Statutory accounts – What are statutory accounts?
Statutory accounts – also known as annual accounts – are a set of financial reports prepared at the end of each financial year. In the UK, all private limited companies are required to prepare statutory accounts.
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Statutory accounts report the financial activity and performance of a limited company. Annual accounts can also be used to work out corporation tax.
Copies of statutory accounts should always be sent to:
- Shareholders
- Companies House
- HM Revenue and Customs (HMRC)
- Anyone who attends the company’s general meetings.
How do I prepare statutory accounts?
When preparing statutory accounts, you must make sure that your accounts meet either the IFRS Standards or the New UK GAAP.
For all limited companies, annual accounts must include:
- A balance sheet – a financial statement which shows how much the company owns, owes or is owed at the end of the financial year. This must be signed by a director and include a director’s name.
- A profit and loss statement – also known as a profit and loss account or a P&L account, this shows the business’s net profit or loss.
- Notes about the accounts.
Depending on the size of your company, you can also need to include:
Statutory accounts for small businesses
Some companies do not need to file full statutory accounts and may not be required to supply certain reports. Three types of businesses are subject to different rules when it comes to annual accounts: small companies, micro-entities, and dormant companies.
Small companies and annual accounts
Your company is considered ‘small’ if it has at least two of the following:
- A turnover of less then £10.2 million
- £5.1 million or less on then balance sheet
- 50 employees or less.
Small companies can send ‘abridged’ account accounts to Companies House. Abridged accounts contain a simpler balance sheet and make less information about your company publicly available.
Small companies can also choose whether to sent a directors' report and a profit and loss account, and whether they want to be audited.
Micro-entities and annual accounts
Very small companies are considered micro-entities. To be considered a micro-entity, your company must meet at least two of the following criteria:
- A turnover of less than £632,000
- £316,000 or less on the balance sheet
- 10 employees or less.
If your company is classified as micro-entity, you can prepare simpler statutory accounts and send your balance sheet to Companies House with less information. The exemptions which apply to small companies also apply to micro-entities.
Dormant companies and annual accounts
Companies House considers a company to be dormant if it hasn’t had any ‘significant’ transactions over the last financial year. Significant transactions are financial transactions that usually need to be reported; this doesn’t include any fees paid to Companies House, penalties for filing accounts late, money paid for shares.
If your business is considered dormant and ‘small’, you do not need to be audited or submit an auditor’s report.
Statutory accounts and Debitoor
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