What are they?
Whether you are SAGA group in Folkestone with thousands of employees or a micro-business in Maidstone with just one, all companies registered in the UK must prepare annual accounts for Companies House and HMRC every year. Also known as ‘statutory accounts’, they are designed to show the financial health of your company. They are made up of at least these three documents:
- a balance sheet, showing the difference between everything that the company owes and is owed to the company
- a profit and loss account, showing the difference between how much the company has sold and it’s running costs, giving you either a profit or a loss
- notes about the accounts, showing other details such as accounting policies, employee benefit plans and leases taken out by the company
Year-end tax return
All active companies (and ones that became dormant within the financial year) must file a year-end tax return. The tax return contains the income figures from your profit and loss account minus your tax allowances and expenses. The tax return (or CT600) includes a tax calculation that shows how your profits have been adjusted to figure out your taxable profits.
Are there any exemptions?
Micro-entities (i.e. over 90% of Kent businesses) and small companies can send simpler accounts to Companies House and the accounts do not need to be audited. However, statutory accounts still be sent to your shareholders and HMRC as part of your tax return.
When do I file my accounts and tax return?
When you first set up a limited company you are automatically assigned a date for the company’s end of financial year, this will be the last day in the month that you incorporated your company. Your first set of accounts will be due 21 months after that date and from then on 9 months after your financial year end. The accounting period for your tax return can be different to your financial year but is usually the same. Here’s a summary of what’s due, when:
|First-year accounts||21 months after you registered with Companies House|
|Annual accounts||9 months after your financial year end|
|Company Tax Return||12 months after your accounting period ends|
|Pay Corporation Tax or tell HMRC none is owed||9 months and 1 day after your ‘accounting period’ for Corporation Tax ends|
Should I outsource my accounts to an accountant?
AK Tax has been supporting successful small businesses throughout Kent and nationwide for more than 10 years. We recommend that all of our clients have a good feel for their company finances, what the business is earning and what is being paid out. However, it’s hard to keep on keep top of all financial opportunities and risks without specialist accountancy knowledge, especially as a business grows and gets more sophisticated. Below we discuss some of the reasons why you may want to outsource your annual accounts and year-end tax return to AK Tax:
You’ll probably pay less tax
No one likes paying more tax than they need to. The main benefit of using an accountant to produce your statutory accounts and year-end tax return is that you are likely to pay less. It’s an accountant’s job to know about all of the latest financial rules and regulations. They are able to identify expenses such as office equipment and employee-related benefits such as childcare vouchers that lower overall costs and therefore the amount of tax you pay. They are also less likely to make costly mistakes due to errors and will help you make sure that everything is filed on time – filing late accounts can cost £1,500 alone.
You’ll have more time to focus on what you do best
Preparing accounts takes time, especially for people who only do it only once a year. Think about what you could do with the time instead. Extra time spent on your business will probably have a far greater impact because that’s where your specialist knowledge lies. You could be out networking with potential new customers or quoting for additional work.
You’ll prevent fraud
UK businesses lose around £40m a year from fraud by their own employees alone. A qualified accountant will help you put checks and balances in place that help you to prevent fraud without making your staff feel as though you don’t trust them.
You’ll have access to the latest accounting software
There are a number of excellent accounting software packages designed to manage your company finances and help your business grow. However, it’s one thing to have access to software, it’s another thing to have a specialist who understands how to use it in a way that really benefits your business. Many accountants will have the expertise to support you and make sure that you take full advantage of accounting software.
Added business advice
Running a business is hard work and no one has all of the specialist knowledge that is required to build a successful company. Accountants have experience in dealing with financial and non-financial issues including how to access finance or whether to diversify your client base. If you have an issue with your business and need advice, the chances are that your accountant has experienced something similar with a business just like yours.
Due to our specialist knowledge of the latest cloud accounting software, we work with clients throughout the UK, which means that no matter where you are located you can take advantage of our competitive prices. Get in touch by calling 01634 540040 or by emailing firstname.lastname@example.org.