, it’s much better to use financial advisors and accountants to help you prepare this end-of-year summary. They will understand the compliance necessary, will walk you through your books, and will also ensure all materials are delivered on time.

Contact Us Now!

So, what are you waiting for? It could be that contacting us now provides you with the required assistance you need. You can contact us at 020 3903 4292 or use our contact form.

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