Filing Limited Company Accounts
Setting up a company in the UK is pretty easy. Filing its yearly accounts is not so easy.
Your company must file a Company Tax Return if you get a ‘notice to deliver a Company Tax Return’ from HMRC, even if you have made a loss or have no tax to pay. Sole traders do not deliver a company tax return, for obvious reasons.
When you file your corporation tax return, you work out your company's profit or loss. An accountant can do this, or you can do it yourself if your company's finances are simple enough.
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All UK-registered companies must prepare annual accounts and file them with Companies House and HMRC. They must accurately report on their financial activity during the previous tax year.
These accounts establish how much profit was made and therefore the amount of Corporation Tax that is payable to the UK Treasury.
The company’s directors have a legal responsibility to make sure these annual accounts have are completed, accurate, and filed before the statutory deadline.
The deadline for your tax return is 12 months after the end of the accounting period it covers. Late submissions attract fines. The tax payment deadline is 9 months and one day after the end of the accounting period.
You also file ‘statutory accounts’ with Companies House. To this end, you keep detailed records of income and expenditure. Statutory accounts must be submitted within 9 months of the end of your company’s financial year. If you qualify as a ‘small’ company in the eyes of HMRC, you can submit abbreviated accounts.
You can file your tax return with HMRC and Companies House at the same time, if you have the relevant login access.
Your statutory (Companies House) year end accounts (financial statement) can include:
- Director's report;
- Balance sheet;
- Profit and loss account;
- Explanatory notes.
A ‘small’ company (which has any 2 of the following: under 50 employees, turnover less than £10.2m, less than £5.1m on the balance sheet) only needs to submit abbreviated accounts to Companies House, which accounts are merely a balance sheet signed by a named director.
If you fit the definition of a ‘micro entity’ – a turnover of £632,000 or less, £316,000 or less on its balance sheet and 10 employees or less, you can submit even simpler accounts. A micro-entity only needs to send a balance sheet and less detail to Companies House.
Dormant companies must still deliver accounts to Companies House, even if you do no business during the tax year.
HMRC and your shareholders will want full financial statements. The Companies House abbreviated version, being public, is useful so you don't have to give away the intimate details of your company's finances to snoopers.
Make a start
- A spreadsheet program, like Microsoft Excel;
- A company bank account which lets you export .csv files or
- An online payment processor, like PayPal, which does the same;
- To keep good records ongoing;
- To prepare accounts well in advance of filing deadlines;
- Optional: accounting software.
The less work your accountant has to do, the more money you will save. This can be vital if you're not making much money but want to keep your company ticking over.
It may be worth investing in some basic accounting software, if you're up to the challenge. Find out what software your accountant uses and thus make it easy for him to do your books.
However, a basic spreadsheet statement of income and expenditure is gold. You can add to it, edit it, show it to your accountant and make his life a lot easier.
Don't be the guy that shows up on his doorstep a month before the accounts are due with a shoebox full of receipts!
Ask your accountant what you can do to make his work easier, and thus, cheaper for you. If he quibbles about this, you may want to find another accountant!
Typical records to keep:
- Income and expenditure;
- Register of fixed assets and their depreciation;
- Company liabilities;
- Unsold stock and uncompleted work at year-end (‘floating’ assets);
- Staff payroll.
Use unique invoice numbers, list outstanding debtors and creditors by date and your accountant should find it easier to cut your tax outgoings, legally.
Reminder: An oddity: the HMRC Tax Return is due 12 months after your accounting period ends, but you must pay any tax you owe within 9 months and a day of that date.
In practice, you prepare your accounts and pay your taxes in good time. We strongly suggest you have your accounts in order 90 days before your tax payment deadline.
Then, if there are any problems with submission or payment, you have plenty of time to fix them!
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