If you are finished setting up your company then it is a big achievement that you have accomplished. Also, you have stepped into the world of possibilities. It takes passion and resilience to get to this point.
But that’s just a start. A business startup is a constant struggle and you have to take it step by step. The most important step that you’ll encounter in your business is accounting. You will have to get on top of it immediately. This way you will prepare better for your annual statutory accounts. Let’s get into a step by step process to help you out with how to do your annual accounts right.
What is business year-end?
A company’s year-end is the time or date your company’s accounting period ends. It is also the date for the limited company to send documents to the HMRC and Companies House.
What do you want to include in Statutory Annual Accounts?
Every company needs to provide statutory annual accounts for Companies House. Company directors are responsible for the preparation of these accounts and then timely submission. As a company director, you have to give a copy of the annual accounts to your shareholders if you have any.
These are the things that you must include while submitting your annual accounts and figuring out how to do your accounts right:
- Your company’s balance sheet
- The profit and loss account of your company’s sales and purchases over the financial year
- The company’s notes of its annual accounts
- A director’s report
- Name and signature of the director on the company’s balance sheet
- A report of the auditor (you don’t need any if your company is exempt)
- Annual accounts for small companies
Annual accounts for small and micro companies are short. You only have to submit the notes and the company’s balance sheet.
Small businesses
First, get a sneak peek about a ‘small business’. A company is considered small if they:
- Have a turnover of less than £10.2m
- Balance sheet showing the value of assets less than £5.1m
- Staff members are 50 or below
Micro-entities
Micro companies have to submit even simpler accounts than small companies. But they have to fulfill few conditions to be considered as a micro-entity which are:
- If they have a turnover of £632,000 or less
- If their balance sheet is showing £316,000 or less
- If their employee count is 10 or less
Dormant companies
If you have a company that is inactive. You only have to prepare inactive accounts for the Companies House. It only consists of the company notes and a balance sheet.
How to change your company’s Accounting Reference Date (ARD)
ARD is the reference date that marks your financial year-end. You will have to inform HMRC before changing company ARD. Any change will influence your corporation and accounting dates. You can set your accounting period 12 months or below. But it cannot go over 12 months.
When to File Your Annual Accounts
The annual accounts of the company usually span over 12 months. The final date for the submission of accounts to the Companies House is exactly 9 months after that. This represents the financial year of the company.