What this blog is about, in a nutshell:
I’ll be kicking off this blog by defining exactly what a small business is (because, let’s face it, it’s pretty ambiguous!) once we work out exactly how you define a small business, we can start looking at the kind of accounts they’ll / you’ll need to submit to make sure you don’t get any of those delightful brown envelopes from HM Rev with a nasty surprise inside.
Ready? Let’s do this!
Micro-entity
Businesses that meet two out of three of the following criteria qualify as a micro-entity: an annual turnover of £632,000 or less, a balance sheet total of £316,000 or less and 10 employees or fewer.
If your business in the ‘micro-entity’ category, you can file micro-entity accounts. These include a balance sheet with a small number of notes, and you will also have the option to omit the profit and loss as well as the director’s report. This is called a filleted account.
However, if you decide to file filleted accounts, they need to contain a statement which highlights that the accounts have been delivered in accordance with the small companies regime and the balance sheet must clearly disclose that the company has chosen not to include its profit and loss, or a director’s report.
If your business doesn’t qualify for this category you may find it in the following:
Small Company
If your business is in this category, you can fill abridged accounts, which will act as both the public accounts and the shareholder accounts for small businesses. Also, at the time of preparation you or your accountant needs to obtain permission from the shareholders to file abridged accounts.
An abridged balance sheet includes line items preceded by letters (fixed assets) and Roman numerals (debtors), not those preceded by Arabic numbers (other receivables). The abridged profit and loss account combines certain items under one heading – ‘gross profit and loss’. As an example, an abridged profit and loss account may include turnover, other operating income, cost of sales and gross profit or loss. You can choose to abridge both the balance sheet and profit and loss account, or just one of them.
If you find your business in these two categories, there is good and bad news. The good news is that you are on the right website (yay!) but the not so good news, is that the accounts you need to submit are a small part of the total administration you should be executing. In fact, the smaller the organisation, the wider your scope of financial activity, and the more you’ll have to report on. Luckily, all you need to know is in this blog, so continue reading and let’s find out how we could make your business life easier.