Follow us on Facebook Follow us on Twitter LinkedIn 01772 611432
Accountants in Preston

Small Companies

This is a broad guide - not legal advice - always check with Companies House for up to date regulations.

"Small Companies" are exempt from audit and can file much simpler Accounts at Companies House.

Better still - Accounts can be filed online - by yourself.

So do you still need an Accountant? Legally, no - "Small Companies" can file their own Accounts - but they still need to comply with the Companies Acts - which aren't exactly bedtime reading.

The format and layout of the Accounts is done for you by the online system, but you still need to get the figures right before you start. For example, are you able to properly account for Accruals & Prepayments, Fixed Assets and Corporation Tax?

Full Statutory Accounts, plus some extra information, must be filed with HMRC.

So realistically, most businesses will need the help of an Accountant at some stage, but maybe in a different way than previously. You will also need help with Corporation Tax - doing the calculation online is relatively straightforward - but the online system will not give you the best tax advice.

So what is a "Small Company"?

This is the simple version for straightforward owner businesses - not groups of companies or PLCs.

From 1994 certain small companies are exempt from having their annual accounts audited.

They are also allowed to:

  • File abbreviated accounts at Companies House

  • Reduced directors report and note disclosures

  • Be exempt from FRS 1 for preparing a cash flow statement

Small company definition:

  • Turnover not more than 5.6m

  • Gross assets not more than 2.8m

  • Employees not more than 50

  • The size criteria must be met the current and the previous year

A company may NOT file abbreviated accounts if it is or, at any time in the relevant year, was:

  • A public company including a private PLC

  • A company carrying on an insurance market activity

  • A person with permission to carry on a regulated activity under Part 4 of the Financial Services and Markets Act 2000

All the other conditions that have applied under previous thresholds, such as the rights of 10% of shareholders to require an audit to be carried out, and disclosures remain the same.

This is a broad guide - not legal advice - always check with Companies House for up to date regulations.