Goodbye Abbreviated Accounts…..

Welcome to the second of our series of blogs on accounting changes. 

All companies have to file their accounts at Companies House each year. Micro, small and medium companies have the option of submitting a little, or significantly, less than their full accounts.

Currently, small companies have two alternative options, if they don’t want to file their full accounts.  They can file either:

  • full accounts but remove the directors’ report and/or profit and loss account, or
  • abbreviated accounts

For most of our small company clients, we file abbreviated accounts – these are a simplified set of accounts, with no directors’ report, no profit or loss, a stripped-back balance sheet, and a limited number of notes.

For accounting periods starting on or after 1 January 2016 (for full years, this means 31 December 2016 year ends onwards), this option of filing abbreviated accounts disappears.  What this means for a small company is that, while the directors’ report and profit and loss account still don’t need to go to Companies House, the full balance sheet and all the notes will be filed – this is more disclosure on public record than this size of company will have had before.

This could mean that companies that qualify as “micro” but have previously prepared “small” accounts may wish to prepare “micro” accounts in future.  However, there are differences between small and micro accounts which make it more appropriate for your business to prepare small accounts, even if it does qualify as micro.  These differences will be explained in a future blog, so watch this space…. (Alternatively, if you are so excited about this that you can’t wait, just give us a call on 0116 242 3400!)

Coming soon….. “What’s Changing for Small and Medium Companies?”Katie Kettle Colour Katie Kettle, Technical Manager 

What is an Annual Return?

An Annual Return is a document that all limited companies must prepare and deliver to Companies House once a year.  It is the responsibility of the directors to ensure that this happens.

It is different from your company’s annual accounts or tax return and usually won’t be completed at the same time.

Companies House will send a reminder letter to your company’s registered office address notifying you of when the next return is due.

The due date is usually a year after either the:

  • Incorporation of your company, or
  • The date of your last annual return

You can file your annual return up to 28 days after the due date.

Please note that if the annual return is filed late it is possible that you can be fined up to £5,000, and your company struck off if you don’t send Companies House your annual return at all.

Your annual return must include:

  • Details of the directors and company secretary (if it has one)
  • What your company does – including its standard industrial classification (SIC) codes
  • The type of company it is e.g. private or public
  • The registered office address
  • The ‘single alternative inspection location’ (SAIL) – the address where the statutory records are kept if not at the registered address

You may also need to include:

  • A ‘statement of capital’ if your company has shares
  • Details of shareholders, if required and depending how long since you last reported on them.

Please note that you must file an Annual Return even if your company is dormant or your details remain unchanged from one year to the next.

Please remember that it is the responsibility of the directors to complete the Annual Return accurately and on time.  Once submitted to Companies House it is available for public inspection.

If you would like some further information or how we can help your business, contact us for a no obligation meeting

Heather Waterfield, Company Secretarial & Administration team_DSC3430.JPG

Times are Changing! (Well, Accounting Standards are Anyway…)

When we prepare a set of accounts for a limited company, one of the first things we do is work out what size the company is.  This will determine how we prepare the accounts, and which set of rules (standards) we will follow.  The general rule is that the smaller the company is, the smaller the accounts can be – you wouldn’t expect a one director/shareholder company’s accounts to be in the same format as those of a large listed company!  Previously we had small, medium and large companies, but recently a new size has been added…. micro companies.  Micro, small and medium companies get certain exemptions from the full accounting standards (known as UK GAAP – or generally accepted accounting practice) in terms of how certain items are treated, how the accounts look, and how much information there is in them.

Whichever size your company falls into, there are changes ahead, but there may be options and opportunities too!

In a series of 5 blogs, we will explore some of the key changes, when they happen, and how they might affect you and your business.

What size is my company?

While this might appear to be a straightforward question, with a straightforward answer, you’ve guessed it…. it’s not!

In order to qualify for the exemptions available by being a smaller company, the company has to meet two out of three criteria for two successive years.  It follows that in order to no longer qualify, the limits have to be breached for two successive years.   There is always that “year of grace”.  Of course if it’s the first year, you only have to meet the criteria for that year in order to qualify for the reduced rules.

Some of the size criteria in place now will be changing (for the most part, the limits are increased) for accounting periods starting 1 January 2016 onwards.  They are:

Micro Small Medium
Turnover £632,000
(unchanged from Jan 16)
£6.5m

(£10.2m from Jan 16)

£25.9m

(£36m from Jan 16)

Gross Assets £316,000

(unchanged from Jan 16)

£3.26m

(£5.1m from Jan 16)

£12.9m

(£18m from Jan 16)

Average Employees 10

(unchanged from Jan 16)

50

(unchanged from Jan 16)

250

(unchanged from Jan 16)

So what are the implications of a company being a different size?

Micro companies can prepare very small accounts, with a simplified profit or loss and balance sheet, no directors’ report and very few notes.  The profit or loss account is not filed at Companies House.

Small companies are required to have a full balance sheet and profit or loss account directors’ report, plus more notes than a micro company.  At the moment, small companies have the option of filing abbreviated accounts at Companies House, which are an abridged version of the full accounts – there’s no directors’ report, no profit or loss account and less notes.

Medium companies’ full accounts include (in addition to the above) a strategic report, a cash flow statement and even more notes.  When filing at Companies House, medium companies file their full accounts, but without the detailed profit and loss account – the main statutory profit and loss account is filed.

As you can see, the increase in the small company thresholds will mean that more companies can take advantage of the exemptions that are afforded to them.  There is more to the story however, as the size limits aren’t the only things that are changing…..

If you have any queries on the above, please get in touch on 0116 242 3400.

Coming soon….. “Goodbye Abbreviated Accounts…..” Continue reading

Are you trading fully protected?

 

Are you worried about customers paying ?

Suppliers chasing you for overdue invoices ?

If you have answered YES to both of these questions then you should consider trading through a limited company. 

If things go wrong (sometimes even with the best planning they do) if you trade through a limited company you could walk away with no personal liabilities therefore protecting you & your family.

Please contact us to find out more.  We can even incorporate the limited company in 24 hours.