Annual accounts provide a comprehensive summary of a company’s financial position, health, and activities over a specific period.
Typically, this will be a fiscal year, providing an easy-to-understand guide to the company’s performance.
Limited company annual accounts provide a detailed overview of the company’s income, expenses, assets, liabilities, and any equity.
The annual accounts UK companies are required to produce are crucial for a range of stakeholders, such as shareholders, creditors, regulatory bodies, and HM Revenue & Customs (HMRC).
They give a complete picture of a company’s financial health while ensuring compliance with legal requirements.
What is the purpose of annual accounts?
Company annual accounts have a number of key purposes.
These include:
Compliance
In the UK, annual accounts preparation is a key requirement for limited companies in order to comply with statutory regulations.
Finance performance assessment
Annual accounts provide a comprehensive overview of the company’s financial performance during the financial year. It gives stakeholders key information required to determine the profitability and operational performance of the business.
Financial position analysis
The balance sheet included in the annual accounts details the company’s assets, liabilities, and shareholder equity. This provides insights into its financial stability and solvency going forward.
Stakeholder information
Annual accounts provide information to shareholders, creditors, investors, and other stakeholders, helping them to make informed decisions.
Strategic planning
The information included in limited company annual accounts provides detailed information that can support strategic decision-making by company management.
Taxation
Finally, annual accounts are essential for taxation purposes, forming the basis for calculating the company’s tax liabilities.
Accurate financial statements ensure that the correct amount of tax is paid.
When should annual accounts be filed?
The filing deadlines for limited companies depend on whether the company is private or public, and for how long it has been trading.
Private limited companies must file their annual accounts with Companies House within nine months of the end of their accounting period.
This means that if the accounting period ends on December 31, annual accounts must be filed by September 30 of the following year.
Public limited companies have a shorter deadline and must file their annual accounts within six months of the end of their accounting period.
Companies that have recently become limited must file accounts within 21 months of the date of incorporation or nine months after the end of the accounting period, whichever is longer.
Failure to meet these deadlines can incur financial penalties, so it’s essential to understand the relevant dates for your business.
How long should you keep annual accounts?
UK limited companies are generally required to keep accounting records for at least six years from the end of the company financial year that they relate to.
This period can be longer if the record shows a transaction that covers more than one accounting period, or if the company has purchased equipment or machinery that it expects to last for more than six years.
If a company tax return has been submitted late, or if HMRC has started a tax enquiry into the return, then any relevant accounts should be kept for longer.
Keeping records ensures that any relevant information for audits, tax assessments, and legal disputes can be provided if necessary.
Can I post my annual accounts to Companies House?
Annual accounts can be posted to Companies House.
If you choose to do so, it’s important to ensure your submission is correctly addressed and sufficient time has been allowed for delivery.
The appropriate forms can be downloaded from the Companies House website. It’s advisable to send documents via recorded delivery to track the submission.
Filing annual accounts online via the Companies House web-filing service is the most efficient and secure method. This reduces the risk of errors and provides instant confirmation of receipt.
If your accounts are being prepared by an accountant, they will usually file accounts on your behalf ensuring their accuracy and compliance with regulations.
Do annual accounts have to be audited?
Whether or not annual accounts need to be audited depends on the size and nature of the company.
Smaller companies with an annual turnover not exceeding £10.2 million, with assets not exceeding £5.1 million, and with fewer than 50 employees, are not required to have their annual accounts audited.
Medium and large companies must have their annual accounts audited. This provides an independent assessment of the accuracy of the financial statements.
Even if a company is not required by law to produce an audit, it may choose to do so voluntarily to enhance its financial credibility with investors and other stakeholders.
How to make annual accounts?
Making annual accounts requires good record-keeping, careful planning and attention to detail.
It involves collecting and recording financial data, reconciling accounts, and preparing key financial statements. The process is essential for assessing the financial health of a company while informing regulatory compliance.
The process can be complex and time-consuming, particularly for people without accounting expertise.
Professional help from accountancy experts will usually be invaluable, helping to ensure accuracy, identify tax-saving opportunities, and prevent costly errors.
They can also provide advice and strategic financial insights, allowing business owners to focus on growth and operations with confidence that their accounting responsibilities are in expert hands.
Bespoke annual account services from DAAFL
At DAAFL, our team of financial experts provides a range of services for limited companies, ensuring that they meet their statutory obligations, reduce their liabilities, and optimise their financial record keeping.
We produce limited company annual accounts for our clients, as well as providing expert advice and guidance to support your business objectives.
Our bespoke services meet your unique needs while giving you more time for other business activities.
Contact us to find out more about how we can help.