When submitting your financial details to Companies House, it’s possible you may want to submit ‘abridged accounts’.
These accounts reveal fewer disclosures – meaning you can withhold potentially sensitive and confidential information. They also exclude a breakdown of balance sheet items.
Not everyone wants all parts of their financial incomings and outgoings plastered all over the Internet. They don’t want company profits being easily accessed by family, friends, competitors, staff or clients.
It’s risky business to let everyone know your profits, for a variety of obvious reasons, and most business owners prefer to file the least amount of legally required information with Companies House.
With accounts easily accessible online, if you don’t want your accounts to show sensitive information, you should definitely opt for the abridged version.
Why abridged accounts?
If you prepare abridged accounts, you don’t need to include the breakdown of fixed assets, debtors and creditors, as well as corporation tax figures. This makes estimating net profit impossible.
Also, abridged accounts can be filleted, meaning that the profit and loss can be removed from the Companies House version. Therefore, the only items online will be a balance sheet with reduced disclosures and no profit and loss pages.
By law, shareholders must agree to preparing abridged accounts. It’s rarely a problem when a company has a single director, but where lots of shareholders exist and perhaps some live abroad, this can be an issue.
You don’t have to file abridged accounts. You have other options:
- Full accounts – shows all disclosures including a breakdown of balance sheet items.
- Filleted accounts – both versions can be filleted. This is where the Companies House filed version has the profit and loss account information removed.
What should I do?
You’re perhaps wondering which version of accounts you should file. Typically, when given the option, most businesses opt for abridged accounts. But it’s not wrong if you want to go with full accounts.
If your accountant hasn’t explained the difference, you might want to look at making a move elsewhere. If your full accounts are displayed publicly without your knowledge, that’s certainly cause for concern.
Ultimately, you have to do what’s right for you at this time in your business venture. It’s important you understand the full benefit of abridged accounts before making this big decision.
If you have a business in the North East and want to speak to an accountant, contact us today. We are based in Newcastle but deal with businesses across the region and the UK.