A statutory account is a breakdown of a company’s annual financial history, that has to be submitted to both HMRC and Companies House. For example, businesses that trade as limited companies (or limited liability partnerships), must be able to show their annual statutory accounts. Those that are self-employed will need to be able to calculate and evidence their profits when submitting the annual tax return. Lots of companies make the decision to use accountants such as Nordens to deal with their filings. However, the director or sole trader of the business retains full responsibility for ensuring that the correct information is submitted on time.
Each financial year, you will need to submit a set of accounts. Ordinarily, these correlate with the twelve months that lead up to the business’s preceding accounting reference date. The accounts should contain the following:
• Notes to the accounts
• Directors’ report signed by a secretary or director
• Balance sheet signed by a director who represents the board
• Profit and loss account
• Auditors’ report (unless the business is exempt)
When the directors sign the accounts off and a copy of them is sent to the company members, they should be submitted to Companies House. Current companies need to file their accounts inside 9 months of every accounting reference date. New companies need to file their initial accounts inside 21 months of the date of incorporation. If you don’t meet the deadline, Companies House can take action to close your business down.
Here at Nordens, our world-class chartered accountants are available to make the filing process easier for you. One quick call with us can determine the exact information your company needs to hand over to HMRC and Companies House. Not only can we help you gather all the important information you so urgently need, we can also talk you through the actual filing process and advise you on what to do if you have made an unfortunate mistake. We also help prevent clients from being struck off the register if they have filed their accounts late! Working with us gives you access to an extensive range of top advice that can improve the way you file your accounts.
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Here at Nordens, we understand that you want to know more about Statutory Accounts. To keep you well-informed, here’s a list of our most frequently asked questions:
A balance sheet shows the value of all that a business owns, but it also shows what the business owes as well as what is due to be paid. The crucial figures to monitor are the ones showing how much money exists within the business. Also important, are trade amounts payable to the company by its clients (trade debtors), alongside the amount the business must repay to its own suppliers (trade creditors). Balance sheets will also highlight any debts, be they short or long term, and in addition the cost or position of any ongoing loans. These debts will be divided amongst existing creditors, with finances allocated within 12 months and long term borrowings too. If a business has multiple loans to pay back it may not have a lot of extra cash, although this is dependent on the length of time they have to pay the loan back.
Figures by themselves will often only tell one side of the story. A lot of the numbers will have notes associated with them near the end of the account files. These clarify in more detail who is owed money and also where there might be one-off payments made (fines, for example). This offers more perspective to business accounts. For instance, they could highlight just where finances are owed to a company, taxman or bank.
The Directors’ report summarises the forecasts of larger limited companies and any dividends that should be remunerated to its shareholders. Larger businesses use it as a chance to look back over the last 12 months, analyse their economic performance, and look forward to the subsequent year. The report displays the director’s names throughout the year of reporting, as well as the actions of the company and any occasions that could have affected the balance sheet.
The total cash profit that a business makes is not always the surest indication of its condition. This is because there are frequently other expenses to pay for. The cash flow statement displays both the money that is going into a company, and money that is going out. It will normally contain money from working activities, tax charges, dividends paid, capital spending and returns on investment. The cash flow statement is an effective method of observing how prudent a company is financially, because it demonstrates how well the money is handled. Nonetheless, you would have to examine both the cash flow statement and the balance sheet together, to get a truer picture of the company’s financial incomings and outgoings.
Your initial statutory accounts should be submitted 21 months after registering with Companies House. From that point, you will have to file 9 months after the financial year of your business. If your submission is late, then you could possibly face a fine of up to £1,500 – dependant on the length of the delay. If you run a small business, then you won’t need to file a complete set of accounts to Companies House. Rather, you can file a condensed version, which summarises the key points and typically will exclude the profit and loss accounts. The full version will need to be sent to both shareholders and HMRC, alongside your company tax return.
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