The importance of accurate and timely limited company accounts

The importance of accurate and timely limited company accounts

Running a business means juggling multiple tasks all at the same time – your products, your staff, and your customers – but none are more vital than creating accurate and timely limited company accounts.

All registered companies must prepare annual statutory accounts and file them with Companies House and HMRC annually. 

Businesses must accurately report their financial activity for the previous tax year.

By preparing these accounts, you’ll determine how much profit has been made throughout the financial year, including payable Corporation Tax.

A company director’s legal responsibility is to ensure the annual accounts have been completed, are accurate, and have been filed on or before the statutory deadline.

In this article, we’ll go through everything you need to know about submitting your limited company accounts and highlight where this will be important for your business.


What’s in a set of limited company accounts?

Depending on your company’s size, there are different reporting responsibilities.

For larger companies, annual accounts must include a balance sheet, a profit and loss account, any notes about their accounts, a directors’ report, an auditor’s report (unless the business is exempt), and the name and signature of the company director.

For small businesses, annual accounts only need to file abbreviated accounts with Companies House. These include a balance sheet and any notes. However, for their company tax return, they must still include full accounts.


What classifies as a small business?

To be a small company, you must:

  • have a turnover of £10.2m or less
  • £5.1m or less on your balance sheet
  • have 50 employees or less

Anything above this, you’d be classified as a medium or large company.


What’s a micro-entity?

There are even smaller businesses known as micro-entities. To be classified as one of these, you must:

  • have a turnover of £632,000 or less
  • £316,000 on your balance sheet
  • have 10 employees or less

As a micro entity, you only need to submit simple accounts to Companies House – normally just a balance sheet.


What if my limited company is inactive?

An inactive company is known as dormant. If this is the case, you still need to deliver company accounts to Companies House, irrespective of how much business you’ve done throughout the year.

Reporting requirements can sometimes be confusing, so it’s worth checking them according to your company’s size on the Government website.


When do I need to file my limited company accounts?

Within 21 months of incorporation, a company must file its first annual accounts.

These accounts will normally cover a period longer than 12 months, with a due date starting from the day of incorporation and running through to your accounting reference date (ARD).

Your ARD represents when your company’s financial year will end. This is usually on the last day of the month in which your company’s first anniversary falls.

For example, if you registered your new business on February 15th 2023, your first ARD date would be the 31st of February 2024.

Upon completion of the first year, you are expected to deliver your accounts for Companies House within 9 months of your ARD.


Changing your ARD

Unless you shorten or extend your financial year, your ARD date won’t change each year.

You (or your accountant) can change this date at any time before the filing deadline – but not if your accounts are overdue (except if your company is in administration).


Shortening your financial year

You can shorten your 12-month financial year by as many months and as often as you’d like.

But you’re only allowed to extend your financial year once every 5 years, and it must occur at least 18 months after your incorporation date or the date of your previous year’s ARD.

Making this change is as simple as filling out Form AA01 and sending it to Companies House.

Your ARD will remain in effect for all future annual accounts unless you make any additional financial changes during that year.

Always keep HMRC informed about what you do, which may affect your corporation tax accounting period.


What’s the deadline for filing my limited company accounts?

Your accounts must be submitted to Companies House 9 months after your year-end (ARD).

When filing your company tax return (CT600) you also have to send your annual accounts to HMRC.

The HMRC tax return is due 12 months after your accounting period ends, but you must pay any tax owed within 9 months and one day of this date.


Speak to an accountant 

Limited company accounts can be complicated and stressful at times, with hours of your time needed to make sure you get them filed correctly.

By hiring an accountant, you’ll get access to our expertise. We’ve helped hundreds of businesses file their annual accounts and company tax returns and stay ahead of their Companies House and HMRC deadlines.

We’ve helped many owners create accurate and timely limited company accounts and given them time to focus on other areas of their business.

Need help with your limited company tax return? Give us a call, and we’ll help you out.

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