Annual Accounts are financial reports that Private Ltd and Public companies must prepare at the end of a financial year. Filing this account is a legal requirement, so ensure that you file on time and prepare the necessary information required. Below are 6 tips that will help you prepare and submit your Annual Accounts.
START PREPARING YOUR ANNUAL ACCOUNTS EARLY
Submitting Annual Accounts can be very challenging as there is usually a lot to prepare in your reports. At the end of your company’s financial year, you must submit all your Annual Accounts to Companies House and HMRC. But, your initial Annual Accounts must be filed 21 months after registering with Companies House and then every 9 months after your company’s financial year ends.
WHAT TO INCLUDE
If you are a Private limited company, you must include; a balance sheet, profit and loss account, notes about your accounts and a director’s report. However, you don’t have to produce a director’s reports if you are a micro-entity. You are considered a micro-entity if your company has any 2 of the following;
- a turnover of £632,000or less
- £316,000or less on your balance sheet
- 10 employees or less
Moreover, you may also have to include an auditor’s report – depending on the size of your company. Also, your company may qualify for an audit exemption depending on which financial year you started business.
For financial years that begin on or after 1 January 2016. Your company must have at least 2 of the following to qualify for an audit exemption.
- An annual turnover of no more than £10.2 million
- Assets worth no more than £5.1 million
- 50 or fewer employees on average
USING A SOFTWARE OR HIRING AN ACCOUNTANT
There is a range of Accounting Software you can use to help you prepare your Annual Accounts. This can be very useful as the software will assist you with all the information that is required to prepare your Annual Accounts.
Although, many companies hire an Accountant to deal with all their finances as they are experts at it. Hiring a good Account will be much more time efficient and less stressful for your company as we will take care of all your finances so your business can focus on what really matters.
You can file your Annual Accounts online, making the process much more time efficient.
Companies House has checks built in to make sure all required information is provided before you submit you’re Annual Accounts. Once your Accounts have been received, you will receive an email. If your Accounts get accepted you will then receive another email stating this.
It is important to submit your Annual Accounts early so that you can make the necessary adjustments if your submission gets rejected. We advise you to always submit early so you avoid paying a fine for late submission. If you file less than a month late, you will receive a £150 penalty and £1,500 for over 6 months late. Moreover, if you submit your Accounts late for 2 years in a row, your fine will be doubled.
If your company is currently not trading or performing any business activity, HMRC will regard you as dormant. In this case, you only need to put together dormant Accounts for Companies House such as a balance sheet and notes about the accounts. You will not need to produce an audit report.
Kala Atkinson is a family owned accountancy practice in East London. We’re experts in small and medium sized businesses and self-employed individuals.
If you need help preparing your Annual Accounts, we are here to help. For further information on how we can help you, get in touch today.