How to file business accounts

As a small business owner, one of the most crucial tasks for your financial year end is preparing and filing your business accounts on time. It’s legally required of all limited private companies and there could be penalties if you file them incorrectly or late. Here, we run through what’s included in business accounts, the deadlines and how to file them.

What are business accounts?

Your business accounts include your annual accounts (otherwise known as statutory accounts), as well as your business tax return. Your statutory accounts are prepared from your business’s financial records at the end of your financial year. They’re also sent to your shareholders, people who can go to your business’s general meetings, as well as Companies House and HMRC, as part of your tax return.

What are the deadlines for filing business accounts?

If you’re a private limited company, you’ll need to file your accounts with Companies House, and these are made publicly available. The time for delivering them is 9 months from your accounting reference date, otherwise known as ARD. ARD refers to the end of your financial year.

Your first ARD takes place on the last day of the month that your business was first incorporated. This means that if you incorporated on 3rd March, then your first ARD would be 31st March of the following year, and any subsequent filings would be on 31st March every year.

The deadlines for filing accounts are as follows:

Filing your first accounts with Companies House	21 months after you register
File annual accounts	9 months after the end of your business’s financial year
Pay Corporation Tax (or tell HMRC you don’t owe any)	9 months and 1 day after the end of your business’s accounting period for corporation tax
File business tax return	12 months after your accounting period for Corporation Tax ends

Your accounting period for Corporation Tax is the time covered by your business tax return. It’s typically the same 12 months as the financial year covered by your annual accounts.

Filing your accounts late can lead to penalties of £150 for filing under a month late, and up to £1,500 for filing more than six months late.

How to prepare your small business accounts

What needs to be included in my business accounts?

To prepare your business accounts, you’ll need to include:

• A balance sheet — this needs to show the value of everything your company owns, including what you owe and what’s owed to you
• A profit and loss statement — this shows your company’s sales, any running costs and profits or losses that you’ve made over the financial year
• Any further notes about your accounts
• A director’s report (unless your business classes as a micro-entity — more on that below)

These accounts will need to comply with accounting standards, including either International Financial Reporting Standards or New UK Generally Accepted Accounting Practice. Your balance sheet must also have the name of a director printed on it and must be signed by a director.

Businesses may also need to provide an auditor’s report in addition, however this depends on the size of your business.

What is a small company or micro-entity?

Businesses that are classed as a small company or a micro-entity might be able to instead send simpler, or ‘abridged’, accounts to Companies House. To be classed as either, you need to have two of the following:

Small company	Micro-entity
A turnover of £10.2 million or less	A turnover of £632,000 or less
£5.1 million or less on your balance sheet	£316,000 or less on your balance sheet
50 employees or fewer	10 employees or fewer

Abridged accounts can only be sent if all your business members agree to it. They must contain a simpler balance sheet, along with any notes, and you’re able to choose to include a simpler profit and loss statement and a copy of your director’s report. As with all balance sheets, it must contain the name of a director printed on it and must be signed by a director. The benefit of abridged accounts is that less information about your business will be available on Companies House.

If your business is classed as small, or a micro-entity, you can also make use of an exemption so that your business accounts don’t need to be audited, and you can choose whether to send a copy of the director’s report and profit and loss statement to Companies House. In addition, micro-entities are also able to prepare simpler accounts that meet statutory requirements, and can choose to only send a balance sheet with less information to Companies House.

How do I format my business accounts?

For help formatting your business accounts correctly, you can either seek out an accountant or use accounting software. Your accounting software will typically help you format your annual accounts correctly and ensure you provide all necessary information before you submit them.

You can check the required format and content on the Government’s legislation website. All your accounts must comply with the UK’s accounting standards.

Can I prepare my own business accounts?

If you so choose, you can manage your own accounting for your business, including both preparing and filing your accounts. However, because limited companies can be more complex than they are for sole traders, it can be difficult to manage all of it yourself. If you get it wrong, there can be penalties, so it might be worth looking into hiring an accountant to help.

Because accountants specialise in dealing with business finance, they can help take a lot of the stress out of filing accounts with HMRC and Companies House. Their job is to make sure your accounts meet all the legal requirements and avoid any penalties, so your accounts will always meet accounting standards. However, remember that even in using an accountant, your company directors are the ones who are legally responsible for making sure your accounts are accurate.

How to file your business accounts

If you’re looking to make managing your accounts as smooth as possible, there are plenty of accounting software options you can use to prepare and file your business accounts. To learn more about the options available to you, check out our article on the best software for Making Tax Digital that outlines all the accounting software that’s compatible with HMRC’s digital tax initiative.

In addition, if you count as a small company or micro-entity, you might be able to make use of the Government’s Company Accounts and Tax Online (CATO) service. This will allow you to submit your accounts data to Companies House and HMRC at once, to make the process even more efficient.

If you prefer the paper method, you also have the option to send in paper accounts to Companies House in the post, however HMRC warns that paper accounts can take much longer to process.

Your company tax return needs to be filed online. Paper forms can only be used if you’ve got a reasonable excuse for not filing online, or if you choose to file in Welsh.

11/02/22: While we want to help as much as we can, the information found here is provided solely for informational purposes and should not be considered financial or legal advice. To the extent permitted by law, Funding Circle does not accept any liability for any loss or damage which may arise directly or indirectly from the use of, or reliance on, the information contained here. If you have any questions, please speak to your professional adviser or seek independent legal advice.