The accounting requirements for private limited company businesses in the UK can seem complex and difficult to understand.
Limited companies are legally required to prepare and file annual accounts to Companies House and HM Revenue and Customs (HMRC).
Limited company accounting should provide a comprehensive overview of the company’s financial position and performance over the previous fiscal year.
The filing requirements vary depending on the size and type of company, and it’s important for business owners and managers to understand what’s expected of them.
Professional limited company accounting services can make the process simpler, freeing up time and resources for other key business activities.
What are the accounts requirements for limited companies, can you prepare your own accounts, and what are the penalties for failing to file accounts on time?
What are the filing requirements of a limited company?
While there are differences in what’s required when it comes to limited company accounts depending on the size and type of company, there are some universal elements.
These include:
Annual accounts
- Profit and loss accounts: This summarises the company’s income and expenses, showing the overall profit or loss
- Balance sheet: The balance sheet provides an overview of the company’s current financial positions, including assets, liabilities, and shareholder equity
- Cash flow statement: This details the cash inflows and outflows to and from the business, highlighting the company’s overall liquidity
- Directors’ report: This is an overview of the company’s performance, and activities, as well as future aims and outlook
- Notes to the accounts: This additional information provides explanations about the figures presented in the financial statements
Deadlines
The deadline for filling accounts depends on whether a limited company is private or public.
Private companies must file annual accounts within nine months of the end of their accounting period, while public companies must file within six months of theirs concluding.
If your company is newly incorporated, you’re required to file your first set of accounts within 21 months of the incorporation date, or nine months after the end of the accounting period (whichever is longer).
Tax returns
As well as annual accounts, companies are required to submit a Corporation Tax Return (CT600) to HMRC.
This details the company’s taxable profits and any tax due.
Do you need an accountant to submit limited company accounts?
It’s not a legal requirement to hire an accountant to prepare and submit limited company accounts.
However, most businesses that do not have in-house accountancy resource will choose to do so. This is because the complexity and importance of the task make it beneficial.
Accountants have the expertise and deep understanding of accounting principles and relevant tax laws to ensure accuracy. They ensure your accounts are compliant with current regulations and are free of errors that may result in penalties.
Preparing and filing limited company accounts can be time and resource-consuming, taking key people away from other business-related tasks.
Hiring professional accounting services frees up time while enabling you to optimise your accounting processes.
Accountants can also provide valuable advice on tax planning and strategies that minimise your liability, identifying allowable expenses that may be overlooked.
They can also provide strategic financial and tax planning advice to help you better plan for the future.
Can I prepare my own limited company account?
It’s certainly possible to prepare your own limited company accounts, particularly if your business is small and the financial activities are straightforward.
However, the complexity of the accounting process, changing requirements, the time it takes, and the penalties for getting it wrong, usually mean it’s advantageous to hire professional accounting support.
How long does it take to submit limited company accounts?
The time it takes to submit limited company accounts will depend on a range of factors, such as the quality of your record keeping, the size of your company, the complexity of your financial transactions, and the efficiency of any accounting processes.
For smaller companies, it may take anywhere from a few days to a couple of weeks.
For larger companies, the preparation time can take several weeks to a few months.
What happens if a limited company does not file accounts?
Failure to file annual accounts can have serious consequences for a limited company.
These can range from financial penalties for late filing to potential legal action. In some cases, consistent failure to file accounts can lead to the prosecution of the company’s directors.
In cases of persistent failure to file accounts, Companies House strike the company off the register resulting in its dissolution. This means the company then ceases to exist as a legal entity and any assets become the property of the Crown.
Late filing can have an impact on a company’s credit rating and creditors may see it as a sign of financial instability. In some cases, this may prompt creditors to try and recover outstanding debt.
Working with a professional limited company accounting service can ensure that accurate accounts are always filed in full and on time.
Bespoke accounting services for limited companies from DAAFL
At DAAFL, we understand the accounting requirements for limited companies.
Our expert team provides a range of services for limited companies, ensuring that they meet their statutory obligations, reduce their liabilities, and plan effectively for the future.
In short, we can take the hassle out of end of year accounts.
Our bespoke accounting for limited companies shares with you the guidance and support your business needs to achieve its objectives.
Our team of financial experts provide a range of services for limited companies, ensuring that they meet their statutory obligations, reduce their liabilities, and optimise their financial record keeping.
Contact us to find out more about how we can help.