Why Do I Have to File Business Accounts?

When you register a company in the UK, you are legally required to report certain information to Companies House and HMRC on a yearly basis – including your company accounts.

What are company accounts?

Company accounts are documents prepared at the end of a financial year which show how a company has performed over the accounting period.

Who has to file company accounts?

All limited companies registered in the UK must deliver accounts to Companies House, regardless of whether you’ve been successful, breaking even, not trading or dormant.

What information do I have to provide?

A set of accounts will usually consist of:

• A profit and loss account
• A balance sheet
• Notes
• A directors’ report

In some circumstances an auditor’s report is necessary, although companies that qualify as small or micro-entities can take advantage of the audit exemption.

The profit and loss account shows the company’s sales, running costs and the profit or loss it has made over the last year.

The balance sheet shows the value of everything the company owns, owes and is owed.

The notes provide supporting information and help users of accounting information understand the current financial position of the company.

The directors’ report provides information on whether the company’s finances are in good health, how well the company's performing, whether the company has capacity to expand and grow, and how well the company is complying with financial regulations.

Abridged accounts for small companies

Small companies can choose to file abridged accounts. These are a simplified version of your accounts and do not need a directors’ report or a profit and loss account. Your company will be ‘small’ if it has any two of the following:

• A turnover of £10.2 million or less
• A balance sheet of £5.1 million or less
• 50 employees or less

Companies with even smaller turnovers are classed as micro-entities. Your company can file micro-entity accounts if it has any two of the following:

• A turnover of £632,000 or less
• A balance sheet of £316,000 or less
• 10 employees or less

Dormant companies

A dormant company must still file accounts with Companies House. Your company is called ‘dormant’ by Companies House if it’s had no ‘significant’ transactions in the financial year that you’d normally report.

Deadline for filing accounts

Every company will have an accounting reference date. The deadline for filing your accounts is calculated from this date. For existing companies, it will be the anniversary of the day after the previous financial year ended. The time allowed for delivering accounts is nine months from the accounting reference date.

Companies House can issue penalties if you file your company accounts past the deadline. These range from £150 for filing under a month late, to £1,500 for filing more than six months late. Not filing your confirmation statements, annual returns or accounts is a criminal offence and directors or LLP designated members could be personally fined in the criminal courts. Failing to pay your late filing penalty can result in enforcement proceedings and criminal proceedings.

Speak to our solicitors

If you are unsure as to whether your business needs to file accounts, or you are uncertain about the requirements of filing business accounts, please contact us. Our experienced Company Law Solicitors will be happy to help you.