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A Quick Definition of Abbreviated Accounts
If you are running a small limited company, it will be necessary for you to submit several reports to HMRC and Companies House.
Which are the main reports required?
Here is a brief list of the main reports you will have to submit and the information they should contain.
If you run a small limited company, you will be allowed to file abbreviated accounts. In order to be able to do so, your small limited company has to meet at least 2 of these conditions:
– Average number of employees must not be over 50
– Balance sheet total must not be over £3.26 million
– Annual turnover must not be over £6.5 million
The main advantage of abbreviated accounts is that they need less information than regular full accounts. As a direct consequence, the general public and competitors will not be able to see detailed information about your accounts. Moreover, many small companies do not even require a full audit.
Generally, abbreviated accounts must contain simple balance sheets, which show the liabilities and asset of your company. Liabilities mainly include overdrafts, trade creditors (i.e. money you owe suppliers), or loans. Assets include stuff such as vehicles, equipment, trade debtors (i.e. money customers owe you), and bank balances. By taking into account both liabilities and assets, abbreviated accounts give a snapshot of a company’s net value. However, they are unable to provide a full picture, especially as they don’t take into consideration your goodwill, reputation, brand, order book etc.
Abbreviated accounts must be filed nine months after the year-end. You have the possibility to file them with Companies House either by post, or directly online.
For many clients, receiving annual return reminders can be confusing, as they think they represent the submission of their accounts. The Companies House Annual Return actually represents an online confirmation of their companies’ details: registered address, shareholders, current directors etc. It is usually a simple process and it only involves an annual filling charge of £14 to Companies Houses.
Filing this return is very important. If you fail to do so, Companies House might start dissolving your company.
Full Members Accounts
This type of account is a more detailed version of an abbreviated account. It includes an income statement or a profit & loss account. The profit & loss account clearly reflects your detailed costs and revenue, which might generate either a loss or a profit. However, in the case of small companies, these accounts can be kept internally. Keep in mind that your bank manager might require them each year.
They represent software generated versions of full accounts and they have to be submitted together with the corporation tax return.
Corporation Tax Return
The Corporation Tax Return needs to be submitted to HMRC 12 months after the year-end and represents a confirmation of the corporation tax calculation. It must be filled electronically and accompanied by the iXBRL accounts.
There still is one important issue that needs to be addressed: Do you need an accountant for this? The answer is NO – at least by law. However, due to the complexity of this task, if you lack the necessary expertise, it is highly advisable to hire an accountant. Mistakes can turn out to be extremely costly.