Statutory accounts, also referred to as annual accounts, are financial reports that private limited and public companies must prepare at the end of each financial year. These records are extremely useful for providing an overview on a company's financial health; they can uncover warning signs to potential financial trouble ahead, as well as highlighting efficiencies and success.
Filing statutory accounts is a legal requirement, but it can be an extremely daunting task. Here, we’ll share our tips to help you file your statutory accounts on time, as well as providing a handy a statutory accounts preparation checklist. But first, let’s recap what should be included in your statutory accounts.
For a limited company in the UK, statutory accounts should typically include the following:
A balance sheet
Profit and loss account
Notes about the accounts
A balance sheet shows the value of everything your company owns, in addition to what it owes on the last day of the financial year. A profit and loss account include your company’s running costs, sales, and any profit or loss made over the financial year.
Notes about the accounts offer more information on who money is owed to and what kind of payments they are, such as one-off or recurring payments. This provides more context to the accounts. Additionally, a director’s report and an auditor’s report might need to be included depending on the size of your company.
A director’s report summarises the company’s prospects and any dividends that possibly will be paid to shareholders, as well as the names of directors, business activities, and events that can be seen on the balance sheet. Larger companies are also likely to use the director’s report as an opportunity to recap the past year and detail the company’s financial performance, while looking ahead to the next financial year.
It’s best to start preparing your statutory accounts early as the reports can be overwhelming to put together.
Statutory accounts have to be submitted at the end of your company’s financial year to shareholders, Companies House, and HMRC as part of your tax return. A copy of your statutory accounts also needs to be sent to every member of your company, and when you file it with Companies House, it will be available to the public.
Note: Your initial statutory accounts must be filed 21 months after registering with Companies House. Then, after that, you’ll file nine months after your company’s financial year ends. The reports you are required to include depend on the size of your company.
If your business is considered a “small company” or “micro-entity”, according to the government, you might have the option to send simpler accounts to Companies House and be exempt from being audited. You might also have the option to use the Company Accounts and Tax Online service, allowing your company to submit accounts to HMRC and Companies House all at once.
Unsure of the best time to run your statutory accounts? Contact our friendly team today on 0207 043 4000.
Before you submit your accounts, make sure you’ve followed our statutory accounts preparation checklist and done all your housekeeping:
Check you’re claiming all legal expenses
It’s imperative that you claim all legal business expenses before the end of your financial year. Remember, every pound you claim as a business expense is a pound taken off your overall profits, and less profit means you have to pay less Corporation Tax. If you’re unsure what deductions you can claim for your business, get in touch.
Chase overdue invoices
Did you know that small businesses spend £5,000 per year chasing late payments?
Your statutory accounts need to be accurate as possible, so before the end of your financial year, play the role of debt collector and chase up any unpaid invoices. When all your invoices have been paid, record them properly.
Get all your paperwork in order
You’ll need to be able to back up your accounts, so before the year-end make sure you have records for everything, (statements from suppliers, records of income received, etc).
It can be extremely difficult to prepare and file your accounts, but it is possible to do them yourself. A range of accounting software products are available to help you format, prepare, and file your statutory accounts. Using a software also assists in helping you include all of the necessary information.
That being said, the majority of limited companies hire an accountant to deal with their finances. A good accountant will ensure you meet all legal requirements and get everything done on time.
There’s a theme occurring here: preparation and forward-planning is key! It’s important to also submit your statutory accounts with plenty of time to spare in case you get rejected, so you’ll still have plenty of time to resubmit them. You can even sign up for email reminders if you’re nervous about missing your company’s deadline.
If you file the accounts late, there are monetary penalties of £150 for filing less than a month late and £1,500 for over six months late. Additionally, the penalties are doubled if you submit the accounts late for two years back to back.
Note: When your company is formed, the first accounting reference date (ARD) will be the last day of the month you incorporated your company of the following year. Your ARD will then be on that day each year.
Most companies can file electronically, making it much simpler and faster. The government’s online service has checks built in to ensure all of the necessary information is provided before you submit. You’ll also be automatically emailed when your accounts have been received, and then you’ll receive another email if they’ve been accepted.
Of course you can post your accounts to Companies House, but as accounts submitted on paper are checked by hand, they can take more than a week to process. Post them next day guaranteed postage, well before the deadline so you don’t have to pay a late penalty.
When filing, it’s best to double check the required content and format for your statutory accounts. Please check out the government’s guidance for company accounts.
We can help with your company’s statutory accounts, whether you want the most basic form of profit and loss account and balance sheet, or bespoke management accounts, financial projection or other forms of reporting.
Rather than just making sure businesses are compliant, at Accounts & Legal we like to offer advice and training so our clients understand financial concepts and reports.
If you’d like help with your statutory reports, (or any other form of accounting), give us a call on 0207 043 4000 or try our instant accounting quote tool.
Find out more about our statutory accounts services here.