When you’re filing small company accounts with Companies House, there are a few of the various choices: dormant company accounts, comprehensive accounts, micro-entity accounts, and abridged accounts. Abridged company reports might be the ideal choice for tiny organizations or start-ups with low turnover rates.
Abridged accounts explained
At the end of the year, all firms in the United Kingdom are required by law to submit statutory accounts. Many small companies previously opted to file “abbreviated accounts” rather than complete ones. Abbreviated financial statements are shorter than comprehensive financial statements and only require a basic balance sheet that shows assets and liabilities.
Abbreviated accounts were invalidated under UK company law as of January 1, 2016. That does not imply, however, that all businesses must give all their financial information when they file their reports with Companies House. There’s now a choice to submit an “abridged account.”
What exactly are abridged accounts, and why should I care about them? Abridged accounts are a simplified version of your company’s annual reports. They require far less information than full accounts, making them an excellent choice for firms looking to limit the amount of financial data made available about their business.
What information should be included in abridged accounts?
Abridged accounts are less informative than full ones since they don’t detail the breakdown of assets on your balance sheet. So, what does the procedure entail? Most importantly, a more basic balance sheet, as well as any necessary notes. A director’s signature is required on the balance sheet. In addition, you may want to include a simplified profit
Accounts that have been abridged do not need to list out your business’s fixed assets, debtors, or creditors. Because there is no breakdown of creditors in the report, you won’t have to disclose your corporation tax amount (which means that rivals can’t calculate your net gain). You may also choose to “fillet” your accounts.
Should my company file abridged accounts with HMRC?
There are certain restrictions governing which firms may submit abridged accounts with Companies House, and which can’t. To put it another way, your firm must fulfil at least two of the following five conditions:
- You’ve only earned a little over £10 million in total.
- Your total assets do not exceed £5.1 million.
- The average number of workers on your team does not exceed 50.
Furthermore, you may only provide abridged accounts if all of your business members agree. When you submit your financial statements to Companies House, you must include a declaration on the balance sheet that the members have agreed to abridge the accounts for this accounting period.
What about micro-entity accounts?
There’s also a choice for businesses with smaller turnovers, referred to as micro-entity accounts. Essentially, very few firms (micro-entities) may only require a balance sheet and profit and loss account with even less information than an abridged account does. Micro-entity accounts do not need to be prepared. To submit micro-entity accounts
- Your turnover hasn’t gone above £632,000 in any of the last three years.
- If your total balance sheet is less than £316,000, you’re in the clear.
- Your company does not have more than 10 employees.
We can help
Venn Accounts are approachable, personal, and professional. They are chartered accountants who prioritise building relationships with their clients above all else. They help you better understand your numbers, while helping your business grow financially – no matter how big or small your company.