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How to file company accounts

November 18, 2022
Whether you’ve just set up a new limited company or have recently made the transition from being a self-employed sole trader, there are plenty of tax-related benefits that come with incorporation.However, being a limited company director does mean more paperwork, with company accounts being just one of the few obligations as a business owner you’ll need to keep on top of.If you’re not sure where to begin, this article’s for you. We’ll be breaking down what company accounts are, who needs to file and how to do so.

What are company accounts?

Simply put, company accounts are financial statements compiled at the end of a financial year that point to the performance of a company over the course of the year.Company accounts include statutory annual accounts and your Company Tax Return, and are prepared at the end of your company’s financial year to be sent to shareholders, Companies House and HM Revenue and Customs (HMRC).Statutory accounts include the following:
    Balance Sheet: A statement detailing the value of the company’s assets and liabilities — or, simply put, the value of everything the company owns, owes and is owed.Profit & loss account: True to its name, this statement showcases the company’s financial position, detailing sales, running costs and any profits or losses made over the year.Director’s report: This is the who, what and how of a business, covering the state of the company’s finances, how well the company is performing, if there’s capacity for growth and how well the company is complying with financial regulations.Notes: Any further explanation of any information in the company account.
If you run a small company, you may only need to send an abridged version of your company accounts. Bye-bye director's report and adios profit and loss account. All you have to do is apply for an audit exemption.Not sure if you classify as a small business? Keep on reading.

What is a small business?

What you consider a small business might not be the same as what Companies House and HMRC do. Thankfully, they’ve provided a clear definition for you.

Any business which meets any 2 of the following requirements is classified as a small business:
    Turnover of less than £10.2 millionA balance sheet of less than £5.1 millionLess than 50 employees in the company
If your company earnings are way below these figures, chances are your business is classified as a micro-entity and should file micro-entity accounts instead.Micro-entities are businesses with at least 2 of the following characteristics:
    Turnover below £632,000Balance sheet with less than £316,000No more than 10 employees

Who needs to file company accounts?

All limited companies are legally required to file company accounts, including all dormant companies.Companies House classifies a dormant company as one with no ‘significant’ transactions made throughout the financial year in question. Significant transactions do not include the following:
    Filing fees paid to Companies HouseLate filing penaltiesMoney paid for shares at the time of company incorporation
Dormant companies classified as small can take advantage of the audit exemption.

When should I file my company accounts?

Unless you’re filing your company’s first accounts, you’ll need to file your company accounting either within 9 months of your company accounting reference date (ARD) if you’re a private company, or within 6 months of the ARD if you’re a public company.If you’re filing your company’s first accounts and these accounts cover a period longer than 12 month, you’ll need to deliver them to Companies House either:
    Within 21 months of the date of incorporation for private companies, or 3 months from the accounting reference dateWithin 18 months of the date of incorporation for public companies, or 3 months from the accounting reference date
Since this differs from company to company, if you aren’t sure when you need to file your accounts by, you can use Companies House’s company information service.

If any unforeseen circumstances stop your from filing your accounts, you can apply for an extension through GOV.UK.

What if I miss the filing deadline?

As filing your company accounts is a legal obligation, filing your accounts late can land you in hot water.The late filing penalty you’re charged depends on how late the accounts reach Companies House.
Length of period from the date accounts are duePenalty for a private company or LLPPenalty for a public company
No more than 1 month£150£750
Between 1-3 months£375£1,500
Between 3-6 months£750£3,000
6 months +£1,500£7,500
Source: GOV.UK

Failure to file your accounts altogether is a criminal offence, and company directors can be personally fined in criminal courts.

How to file company accounts

You can file your company accounts online or by post. Filing by post, unsurprisingly, takes a bit longer, but if you don’t mind the wait, you can find the address for your local Companies House here.

Filing online is the faster option, and has built-in checks to ensure all the necessary information is entered before you send them off, minimising any risk of error.To file online, you’ll need to:
    Register for online filingProvide an email addressChoose a passwordHave the company’s authentication code to hand
If you’re worried about filing your limited company accounts, Ember’s in-house qualified accountants are on hand to help you prepare and submit your company accounts on time.

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