Statutory Accounts Requirements and Preparation
All limited companies registered in the UK are required to prepare financial accounts for Companies House and HMRC each year. These accounts are often referred to as ‘annual accounts’ or ‘statutory accounts’ and they are used to report the financial activity and performance of a business during its most recent financial year.
The financial year of a limited company is usually a 12-month period that ends on the accounting reference date (ARD), which normally falls the anniversary of company formation. Annual accounts are also used to work out how much Corporation Tax a company has to pay to HMRC on its taxable profits.
Types of limited company accounts
All companies, whether trading or dormant (non-trading), must prepare accounts of some kind and provide copies to their members (shareholders or guarantors) and Companies House. Trading companies must also submit accounts to HMRC with each Company Tax Return.
There are 5 types of annual accounts for UK limited companies:
Small company accounts
Medium-sized company accounts
Large company accounts
Dormant company accounts
There are three classifications of company accounts for trading companies: small, medium and large. Within the small company classification there is a subset called micro-entity, which applies to very small companies. The size of a company is determined by various thresholds for annual turnover, balance sheet total, and average number of employees, each of which impacts the amount of accounting data required in the accounts.