Annual accounts: What you need to know

Annual accounts: What you need to know

If you’re a company director, you have a responsibility to file your company’s annual accounts. It might sound daunting at first, but all limited companies in Britain are going through the same process.

The purpose of annual accounts is to report the financial activity of your company and to work out how much Corporation Tax is due to HMRC.

It’s the legal responsible of directors to file the accounts on time, and most businesses use an accountant to do it on their behalf.

When are annual accounts due?

Unlike self-assessment accounts – due on 31 January each year – company accounts vary depending on when the company’s formation year.

Your initial Accounting Reference Date (ARD) – which governs when your company’s annual accounts are due – is the last day of the month in which your company was incorporated.

So, if you launched on 13 July, 2014, your filing deadline is set to 31 July, unless you request a change. Your financial year will end on 31 July and you will have nine months from this date to submit your annual accounts to Companies House.

For new companies, first accounts must be submitted no later than 21 months following the date of incorporation.

What do I need to provide?

Typically, companies must produce a profit and loss (P&L) account, a balance sheet signed by directors, any associated notes and a signed director’s report.

Your accountant is only required to send an abbreviated version of these accounts to Companies House, so only limited financial information appears in the public records.

Can I change the dates?

There are often very legitimate reasons why you or your accountant might want to change your deadline date. You just need to inform Companies House by filling in and submitting FORM AA01.

You can shorten your company’s Accounting Referencing Date (ARD) as often as you like – but you can only extend your filing deadline once every five years. Also, you cannot extend an accounting period so that it lasts more than 18 months.

Dormant companies and annual accounts

Dormant companies only need to prepare dormant accounts. These are made up of a balance sheet and notes about the accounts. You do not need to send anything to HMRC. However, you must tell HMRC that the company is dormant for Corporation Tax purposes.

Should I use an accountant?

As a director, you are legally responsible in a number of areas. This includes:

  • Keeping accurate records
  • Filing true and fair annual accounts at Companies House and HMRC
  • Working out the tax liabilities of your business
  • Filing Company Tax Returns
  • Preparing your own Self-Assessment tax returns.

You should weigh up the amount of time you will have to commit if you do the accounting yourself. Paying an accountant is likely to be more cost efficient than dedicating many hours of your own valuable time.

If you need to file annual accounts but are struggling with time, contact us today for more details.