Annual Accounts for a limited company explained
Year-end accounts, statutory accounts, company annual accounts. All these terms refer to the same thing- financial statements every limited company has to prepare annually to comply with the statutory requirements.
The financial statements are prepared from the financial records which a limited company should systematically update throughout the year. This can be done either in a spreadsheet if a company is quite small with little transactions; however, companies with bigger volume of transactions or more complicated structure or those who want to focus more on growing their business should consider using accounting software. Accounting software, like for example Xero, can streamline your bookkeeping, save you time and minimise overall costs for bookkeeping or accounting services.
If you’d like to implement Xero accounting software in your business, book a meeting with our Xero experts today to discuss more details and find out how we can help you.
Full set of statutory accounts for a limited company consists of:
- A statement of financial position called also a balance sheet
- A statement of profit or loss and other comprehensive income called very often just P&L
- A statement of changes in equity
- A statement of cash flows
- A director’s report
- Notes to the accounts
What do limited companies have to do with their accounts?
Limited company accounts need to be sent to Companies House annually, they also have to be shared with the shareholders and anyone who attends the company’s general meetings. One of the responsibilities of a limited company director is to present the financial statements to the shareholders. The statutory accounts are also sent to HMRC together with a Corporation Tax return to support your return.
Can I prepare my own accounts for a limited company?
Absolutely! You can do limited company accounts yourself and send them to Companies House and HMRC. However, please be aware there are different Financial Reporting Standards, like FRS 102 or FRS 105, which limited company annual accounts have to comply with. Different standards mean different rules about presentation of your statutory accounts and accounting treatments of different elements.
The standards can’t be freely chosen just to your liking, there are rules that determine which standard can be used by which limited company. Smaller limited companies can also prepare simpler accounts and this also means not all the financial statements are required.
Are limited company accounts public?
Yes, accounts for a limited company you submit to Companies House are in a public domain and can be seen by anyone. Please, don’t be alarmed that people can steal your business model or your secrets about how you’re managing it. Statutory accounts for limited companies don’t go into all these details. By looking at Companies House website, people can also see if you submitted your limited company annual accounts at all and if you comply with your statutory responsibilities as a company director.
What happens when you don't file accounts for a limited company?
A private limited liability company has 9 months from the end of its financial year to submit limited company annual accounts to Companies House. This is plenty of time to catch up with your bookkeeping, make all necessary adjustments and prepare the accounts to comply with the financial reporting standards.
Penalties for late filing are just unnecessary cost to your business, so try to stick to the filing deadlines for your limited company annual accounts.
| How long your accounts are late | Penalty for Ltd |
|---|---|
|
not more than 1 month |
£150 |
|
between 1-3 months |
£375 |
|
between 3-6 months |
£750 |
|
more than 6 months |
£1,500 |
Looking for an accountant for your limited company? Why not contact our accountancy practice in Oxford to discuss your needs.
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