Year End Accounts
Fortuous can assist you whether you want the most basic form of profit and loss account and balance sheet through to highly bespoke management accounts, financial projection or other forms of measuring, monitoring and reporting to keep your business healthy and well managed.
SME business clients generally have the starting point of asking what accounts do they have to prepare and have?
The answer is all companies, with the exception of dormant and ‘small’ companies, must prepare full annual accounts every year for Companies House and HMRC.
Regardless of the statutory compliance requirements for preparing and filing company accounts, there are obvious reasons why directors and shareholders should want to have accurate and up-to-date accounts and information.
The vast majority of UK companies are small businesses under the HMRC definition, which is to satisfy 2 out of 3 of:
• A turnover of £10.2 million or less;
• £5.1 million or less on its balance sheet;
• 50 employees or less
Small companies under the above definition now only need to annually file a balance sheet signed by a director and supporting notes. There is a further sub-category of micro business which are smaller but the requirements are broadly similar.
What are statutory accounts?
Statutory accounts are an important part of running your business so that your shareholders see how your company is performing and to keep your records updated with Companies House.
More commonly referred to as annual accounts, there are a number of important figures you must include and if you know what to look out for you could even check up on how your competitors are doing.
A company accounts must include a balance sheet, notes, a profit and loss account, cashflow statement and a directors’ report.
Your first accounts need to be filed 21 months after registration with Companies House.
After that you need to file nine months after your company’s financial year ends.
If you file late you could be fined up to £1,500 depending on how long the delay is.
Understanding Company Accounts
It’s one thing getting your accounts prepared by an accountant or bookkeeper and another thing understanding the figures put together. Businesses that are well run, stable and successful also tend to keep a close watch on the financials and this doesn’t just mean how much money is coming in, although that’s always welcome if healthy.
Aside from a basic profit and loss summary, company accounts can provide many other measures of success, efficiency and/or inefficiency or warning signs of trouble ahead. This is why understanding your company accounts is so important.
Our approach is to offer advice and training to all our clients in understanding financial concepts and reports and the software now generally used to record information.
What about the profit & loss account?
Even though the statutory obligation for small companies is balance sheet only, you really can’t prepare a balance sheet without also having a profit and loss account first.
A Profit and Loss account is a basic trading summary – how much has been sold and how much has been spent running the company.
Adjustments from profit and loss to final company accounts
The profit and loss statement will get adjusted to reflect other financial and/or tax related aspects which involves a Cash Flow statement and Balance Sheet.
Draft year end accounts for approval
Once the data is collected, our Accounting team is normally able to produce a set of draft statutory accounts for your approval within a week, including calculating your corporation tax liability. By tackling the accounts process shortly after the financial year end and working through the corporation tax calculation in the same time frame, this allows you to budget for and build the payment into your cash flow model.