As a Director of a limited company within the United Kingdom, you are obligated under law to submit company accounts to Companies House.
This requirement holds even if your company is dormant or isn’t presently conducting business.
The process is simple, yet pivotal, and getting it right will help you avoid potential fines or even legal repercussions.
This article aims to delve into the specifics of filing your accounts to Companies House, touching on the different types of accounts, critical deadlines, and the steps involved.
Understanding Company Accounts
Company accounts, also known as ‘financial accounts’ and ‘annual accounts’, give a financial performance snapshot of your company over the previous year.
Companies House and HM Revenue and Customs (HMRC) use these accounts to evaluate your company’s financial standing.
Different Types of Company Accounts
Companies House recognises three main types of accounts:
- Small company accounts
- Medium-sized company accounts
- Large company accounts
The classification of your company – whether it’s small, medium-sized, or large – depends on your employee count, turnover, and balance sheet total. The thresholds for each category are outlined below:
Small company accounts
Fewer than 50 employees, a turnover of less than £10.2 million, and a balance sheet total of less than £5.1 million.
Medium-sized company accounts
Fewer than 250 employees, a turnover of less than £36 million, and a balance sheet total of less than £18 million.
Large company accounts
More than 250 employees, a turnover of more than £36 million, and a balance sheet total of more than £18 million.
Most UK-based companies qualify as small and consequently submit small company accounts.
Filing Deadlines for Company Accounts
UK limited companies are required to prepare and submit their first financial report to Companies House 21 months after registration.
Subsequent reports are due 9 months after the end of your company’s financial year.
Compliance with these deadlines is non-negotiable, and a failure to meet them could lead to penalties or legal action.
Content of an Annual Account
A complete set of annual accounts should include:
Balance sheet
This document captures your company’s financial state at a given time, detailing assets, liabilities, and equity.
It aids in assessing your company’s capacity to meet its financial commitments.
Profit and loss account
This account gives an overview of your company’s income and expenditure over the financial year, determining your net profit or loss.
Notes
Additional information regarding your company’s financial performance, such as the details of significant transactions or events that occurred during the financial year, is provided in the notes to the accounts.
Director’s report
This report gives an overview of your company’s performance and highlights potential risks or uncertainties that may impact future performance.
All medium and large companies are obligated to provide this report. However, it’s optional for small companies.
Auditor’s report (if applicable)
Companies that require an audit must include an auditor’s report in their accounts.
This report independently assesses your financial statements, assuring stakeholders of their accuracy and completeness.
It is crucial that your accounts align with relevant accounting standards, such as the International Financial Reporting Standards (IFRS) or UK Generally Accepted Accounting Practice (UK GAAP).
For guidance on which standards your company should adhere to, consult an accountant or financial advisor.
How to Submit Your Accounts to Companies House
Submitting your accounts to Companies House is a straightforward process, and you have three options:
- File online
- File by post
- File using third-party software
Let’s delve into each option in more detail.
Filing Online
Filing online is the quickest and most efficient way to submit your accounts.
To do so, you’ll need to register for a Companies House WebFiling account. After registration, log in to your account and follow the on-screen instructions to submit your annual accounts.
Filing by Post
If you opt to file by post, you’ll need to complete form AA and mail it to Companies House.
Keep in mind that this method is time-consuming, and you’ll need to account for potential delays in the post to avoid late filing penalties.
Filing Using Third-Party Software
Several third-party software solutions are compatible with Companies House systems and allow you to submit your accounts electronically.
Consider this option if you’re looking for additional functionality, such as integration with your existing accounting software.
Consequences of Late Filing
Failure to meet the filing deadline results in automatic penalties, which increase depending on the extent of the delay.
Penalties start at £150 for a delay of up to one month and can reach up to £1,500 for a delay of over six months.
These penalties apply to each account you fail to submit on time, so the total amount could be substantial for companies with multiple accounts.
Besides monetary penalties, late filing can also damage your company’s reputation and impact its credit rating.
Appealing Late Filing Penalties
Companies House only accepts appeals against late filing penalties under exceptional circumstances.
These circumstances could include unexpected ill health or a natural disaster.
If you wish to appeal, you’ll need to provide compelling evidence to support your case.
Additional Obligations When Filing Your Accounts
Beyond Companies House, you’re also obliged to send a copy of your annual accounts to:
- Every shareholder in your company
- Any person who is entitled to attend general company meetings
- HM Revenue and Customs (HMRC) as part of your Company Tax Return
Special Cases: Dormant and Micro-Entity Companies
Dormant companies – those that haven’t had any significant accounting transactions during the financial year – still need to submit accounts.
However, they can send dormant company accounts, which are simpler than regular accounts.
Micro-entities, on the other hand, are very small companies.
To qualify, a company must meet two out of the following three criteria: turnover of £632,000 or less, £316,000 or less on the balance sheet, or 10 employees or less.
These companies can prepare simpler accounts and have fewer disclosures.
Summary
Filing your company accounts with Companies House is a vital part of running a business in the UK.
While the process may seem complex at first glance, understanding each step ensures a smoother filing process.
Remember, you don’t have to go it alone – professionals such as accountants and financial advisors can provide valuable assistance.
Above all, always strive to comply with filing deadlines to avoid penalties and maintain your company’s reputation.
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